<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------------------------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Golden Telecom, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Shares of Common Stock, par value $.01 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
38122G107
- --------------------------------------------------------------------------------
(CUSIP Number)
Grier C. Raclin
Global TeleSystems Group, Inc.
4121 Wilson Boulevard, 8th Floor
Arlington, VA 22203
(703) 236-3100
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and
Communications)
October 5, 1999
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
................................................................................
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box [ ].
Page 1 of 10
<PAGE> 2
CUSIP No. 38122G107
- --------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Global TeleSystems Group, Inc.
- --------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
[ ] (a)
- --------------------------------------------------------------------------------
[ ] (b)
- --------------------------------------------------------------------------------
(3) SEC Use Only
- --------------------------------------------------------------------------------
(4) SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
- --------------------------------------------------------------------------------
(5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e). [ ]
- --------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
NUMBER OF SHARES (7) SOLE VOTING POWER 15,056,328
-------------------------------------------------------
BENEFICIALLY OWNED (8) SHARED VOTING POWER 0
-------------------------------------------------------
BY EACH REPORTING (9) SOLE DISPOSITIVE POWER 15,056,328
-------------------------------------------------------
PERSON WITH (10) SHARED DISPOSITIVE POWER 0
- --------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
15,056,328
- --------------------------------------------------------------------------------
(12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) [ ]
- --------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 66.0%
- --------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
- --------------------------------------------------------------------------------
Page 2 of 10
<PAGE> 3
CUSIP No. 38122G107
Item 1. Security and Issuer.
This Statement on Schedule 13D (this "Statement") relates to the shares
of common stock, par value $.01 per share (the "Common Stock") of Golden
Telecom, Inc., a Delaware corporation (the "Golden Telecom"). The principal
executive offices of Golden Telecom are located at 12, Krasnokazarmennaya
Street, 111250 Moscow, Russia.
Item 2. Identity and Background.
This statement is being filed by Global TeleSystems Group, Inc., a
Delaware corporation ("GTS").
The principal executive offices of the Reporting Person are located at
4121 Wilson Boulevard, 8th Floor, Arlington, VA 22203. GTS is an independent
provider of telecommunications services to businesses, other high usage
customers and telecommunications carriers in Europe.
During the last five years, GTS has not been (a) convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(b) a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On October 5, Golden Telecom completed its initial public offering (the
"IPO"). Immediately before the completion of the IPO, GTS owned all 10,600,000
shares of Common Stock that were then issued and outstanding.
As part of the IPO, Golden Telecom registered its shares of Common
Stock under Section 12(g) of the Securities Act of 1934, as amended, and issued
and sold 4,650,000 shares of Common Stock. Golden Telecom also entered into a
subscription agreement (the "Subscription Agreement") with GTS, dated as of
September 30, 1999, pursuant to which Golden Telecom agreed to issue and sell to
GTS, and GTS agreed to purchase from Golden Telecom, 4,456,328 shares of Common
Stock (the "Subscription Shares"). Pursuant to the Subscription Agreement, the
purchase price for the Subscription Shares was $11.22 per share, which was the
public offering price of $12.00 per share in the IPO, less underwriting
discounts of 6.5%. The aggregate purchase price for the Subscription Shares was
$50,000,000.00.
Page 3 of 10
<PAGE> 4
CUSIP No. 38122G107
GTS's purchase of the Subscription Shares was consummated on October 5,
1999, concurrently with the consummation of the IPO. GTS paid for the
Subscription Shares out of its working capital. After the completion of the IPO,
the concurrent purchase by GTS of the Subscription Shares, and the concurrent
purchases of an additional 3,093,797 shares of Common Stock by four other
investors pursuant to subscription agreements with Golden Telecom, 22,800,125
shares of Common Stock were outstanding. Immediately following these
transactions, GTS owned 15,056,328 shares of Common Stock, or approximately
66.0% of all the outstanding shares of Common Stock.
Item 4. Purpose of Transaction.
GTS purchased the Subscription Shares for the purpose of making an
investment in Golden Telecom.
GTS from time to time intends to review its investment in Golden
Telecom on the basis of various factors, including Golden Telecom's business,
financial condition, results of operations and prospects, general economic and
industry conditions, the securities markets in general and those for Golden
Telecom's securities in particular, as well as other developments and other
investment opportunities. Based upon such review, GTS will take such actions in
the future as GTS may deem appropriate in light of the circumstances existing
from time to time. If GTS believes that further investment in Golden Telecom is
attractive, whether because of the market price of Golden Telecom's securities
or otherwise, it may purchase additional shares of Common Stock or other
securities of Golden Telecom either in the open market or in privately
negotiated transactions. Similarly, depending on market and other factors, GTS
may determine to dispose of some or all of the shares of Common Stock currently
owned by GTS or otherwise acquired by GTS either in the open market or in
privately negotiated transactions. However, as described below in Item 6, GTS
has agreed that it will not offer, sell, contract to sell, announce an intention
to sell, pledge or otherwise dispose of, directly or indirectly, any shares of
Common Stock or securities convertible into or exchangeable or exercisable for
any Common Stock without the prior written consent of Deutsche Bank AG London,
which consent may not be unreasonably withheld, for a period of 360 days after
September 30, 1999, which is the date of the prospectus relating to the IPO.
Except as set forth above, GTS has not formulated any plans or
proposals which relate to or would result in: (a) the acquisition by any person
of additional securities of Golden Telecom or the disposition of securities of
Golden Telecom, (b) an extraordinary corporate transaction involving Golden
Telecom or any of its subsidiaries, (c) a sale or transfer of a material amount
of the assets of Golden Telecom or any of its subsidiaries, (d) any change in
the present board of directors or management of Golden Telecom, (e) any material
change in Golden Telecom's capitalization or dividend policy, (f) any other
material change in Golden Telecom's business or corporate structure, (g) any
change in Golden Telecom's charter or bylaws or other or
Page 4 of 10
<PAGE> 5
CUSIP No. 38122G107
instruments corresponding thereto or other action which may impede the
acquisition of control of Golden Telecom by any person, (h) causing a class of
Golden Telecom's securities to be deregistered or delisted, (i) a class of
equity securities of Golden Telecom becoming eligible for termination of
registration or (j) any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
GTS beneficially owns the number of shares of Common Stock and the
percentage of outstanding shares of Common Stock listed in the responses to
Items 11 and 13, respectively, on the cover page hereof, and such responses are
incorporated by reference herein. In addition, the number of shares of Common
Stock with respect to which GTS (i) has sole voting power, (ii) shares voting
power, (iii) has sole dispositive power, and (iv) shares dispositive power, are
listed in the responses to Items 7, 8, 9, and 10, respectively, on the cover
page filed herewith, and such responses are incorporated by reference herein.
Except as described in this Statement, GTS has not acquired or disposed
of any shares of Common Stock since Golden Telecom registered its shares of
Common Stock under Section 12(g) of the Securities Act of 1934, as amended.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
GTS has entered into the following agreement with respect to the
securities of Golden Telecom:
o Underwriting Agreement, dated September 30, 1999, among GTS, Golden
Telecom, Deutsche Bank AG London and Bear, Stearns & Co., Inc. In the
Underwriting Agreement, GTS has agreed that it will not offer, sell,
contract to sell, announce an intention to sell, pledge or otherwise
dispose of, directly or indirectly, any shares of Common Stock or
securities convertible into or exchangeable or exercisable for any
Common Stock without the prior written consent of Deutsche Bank AG
London, which consent may not be unreasonably withheld, for a period of
360 days after September 30, 1999, which is the date of the prospectus
relating to the IPO.
o Administrative Services Agreement, dated October 5, 1999, between GTS
and Golden Telecom. Pursuant to the Administrative Services Agreement,
GTS has agreed to provide Golden Telecom with certain accounting, tax
and financial management and budgeting services, legal and regulatory
services and human resources services. Under the terms of the
Administrative Services Agreement, GTS will provide these
administrative services subject to the oversight, supervision and
approval of the executive officers of Golden Telecom. Golden Telecom
will pay GTS a fixed monthly fee of $16,000 for these
Page 5 of 10
<PAGE> 6
CUSIP No. 38122G107
services, which is intended to be comparable to the fees that Golden
Telecom would pay if an independent third party provided the services.
The Administrative Services Agreement may be terminated by either
party upon at least 90 days' written notice and, in the case of a
termination by Golden Telecom, with the consent of GTS, which consent
may not be unreasonably withheld. In addition, the Administrative
Services Agreement will be terminated if Golden Telecom experiences a
change of control. A change of control will be deemed to have occurred
if:
o a majority of the seats on Golden Telecom'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 Golden Telecom
directors nominated by GTS; or
o 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 Golden Telecom.
o Employee Benefits Agreement, dated October 5, 1999, between GTS and
Golden Telecom. Pursuant to the Employee Benefits Agreement, Golden
Telecom's employees will participate in the employee benefit plans
(including, without limitation, the GTS 401(k) plan, long-term
disability plan, group life insurance plan and medical benefit plans)
which, immediately before the consummation of the IPO, covered these
employees. Golden Telecom will pay GTS a management fee equal to 25%
of the aggregate amount of all employees' base salaries, as in effect
from time to time, subject to adjustments as agreed between GTS and
the Company from time to time.
o Indemnification Agreement, dated October 5, 1999, between GTS and
Golden Telecom. The Indemnification Agreement provides generally for a
full and complete release and discharge between GTS and Golden Telecom
as of the closing date of the IPO of all liabilities existing or
arising on or before such closing date. Except as set forth in the
Indemnification Agreement, GTS will agree to indemnify, defend and
hold harmless Golden Telecom and each of its directors, officers,
employees and agents from and against all liabilities relating to,
arising out of or resulting from any material breach by GTS under any
of the agreements summarized in this Item 6.
Except as set forth in the Indemnification Agreement, Golden Telecom
will agree to indemnify, defend and hold harmless each of GTS and its
directors, officers, employees and agents from and against all
liabilities relating to, arising out of or resulting from:
o Golden Telecom's failure to pay, perform or otherwise promptly
discharge any of its liabilities arising out of its business,
operations or assets on or
Page 6 of 10
<PAGE> 7
CUSIP No. 38122G107
after the closing date of the IPO, whether or not expressly
assumed by Golden Telecom;
o any liabilities attributable to Golden Telecom in connection with
any United States federal or state tax audit of GTS;
o any material breach by Golden Telecom of any of the agreements
summarized in this Item 6; and
o any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact
required to be stated in the prospectus relating to the IPO or
necessary to make the statements in such prospectus not
misleading, with respect to all information contained in such
prospectus or the registration statement of which it forms a
part.
The Indemnification Agreement also provides that Golden Telecom will
indemnify GTS for any liabilities incurred by GTS under any of its
guarantees of Golden Telecom's obligations or liabilities and that Golden
Telecom will pay GTS for its direct costs, if any, of maintaining such
guarantees.
o Registration Rights Agreement, dated October 5, 1999, between GTS and
Golden Telecom. The Registration Rights Agreement provides that, on up to
three occasions, following the 360-day lock-up on sales of shares of Common
Stock held by GTS and on GTS's written request, Golden Telecom will use its
reasonable best efforts to register under the applicable federal and state
securities laws the resale of any of GTS's shares of Common Stock. GTS will
also have the right, following the 360-day lock-up on sales of shares of
Common Stock held by GTS, to include its shares of Common Stock in future
registrations initiated by Golden Telecom on its own behalf or on behalf of
other shareholders. This right is subject to certain limitations as to
whether and to what extent GTS may request registration. GTS will pay the
out-of-pocket costs for registrations which it initiates. Golden Telecom
has agreed to pay all of its out-of-pocket costs and expenses, other than
underwriting discounts and commissions pertaining to shares resold by GTS,
in connection with registrations in which GTS participates but does not
initiate. In addition to the above rights, when GTS owns less than 25% of
the outstanding shares of Golden Telecom's capital stock, it may request
that Golden Telecom register such remaining shares in a shelf registration
statement, at GTS's expense. Subject to certain limitations, such
registration rights may be assigned by GTS. The Registration Rights
Agreement contains customary indemnification and contribution provisions
between Golden Telecom and GTS.
Page 7 of 10
<PAGE> 8
CUSIP No. 38122G107
o Shareholders' Agreement, dated October 5, 1999, between GTS and Golden
Telecom. The Shareholders' Agreement provides GTS with pre-emptive rights
for equity issue by Golden Telecom. Specifically, among other things,
Golden Telecom has granted to GTS the right to purchase any new equity
securities of Golden Telecom so that GTS can maintain its percentage
ownership in Golden Telecom immediately prior to the issuance of such new
equity securities. These pre-emptive rights will terminate when GTS owns
less than 25% of the outstanding shares of Common Stock.
The Shareholders' Agreement also provides for certain corporate governance
matters. The Shareholders' Agreement provides that certain "interested
transactions" between Golden Telecom or its affiliates, on the one hand,
and GTS or its affiliates, on the other hand, will require the approval of
a majority of Golden Telecom's independent directors, unless the
transaction has been described in a business plan or a budget that had
already been separately approved by such independent directors.
o Trademark Transfer Agreement, dated October 5, 1999, between GTS and Golden
Telecom. Pursuant to the Trademark Transfer Agreement, GTS has transferred
its rights and interests in all trademarks used by Golden Telecom,
including, without limitation, Sovintel, Sovam Teleport, TeleRoss,
Russia-On-Line, Golden Telecom, GlasNet and PrimTelefone. If GTS's
ownership of Golden Telecom falls below 50%, then GTS will have the right
to require Golden Telecom to cease using certain other trademarks and
service marks.
Page 8 of 10
<PAGE> 9
CUSIP No. 38122G107
Item 7. Materials to be Filed as Exhibits.
1. Subscription Agreement, dated September 30, 1999, between GTS and Golden
Telecom.
2. Underwriting Agreement, dated September 30, 1999, among GTS, Golden
Telecom, Deutsche Bank AG London and Bear, Stearns & Co., Inc.
3. Administrative Services Agreement, dated October 5, 1999, between GTS and
Golden Telecom.
4. Employee Benefits Agreement, dated October 5, 1999, between GTS and Golden
Telecom.
5. Indemnification Agreement, dated October 5, 1999, between GTS and Golden
Telecom.
6. Registration Rights Agreement, dated October 5, 1999, between GTS and
Golden Telecom.
7. Shareholders' Agreement, dated October 5, 1999, between GTS and Golden
Telecom.
8. Trademark Transfer Agreement, dated October 5, 1999, between GTS and Golden
Telecom.
Page 9 of 10
<PAGE> 10
CUSIP No. 38122G107
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certify that the information set forth in this Statement is true,
complete and correct.
Date: October 14, 1999 GLOBAL TELESYSTEMS GROUP, INC.
By: /s/ ARNOLD Y. DEAN
------------------------------------------
Name: Arnold Y. Dean
Title: Deputy General Counsel and Assistant
Secretary
Page 10 of 10
<PAGE> 11
Index of Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
1. Subscription Agreement, dated September 30, 1999, between GTS and
Golden Telecom.
2. Underwriting Agreement, dated September 30, 1999, among GTS,
Golden Telecom, Deutsche Bank AG London and Bear, Stearns & Co.,
Inc.
3. Administrative Services Agreement, dated October 5, 1999, between
GTS and Golden Telecom.
4. Employee Benefits Agreement, dated October 5, 1999, between GTS
and Golden Telecom.
5. Indemnification Agreement, dated October 5, 1999, between GTS and
Golden Telecom.
6. Registration Rights Agreement, dated October 5, 1999, between GTS
and Golden Telecom.
7. Shareholders' Agreement, dated October 5, 1999, between GTS and
Golden Telecom.
8. Trademark Transfer Agreement, dated October 5, 1999, between GTS
and Golden Telecom.
</TABLE>
<PAGE> 1
EXHIBIT 1
DATED SEPTEMBER 30, 1999
GOLDEN TELECOM, INC.
4,456,328 SHARES OF COMMON STOCK, PAR VALUE $.01 EACH
---------------------------------
SUBSCRIPTION AGREEMENT
---------------------------------
<PAGE> 2
THIS AGREEMENT is made on September 30, 1999 BETWEEN:
(1) Golden Telecom, Inc., a Delaware corporation (the "COMPANY"); and
(2) Global TeleSystems Group, Inc., a Delaware corporation ("INVESTOR").
WHEREAS:
(A) The Company is conducting an initial public offering (the "IPO") of
4,650,000 shares of its Common Stock, par value $.01 per share (the
"Common Stock").
(B) In connection with this Agreement, Investor proposes to subscribe for, and
the Company proposes to issue to Investor, 4,456,328 shares of Common
Stock (the "Shares") concurrently with the IPO.
(C) Investor intends to pay for the Shares purchased from the Company with
$50,000,000 in cash.
(D) The Company has filed with the U.S. Securities and Exchange Commission a
registration statement on Form S-1, File No. 333-82791, relating to the
shares of Common Stock to be offered and sold in the IPO and to the other
securities to be offered and sold concurrently with the IPO, including the
Shares.
(E) Investor has received (i) a copy of the preliminary prospectus, dated
September 13, 1999, and (ii) a copy of the prospectus, dated September 30,
1999 (the "Prospectus"), each relating to the Company, the IPO and
Investor's intention to subscribe for the Shares.
IT IS AGREED as follows:
1. INTERPRETATION
(1) In this Agreement (including the Recitals):
"CLOSING" means the sale of the Shares by the Company to Investor;
"COMMON STOCK" has the meaning given to it in Recital (A);
"COMPANY" has the meaning given to it in introductory clause (1) of this
Agreement;
"INVESTOR" has the meaning given to it in introductory clause (2) of this
Agreement;
"IPO" has the meaning given to it in Recital (A);
"PROSPECTUS" has the meaning given to it in Recital (E);
1
<PAGE> 3
"PURCHASE PRICE" means $50,000,000; and
"SHARES" has the meaning given to it in Recital (B).
(2) The headings in this Agreement do not affect its interpretation.
2. SUBSCRIPTION
Subject to the terms and conditions of this Agreement, Investor agrees to
subscribe for the Shares, and the Company agrees to issue and sell the
Shares to Investor.
3. CLOSING
(1) At 9:00 A.M. (New York time) on October 5, 1999 or at such other time
and/or date as the Closing occurs:
(a) the Company shall issue the Shares and shall deliver a certificate,
in definitive form and registered in such name(s) and in such
denomination(s) as Investor shall request in writing not later than
two full business days prior to the Closing, evidencing the Shares
for the account(s) of Investor, against payment of the Purchase
Price; and
(b) Investor shall pay to the Company the Purchase Price in respect of
the Shares in Federal (same day) funds.
(2) A certificate or certificates for the Shares to be delivered to Investor
shall be in definitive form and delivered to Investor at the offices of
Shearman & Sterling, Washington, DC, for the accounts of Investor on the
Closing Date in accordance with the instructions delivered in accordance
with clause 3(1)(a) above.
4. REPRESENTATIONS AND WARRANTIES
(1) The Company represents, warrants and undertakes to Investor as follows:
(a) that the Recitals relating to the Company are in every material
respect true and accurate and not misleading;
(b) 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 materially as
described in the Prospectus;
2
<PAGE> 4
(c) 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;
(d) that the Shares have been duly authorized by the Company; and
(e) that the Shares will, on issue and receipt of payment therefor in
accordance with the terms of this Agreement, be validly issued in
accordance with the 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.
(2) Investor represents, warrants and undertakes to the Company as follows:
(a) that the Recitals relating to Investor are in every material respect
true and accurate and not misleading;
(b) that Investor has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware
with full power and authority to subscribe for the Shares as
contemplated by this Agreement;
(c) that the execution of this Agreement by Investor has been duly
authorized by Investor, and this Agreement constitutes a legal, valid
and binding obligation of Investor; and
(d) that Investor is acquiring the Shares for its own account and without
a view to the public distribution of the Shares or any interest
therein.
5. CONDITIONS PRECEDENT
The obligations of Investor to purchase the Shares are conditional upon
the consummation of the IPO in all material respects as described in the
Prospectus.
6. 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:
3
<PAGE> 5
IN THE CASE OF THE COMPANY:
Golden Telecom, Inc.
12, Krasnokazarmennaya
Moscow, Russia 111250
Telephone: +7-095-797-9300
Facsimile: +7-095-797-9331
Attention: General Counsel
IN THE CASE OF INVESTOR:
Global TeleSystems Group, Inc.
4121 Wilson Boulevard
8th Floor
Arlington, VA 22203
Facsimile: +1-703-236-3101
Attention: General Counsel
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.
7. 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.
8. GOVERNING LAW
THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
4
<PAGE> 6
IN WITNESS of which this Agreement has been executed on the date written
above.
GOLDEN TELECOM, INC.
By: /s/ Jeffrey A. Riddell
------------------------------------
Name: Jeffrey A. Riddell
Title: General Counsel and Secretary
GLOBAL TELESYSTEMS GROUP, INC.
By: /s/ Arnold Y. Dean
------------------------------------
Name: Arnold Y. Dean
Title: Deputy General Counsel and Assistant Secretary
5
<PAGE> 1
EXHIBIT 2
DATED SEPTEMBER 30, 1999
GOLDEN TELECOM, INC.
4,650,000 SHARES OF PAR VALUE $.01 EACH
COMMON STOCK
---------------------------------
UNDERWRITING AGREEMENT
---------------------------------
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C>
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.................................................23
11. TERMINATION..........................................................35
12. NOTICES..............................................................36
13. COUNTERPARTS.........................................................37
14. GOVERNING LAW........................................................37
SCHEDULE
1. The Underwriters
</TABLE>
<PAGE> 3
THIS AGREEMENT is made on September 30, 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") and Bear, Stearns & Co.
Inc. ("BEAR STEARNS") 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 meetings of the
board of directors held on July 12 and September 30, 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;
"CMSS" shall mean ChaseMellon Shareholder Services, L.L.C.;
"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);
-2-
<PAGE> 5
"MATERIAL ADVERSE EFFECT" has the meaning given to it in subclause
7(n);
"NASDAQ NATIONAL MARKET" means the Nasdaq Stock Market's National
Market;
"OFFERING" has the meaning given to it in Recital (B);
"OFFER PRICE" means $12.00 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 $11.22 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);
-3-
<PAGE> 6
"RUSSIAN MATERIAL ADVERSE EFFECT" has the meaning given to it in
subclause 10(1)(b)(C)(v);
"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.
-4-
<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 October 30, 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
-5-
<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, Bear
Stearns (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, provided, however, that under no
circumstances will the Designated Underwriter be liable to the
Company or to any of the Participants for any action taken or
omitted in good faith in connection with transactions effected
with regard to the Participants. 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 October 5, 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
-6-
<PAGE> 9
full business days prior to the First Closing, evidencing the
Firm Shares for the respective accounts of the several
Underwriters, with any transfer taxes payable 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 CMSS 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
-7-
<PAGE> 10
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, purchase, 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
-8-
<PAGE> 11
the Prospectus, and any supplements and amendments thereto or
to the Registration Statement as the Representatives may
reasonably request;
(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 hereof, the Company will not
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, disposi-
-9-
<PAGE> 12
tion or filing, without the prior written consent of Deutsche Bank,
which consent shall not be unreasonably withheld.
(8) For a period of 360 days after the date hereof, 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.
(9) The Company hereby agrees that it will ensure that the Directed Shares
are restricted as required by the National Association of Securities
Dealers, Inc. (the "NASD") or the NASD rules from sale, transfer,
assignment, pledge or hypothecation for a period of three (3) months
following the Closing Date. The Designated Underwriter will notify the
Company as to which persons will need to be so restricted. At the
request of the Designated Underwriter, the Company will direct CMSS to
place a stop transfer restriction upon such securities for such a
period of time. Should the Company release, or seek to release, from
such restrictions any of the Directed Shares, the Company agrees to
reimburse the Designated Underwriter for any reasonable expenses
(including, without limitation, legal expenses) it incurs in connection
with such release.
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 $0.46 per Offer Share under the Offer Price.
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
-10-
<PAGE> 13
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, all costs and expenses of the
Designated Underwriter, including the fees and disbursements of counsel
for the Designated Underwriter, in connection with matters related to
the Directed Share Program 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.
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 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 and
will comply in all material respects with any applicable laws
or regulations of foreign jurisdictions in which
-11-
<PAGE> 14
the Prospectus, as amended or supplemented, if applicable,
will be distributed in connection with the offer and sale of
the Directed Shares; 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 and complied in all material
respects with any applicable laws or regulations of foreign
jurisdictions in which each Preliminary Prospectus, as amended
or supplemented, if applicable, was distributed in connection
with the offer and sale of the Directed Shares; except that
the representations 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;
-12-
<PAGE> 15
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;
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,
-13-
<PAGE> 16
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, 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;
-14-
<PAGE> 17
(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 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 distribu-
-15-
<PAGE> 18
tions 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;
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
-16-
<PAGE> 19
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 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 securi-
-17-
<PAGE> 20
ties); 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 that except as disclosed in the Prospectus, the
Company is not aware of any pending investigation which might
lead to a claim of such a violation.
(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) (i) 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
-18-
<PAGE> 21
they were made, not misleading or (ii) caused by any untrue statement
or alleged untrue statement of a material fact contained in the
supplement or Preliminary Prospectus or Prospectus wrapper material
distributed in connection with the Directed Share Program, or caused by
any omission or alleged omission to state therein a material fact
necessary to make the statements therein, when considered in
conjunction with any Preliminary Prospectus or the Prospectus, 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.
(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 connection with the offer and sale of the Directed Shares, the
Company agrees, promptly upon a request in writing, to indemnify and
hold harmless the Designated
-19-
<PAGE> 22
Underwriter from and against any and all losses, liabilities, claims,
damages and reasonable expenses incurred by it as a result of the
failure of the Participants to pay for and accept delivery of the
Directed Shares which, by the end of the day following the date of this
Agreement, were subject to a properly confirmed agreement to purchase
such Directed Shares.
(4) 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), (2) or (3) of this clause 8, such
person (for purposes of this subclause (4), the "INDEMNIFIED PARTY")
shall promptly notify the person against whom such indemnity may be
sought (for purposes of this subclause (4), 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 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
-20-
<PAGE> 23
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.
(5) To the extent the indemnification provided for in subclause (1), (2) or
(3) 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 on the one
hand and the Underwriters on the other hand 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 and 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, 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.
(6) 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
-21-
<PAGE> 24
method of allocation that does not take account of the equitable
considerations referred to in subclause (5) 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.
(7) 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.
(8) 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, (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.
(9) 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 applica-
-22-
<PAGE> 25
tion 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 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;
-23-
<PAGE> 26
(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
U.S. Federal or New York State 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 U.S. Federal or New
York State 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);
(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;
-24-
<PAGE> 27
(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 referred to therein, fairly
summarize the matters referred to therein;
(viii) The Company is not now, and immediately
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 the applicable statutory requirements
of the Delaware General Corporation Law,
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 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
-25-
<PAGE> 28
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 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;
-26-
<PAGE> 29
(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
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
-27-
<PAGE> 30
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 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
-28-
<PAGE> 31
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 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) 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
-29-
<PAGE> 32
carry on its business and to own, lease and
operate its properties as disclosed in the
Prospectus;
(ii) 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;
(iii) 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 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;
(iv) 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 Gossvi-
-30-
<PAGE> 33
aznadzor), 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;
(v) 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 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
(vi) 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.
In addition, such counsel shall state that
the statements relating to telecommunications law and
regulations in the Russian Federation in the
Prospectus under the caption "REGULATION," insofar as
they purport to constitute a summary of the matters
expressly referred to therein, fairly describe such
matters in all material respects.
-31-
<PAGE> 34
(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 69% 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 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
-32-
<PAGE> 35
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
(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.
-33-
<PAGE> 36
(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 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
-34-
<PAGE> 37
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.
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
-35-
<PAGE> 38
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.
4121 Wilson Boulevard
8th Floor
Arlington, VA 22203
Facsimile: (703) 236-3101
Attention: General Counsel
-36-
<PAGE> 39
IN THE CASE OF THE PARENT:
Global Telesystems Group, Inc.
4121 Wilson Boulevard
8th Floor
Arlington, VA 22203
Facsimile: (703) 236-3101
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.
-37-
<PAGE> 40
IN WITNESS of which this Agreement has been executed on the date written above.
Yours faithfully,
GOLDEN TELECOM, INC.
By: /s/ Jeffrey A. Riddell
---------------------------------------
Name: Jeffrey A. Riddell
Title: General Counsel and Secretary
GLOBAL TELESYSTEMS GROUP, INC.
By: /s/ Vimal Agarwal
---------------------------------------
Name: Vimal Agarwal
Title: Vice President and Group Treasurer
CONFIRMED AND ACCEPTED,
as of the date first written above:
DEUTSCHE BANK AG LONDON
BEAR, STEARNS & CO. INC.
By: DEUTSCHE BANK AG LONDON
By: /s/ Darren Anstee
---------------------------------------
Name: Darren Anstee
Title: Vice President
-38-
<PAGE> 41
SCHEDULE 1
THE UNDERWRITERS
UNDERWRITER UNDERWRITING COMMITMENT
Deutsche Bank AG London 3,720,000
Bear, Stearns & Co. Inc. 930,000
---------
Total 4,650,000
<PAGE> 1
EXHIBIT 3
ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT (this "Agreement") is made and
entered into as of October 5, 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 the date hereof (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
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
<PAGE> 2
2
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 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.
<PAGE> 3
3
If to GTS:
Global TeleSystems Group, Inc.
4121 Wilson Boulevard
8th Floor
Arlington, VA 22203
Attn: Chief Financial Officer
Copy to: General Counsel
If to the Company:
Golden Telecom, Inc.
c/o Golden Teleservices, Inc.
4121 Wilson Boulevard
8th Floor
Arlington, VA 22203
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.
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
<PAGE> 4
4
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: /s/ Arnold Y. Dean
--------------------------------------
Name: Arnold Y. Dean
Title: Deputy General Counsel and
Assistant Secretary
GOLDEN TELECOM, INC.
By: /s/ Jeffrey A. Riddell
--------------------------------------
Name: Jeffrey A. Riddell
Title: General Counsel and Secretary
<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 4
EMPLOYEE BENEFITS AGREEMENT
EMPLOYEE BENEFITS AGREEMENT (the "Agreement"), dated as of
October 5, 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 certain 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 expatriate employees of the
Business who become employees of the Company as of the Effective Date.
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.
(b) As of the Effective Date, the Transferred Employees will
participate in each of the employee benefit plans (including, without
limitation, the GTS 401(k) plan, long-term disability plan, group life
insurance plan and medical benefit plans) which, immediately prior to the
Effective Date, cover the Transferred Employees (collectively, the "GTS Benefit
Plans"), it being understood that the GTS Benefit Plans do not include
compensation plans, such as any equity participation plans.
<PAGE> 2
2
(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 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 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
<PAGE> 3
3
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 fee equal to
25% of the aggregate amount of all Transferred Employees' base salaries, as in
effect from time to time (the "Management Fee"), subject to adjustments as
agreed between GTS and the Company from time to time. It is understood that the
Management Fee shall be paid in connection with the actual costs of
administering such benefits and shall not be paid as compensation to GTS for
the services it provides for the Company in connection with the administration
of such benefits.. 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.
SECTION 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
<PAGE> 4
4
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.
4121 Wilson Boulevard
8th Floor
Arlington, VA 22203
Attn: Chief Financial Officer
Copy to: General Counsel
If to the Company:
Golden Telecom, Inc.
c/o Golden Teleservices, Inc.
4121 Wilson Boulevard
8th Floor
Arlington, VA 22203
Attn: Chief Financial Officer
Copy to: General Counsel
SECTION 9. 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 10. 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 11. 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> 5
5
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: /s/ Arnold Y. Dean
---------------------------------
Name: Arnold Y. Dean
Title: Deputy General Counsel and
Assistant Secretary
GOLDEN TELECOM, INC.
By: /s/ Jeffrey A. Riddell
---------------------------------
Name: Jeffrey A. Riddell
Title: General Counsel and Secretary
<PAGE> 1
EXHIBIT 5
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into as of October 5, 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 September 30, 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 October 5, 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"); (iv) any payments that GTS is
required to make under its guarantees of the debt facilities outstanding on the
date of this Agreement between the Company or its subsidiaries, on the one
hand, and Motorola Corporation or Ericsson Radio Systems AB or their
subsidiaries, on the other hand; and (v) any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (as amended or
supplemented if the 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
<PAGE> 2
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 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.
2
<PAGE> 3
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.
4121 Wilson Boulevard
8th Floor
Arlington, VA 22203
Attn: Chief Financial Officer
Copy to: General Counsel
If to the Company:
Golden Telecom, Inc.
c/o Golden Teleservices, Inc.
4121 Wilson Boulevard
8th Floor
Arlington, VA 22203
Attn: Chief Financial Officer
Copy to: General Counsel
3
<PAGE> 4
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.
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.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
GLOBAL TELESYSTEMS GROUP, INC.
By: /s/ Arnold Y. Dean
---------------------------------
Name: Arnold Y. Dean
Title: Deputy General Counsel and
Assistant Secretary
GOLDEN TELECOM, INC.
By: /s/ Jeffrey A. Riddell
---------------------------------
Name: Jeffrey A. Riddell
Title: General Counsel and Secretary
5
<PAGE> 1
EXHIBIT 6
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made
and entered into as of October 5, 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 15,056,328 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.
"Exchange Act" means The Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder as in effect from
time to time.
<PAGE> 2
2
"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 15,056,328 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.
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
<PAGE> 3
3
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 26,
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.
(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
<PAGE> 4
4
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 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
<PAGE> 5
5
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 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
<PAGE> 6
6
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 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
<PAGE> 7
7
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 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)
<PAGE> 8
8
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;
(l) upon the occurrence of any event contemplated by paragraph
(d)(6) above, prepare a supplement or post-effective Amendment to the
Registration Statement or the Prospectus or any document incorporated
therein by reference or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Securities,
the Prospectus will not contain an untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein not misleading;
(m) use its reasonable best efforts to cause all Registrable
Securities covered by the Registration Statement to be listed on each
securities exchange or the Nasdaq National Market on which similar
securities issued by the Company are then listed if requested by 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)
<PAGE> 9
9
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 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
<PAGE> 10
10
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 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.
<PAGE> 11
11
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 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.
<PAGE> 12
12
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder will (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) unless in such indemnified party's reasonable judgment a conflict of
interest may exist between such indemnified and indemnifying parties with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party and in
that case the indemnified party shall have the right to participate in the
conduct of such defense provided that it will pay for the fees of its own
counsel. Whether or not such defense is assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld). No
indemnifying party will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving of
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be obligated
to pay the fees and expenses of such additional counsel or counsels. The failure
to notify an indemnifying party promptly of the commencement of any such action,
if and to the extent prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section, but the omission so to notify the indemnifying party will not
relieve it of any liability that it may have to any indemnified party otherwise
than under this Section.
(d) Contribution. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims, damages
or liabilities in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified party in connection with the
actions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of material fact or omission or alleged omission to
state a material fact, has been made, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses, claims,
damages or liabilities referred to above shall be deemed to include any legal or
other fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
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
<PAGE> 13
13
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 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.
<PAGE> 14
14
(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
(ii) If to the Company:
Golden Telecom, Inc.
c/o Golden Teleservices, Inc.
4121 Wilson Boulevard
8th Floor
Arlington, VA 22203
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
<PAGE> 15
15
portions of this Agreement shall be and hereby are redrafted to conform with
applicable law, while leaving the remaining portions of this Agreement intact.
(j) Force Majeure. No party shall be deemed to have breached
this Agreement or be held liable for any failure or delay in the performance of
all or any portion of its obligations under this Agreement if prevented from
doing so by a cause or causes beyond its control. Without limiting the
generality of the foregoing, such causes include acts of God or the public
enemy, fires, floods, storms, earthquakes, riots, strikes, lock-outs, wars and
war-operations, restraints of government power or communication line failure or
other circumstances beyond such party's control, or by reason of the judgment,
ruling or order of any court or agency of competent jurisdiction or change of
law or regulation subsequent to the execution of this Agreement.
(k) Successors and Assigns. Subject to the provisions of
Section 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> 16
16
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
GLOBAL TELESYSTEMS GROUP, INC.
By: /s/ Arnold Y. Dean
---------------------------------------
Name: Arnold Y. Dean
Title: Deputy General Counsel and
Assistant Secretary
GOLDEN TELECOM, INC.
By: /s/ Jeffrey A. Riddell
---------------------------------------
Name: Jeffrey A. Riddell
Title: General Counsel and Secretary
<PAGE> 1
EXHIBIT 7
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (this "Agreement") is made and entered
into as of October 5, 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.
"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.
<PAGE> 2
"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 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.
2
<PAGE> 3
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.
c/o Golden Teleservices, Inc.
4121 Wilson Boulevard
8th Floor
Arlington, VA 22203
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.
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.
3
<PAGE> 4
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.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
GLOBAL TELESYSTEMS GROUP, INC.
By: /s/ Arnold Y. Dean
----------------------------------------
Name: Arnold Y. Dean
Title: Deputy General Counsel and
Assistant Secretary
GOLDEN TELECOM, INC.
By: /s/ Jeffrey A. Riddell
----------------------------------------
Name: Jeffrey A. Riddell
Title: General Counsel and Secretary
5
<PAGE> 6
TRADEMARK TRANSFER AGREEMENT
THIS TRADEMARK TRANSFER AGREEMENT (the "Agreement") dated as of October
5, 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.
"Related Trademark" or "Related Trademarks" means the trademarks,
service marks, trademark registrations and trademark applications set forth in
Schedule IB hereto (the "Related Trademarks").
<PAGE> 7
"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 the Related Trademarks and (ii) take all other
actions which may be appropriate to release, surrender or return the Trademarks
to GTS.
2
<PAGE> 8
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.
Global TeleSystems Group, Inc.
4121 Wilson Boulevard
8th Floor
Arlington, VA 22203
Attn: Chief Financial Officer
Copy to: General Counsel
3
<PAGE> 9
If to the Company:
Golden Telecom, Inc.
c/o Golden Teleservices, Inc.
4121 Wilson Boulevard
8th Floor
Arlington, VA 22203
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 control, or by reason of the judgment, ruling
or order of any court or agency of
4
<PAGE> 10
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.
5
<PAGE> 11
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: /s/ Arnold Y. Dean
-----------------------------------------
Name: Arnold Y. Dean
Title: Deputy General Counsel and
Assistant Secretary
GOLDEN TELECOM, INC.
By: /s/ Jeffrey A. Riddell
-----------------------------------------
Name: Jeffrey A. Riddell
Title: General Counsel and Secretary
6
<PAGE> 12
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
