UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. __)*
GOLDEN TELECOM, INC.
----------------------
(Name of Issuer)
Common Stock, Par Value $0.01 Per Share
---------------------------------------
(Title of Class of Securities)
38122G107
----------------------
(CUSIP Number)
Bjorn Hogstad, Esq.
Telenor ASA
Snaroyveien 30
N-1331 Fornebu, Norway
47-97-77-8806
----------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 19, 2003
----------------------
(Date of Event which Requires Filing
of this Statement)
Copy to:
Peter S. O'Driscoll, Esq.
Coudert Brothers LLP
60 Cannon Street
London EC4N 6JP
England
44-207-248-3000
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of SectionSection 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g),
check the following box. [_]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page will be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
1
SCHEDULE 13D
CUSIP NO. 38122G107
--------------------------------------------------------------------------------
1 Names of Reporting Persons. I.R.S. Identification Nos. of
above persons (entities only).
Nye Telenor East Invest AS
--------------------------------------------------------------------------------
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)
OO (See Item 3)
--------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Norway
--------------------------------------------------------------------------------
7 Sole Voting Power
Number of 6,732,966 (See Item 5)
Shares 8 Shared Voting Power
Beneficially Owned by -0-
Each 9 Sole Dispositive Power
Reporting 6,732,966 (See Item 5)
Person With 10 Shared Dispositive Power
-0-
--------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
6,732,966 (See Item 5)
--------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [ ]
The aggregate amount reported as beneficially owned in row (11) does
not include shares which the Reporting Person discloses in the report
but as to which beneficial ownership is disclaimed pursuant to Rule
13d-4 [17 CFR 240.13d-4] under the Securities Exchange Act of 1934.
--------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
19.5% of the outstanding Common Stock
--------------------------------------------------------------------------------
14 Type of Reporting Person (See Instructions)
CO
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2
SCHEDULE 13D
CUSIP NO. 38122G107
--------------------------------------------------------------------------------
1 Names of Reporting Persons. I.R.S. Identification Nos. of above
persons (entities only).
Telenor Business Solutions Holding AS
--------------------------------------------------------------------------------
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)
OO (See Item 3)
--------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Norway
--------------------------------------------------------------------------------
7 Sole Voting Power
Number of 6,732,966/(1)/ (See Item 5)
Shares 8 Shared Voting Power
Beneficially Owned by -0-
Each 9 Sole Dispositive Power
Reporting 6,732,966/(1)/ (See Item 5)
Person With 10 Shared Dispositive Power
-0-
--------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
6,732,966/(1)/ (See Item 5)
--------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [ ]
The aggregate amount reported as beneficially owned in row (11) does
not include shares which the Reporting Person discloses in the report
but as to which beneficial ownership is disclaimed pursuant to Rule
13d-4 [17 CFR 240.13d-4] under the Securities Exchange Act of 1934.
--------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
19.5% of the outstanding Common Stock/(1)/
--------------------------------------------------------------------------------
14 Type of Reporting Person (See Instructions)
CO
--------------------------------------------------------------------------------
(1) The Reporting Person disclaims beneficial ownership of all shares.
3
SCHEDULE 13D
CUSIP NO. 38122G107
--------------------------------------------------------------------------------
1 Names of Reporting Persons. I.R.S. Identification Nos. of above
persons (entities only).
Telenor ASA
--------------------------------------------------------------------------------
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)
OO (See Item 3)
--------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Norway
--------------------------------------------------------------------------------
7 Sole Voting Power
Number of 6,732,966/(2)/ (See Item 5)
Shares 8 Shared Voting Power
Beneficially Owned by -0-
Each 9 Sole Dispositive Power
Reporting 6,732,966/(2)/ (See Item 5)
Person With 10 Shared Dispositive Power
-0-
--------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
6,732,966/(2)/ (See Item 5)
--------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [ ]
The aggregate amount reported as beneficially owned in row (11) does
not include shares which the Reporting Person discloses in the report
but as to which beneficial ownership is disclaimed pursuant to Rule
13d-4 [17 CFR 240.13d-4] under the Securities Exchange Act of 1934.
--------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
19.5% of the outstanding Common Stock/(2)/
--------------------------------------------------------------------------------
14 Type of Reporting Person (See Instructions)
CO
--------------------------------------------------------------------------------
(2) The Reporting Person disclaims beneficial ownership of all shares.
4
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D relates to the common stock, par value $0.01 per
share (the "Common Stock"), of Golden Telecom, Inc., a Delaware corporation
("GTI"). The principal executive offices of GTI are located at 1 Kozhevnichesky
Proezd, Moscow, Russia 115114.
ITEM 2. IDENTITY AND BACKGROUND
This statement is being filed jointly by Nye Telenor East Invest AS, Telenor
Business Solutions Holding AS, the holder of 100% of the shares of Nye Telenor
East Invest AS, and Telenor ASA, the holder of 100% of the shares of Telenor
Business Solutions Holding AS, with respect to 6,732,966 shares of GTI's Common
Stock to be acquired by Nye Telenor East Invest AS, subject to the terms,
covenants and conditions of the Share Exchange Agreement (as defined below) (See
Item 5 below regarding the calculation of such 6,732,966 shares). This statement
represents an initial filing by Nye Telenor East Invest AS, Telenor Business
Solutions Holding AS and Telenor ASA (collectively, the "Reporting Persons")
with respect to such Common Stock. The agreement between the Reporting Persons
relating to the joint filing of this statement is attached as Exhibit A hereto.
NYE TELENOR EAST INVEST AS
(a) Nye Telenor East Invest AS, a corporation formed under the laws of
Norway.
(b) Snaroyveien 30, N-1331 Fornebu, Norway.
(c) Nye Telenor East Invest AS is engaged principally in the business
of investing in the telecommunications industry outside of Norway.
(d) During the last five years, Nye Telenor East Invest AS has not been
convicted in a criminal proceeding.
(e) During the last five years, Nye Telenor East Invest AS was not a
party to a civil proceeding of a judicial or administrative body as a result of
which Nye Telenor East Invest AS 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.
EXECUTIVE OFFICERS AND DIRECTORS OF NYE TELENOR EAST INVEST AS
(a), (b), (c) and (f) The following information sets forth the name,
citizenship, business address and present principal occupation of each of the
directors and executive officers of Nye Telenor East Invest AS. The business
address of each of such persons is Nye Telenor East Invest AS, c/o Telenor ASA,
Snaroyveien 30, N-1331 Fornebu, Norway.
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DIRECTORS OF NYE TELENOR EAST INVEST AS
---------------------------------------
Name Citizenship Present Principal Occupation
---- ----------- ----------------------------
Jon Fredrik Baksaas Norway President and Chief Executive Officer of Telenor ASA;
Chairman of the Board of Nye Telenor East Invest AS
Torstein Moland Norway Senior Executive Vice President and Chief Financial Officer
of Telenor ASA; Director of Nye Telenor East Invest AS
Morten Lundal Norway Executive Vice President of Telenor ASA; Chief Executive
Officer of Nextra AS; Chairman of the Board of Telenor
Internett AS; Managing Director of Nye Telenor East Invest
AS
EXECUTIVE OFFICERS OF NYE TELENOR EAST INVEST AS
------------------------------------------------
Name Citizenship Present Principal Occupation
---- ----------- ----------------------------
Morten Lundal Norway Executive Vice President of Telenor ASA; Chief Executive
Officer of Nextra AS; Chairman of the Board of Telenor
Internett AS; Director of Nye Telenor East Invest AS
(d) During the last five years, none of the above directors and
executive officers of Nye Telenor East Invest AS has been convicted in a
criminal proceeding.
(e) During the last five years, none of the above directors and
executive officers of Nye Telenor East Invest AS was a party to a civil
proceeding of a judicial or administrative body as a result of which Nye Telenor
East Invest AS 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.
TELENOR BUSINESS SOLUTIONS HOLDING AS
(a) Telenor Business Solutions Holding AS, a corporation formed under
the laws of Norway.
(b) Snaroyveien 30, N-1331 Fornebu, Norway.
(c) Telenor Business Solutions Holding AS is engaged principally in the
business of (i) the import, sale, installation, customer education, consulting
and provision of telecommunication equipment and services to businesses,
government and consumers, (ii) the production and sale of software, (iii)
building and operating cable TV systems, and (v) participating in other related
businesses, including, by way of subscription of shares or otherwise,
participating in companies engaging in business of a similar nature.
(d) During the last five years, Telenor Business Solutions Holding AS
has not been convicted in a criminal proceeding.
(e) During the last five years, Telenor Business Solutions Holding AS
was not a party to a civil proceeding of a judicial or administrative body as a
result of which Telenor Business Solutions Holding AS 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.
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EXECUTIVE OFFICERS AND DIRECTORS OF TELENOR BUSINESS HOLDING SOLUTIONS
AS
(a), (b), (c) and (f) The following information sets forth the name,
citizenship, business address and present principal occupation of each of the
directors and executive officers of Telenor Business Solutions Holding AS. The
business address of each of such persons is Telenor Business Solutions Holding
AS, c/o Telenor ASA, Snaroyveien 30 N-1331 Fornebu, Norway.
DIRECTORS OF TELENOR BUSINESS SOLUTIONS HOLDING AS
--------------------------------------------------
Name Citizenship Present Principal Occupation
---- ----------- ----------------------------
Morten Karlsen Sorby Norway Executive Vice President and Chief Executive Officer of
Telenor Norway; Chairman of the Board of Telenor Business
Solutions Holding AS
Ragnar Karhus Norway Finance Director of Telenor Norway; Director of Telenor
Business Solutions Holding AS
Sveinung Hole Norway Marketing Director of Telenor Norway; Director of Telenor
Business Solutions Holding AS
Kjersti Wiklund Norway IT Director of Telenor Norway; Director of Telenor Business
Solutions Holding AS
Marit Saebu Norway Head of Key Customer Accounts, Director of Telenor Business
Solutions Holding AS
Helge Enger Norway Employee Representative
Rudi Lauritz Rorstad Norway Employee Representative
Rita Loberg Norway Employee Representative
EXECUTIVE OFFICERS OF TELENOR BUSINESS SOLUTIONS HOLDING AS
-----------------------------------------------------------
Name Citizenship Present Principal Occupation
---- ----------- ----------------------------
Ragnar Karhus Norway Director of Finance of Telenor Norway; Director of Telenor
Business Solutions Holding AS
(d) During the last five years, none of the above directors and
executive officers of Telenor Business Solutions Holding AS has been convicted
in a criminal proceeding.
(e) During the last five years, none of the above directors and
executive officers of Telenor Business Solutions Holding AS has been a party to
a civil proceeding of a judicial or administrative body as a result of which
such executive officer or director 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.
TELENOR ASA
(a) Telenor ASA, a corporation formed under the laws of Norway.
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(b) Snaroyveien, 30 N-1331 Fornebu, Norway.
(c) Telenor ASA is engaged principally in the business of production
and supply of services in the fields of telecommunications, data services and
media distribution.
(d) During the last five years, Telenor ASA has not been convicted in a
criminal proceeding.
(e) During the last five years, Telenor ASA was not a party to a civil
proceeding of a judicial or administrative body as a result of which Telenor ASA
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.
EXECUTIVE OFFICERS AND DIRECTORS OF TELENOR ASA
(a), (b), (c) and (f) The following information sets forth the name,
citizenship, business address and present principal occupation of each of the
directors and executive officers of Telenor ASA. The business address of each of
such persons is c/o Telenor ASA, Snaroyveien 30 N-1331 Fornebu, Norway.
DIRECTORS OF TELENOR ASA
------------------------
Name Citizenship Present Principal Occupation
---- ----------- ----------------------------
Torleif Enger Norway Executive Vice President of Norsk Hydro ASA; Chairman of
the Board of Telenor ASA
Bjorg Ven Norway Partner, Haavind Vislie Law Firm; Chairman of the Board of
the National Insurance Fund and Gjensidige NOR
Spareforsikring; Deputy Chairman of the Board of Telenor ASA
Hanne de Mora Switzerland Principal of A-Connect
Einar Forde Norway Director of Telenor ASA
Jorgen Lindegaard Sweden President and Chief Executive Officer of the SAS Group;
Chairman of the Board of Sonofon Holding AS; and Member of
the Boards of Finansieringsinstituttet for Industri og
Haandvaerk AS and Superfos AS
John Giverholt Norway Chief Financial Officer of Ferd AS
Liselott Kilaas Norway Head of Business Area Communication and Security Systems of
ZENITEL Norway AS
Per Gunnar Salomonsen Norway Employee Representative
Harald Stavn Norway Employee Representative
Irma Ruth Tystad Norway Employee Representative
8
EXECUTIVE OFFICERS OF TELENOR ASA
---------------------------------
Name Citizenship Present Principal Occupation
---- ----------- ----------------------------
Jon Fredrik Baksaas Norway President and Chief Executive Officer of Telenor ASA
Arve Johansen Norway Senior Executive Vice President of Telenor ASA, Chief
Executive Officer of Telenor Mobile Communication AS and
Chief Executive Officer of Telenor Mobile Holding AS
Torstein Moland Norway Senior Executive Vice President and Chief Financial Officer
of Telenor ASA
Jan Edvard Thygesen Norway Executive Vice President of Telenor ASA and Chief Executive
Officer of Telenor Networks
Stig Eide Sivertsen Norway Executive Vice President of Telenor ASA and Chairman of the
Board of Telenor Broadband Services AS
Morten Karlsen Sorby Norway Executive Vice President and Chief Executive Officer of
Telenor Norway
Berit Svendsen Norway Executive Vice President of Telenor ASA and Chief
Technology Officer of Telenor ASA
(d) During the last five years, none of the above directors and
executive officers of Telenor ASA has been convicted in a criminal proceeding.
(e) During the last five years, none of the above directors and
executive officers of Telenor ASA has been a party to a civil proceeding of a
judicial or administrative body as a result of which such executive officer or
director 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
Nye Telenor East Invest AS ("Telenor") has entered into a Share Exchange
Agreement (the "Share Exchange Agreement") dated as of August 19, 2003 with
SFMT-CIS, Inc., a Delaware corporation and a wholly-owned subsidiary of GTI
("SFMT"), and GTI which provides that, on the terms and subject to the covenants
and conditions specified therein, GTI will issue to Telenor shares of Common
Stock constituting as of the closing date of the transaction (the "Closing
Date") 19.5% of the issued and outstanding Common Stock of GTI, after taking
into account the effect of such issuance, in exchange for the sale and transfer
by Telenor to SFMT of all of the outstanding shares of capital stock in OAO
"Comincom", a Russian open joint stock company ("Comincom"), with the sole
exception of five shares of Comincom's common stock.
ITEM 4. PURPOSE OF TRANSACTION
Under the Share Exchange Agreement, the parties have agreed that, subject to the
covenants and conditions specified therein, GTI will issue to Telenor shares of
Common Stock constituting as of the Closing Date 19.5% of the issued and
outstanding Common Stock of GTI, after taking into account the effect of such
issuance (the "GTI Shares"), in exchange for the sale and transfer by Telenor to
SFMT of 129,292 shares of common stock, nominal value 1 Ruble per share, 541
shares of non-convertible preferred stock, nominal value 1 Ruble per share, and
29,838 shares of Class B convertible preferred stock, nominal value 1 Ruble per
share, of Comincom, representing all of the outstanding shares of capital stock
in Comincom, with the sole exception of five shares of Comincom's common
9
stock. Subject to the terms, covenants and conditions of the Share Exchange
Agreement, to comply with certain requirements of Russian law, such remaining
five shares of Comincom's common stock will be transferred by Mr. Alexander V.
Kozhanov, a person appointed by Telenor to own and transfer such shares
("Telenor's Designee"), to SFMT-Rusnet, Inc., a Delaware corporation and an
indirect wholly-owned subsidiary of GTI appointed by SFMT to purchase and own
such shares ("SFMT's Designee"), pursuant to the Supplemental Share Transfer
Agreement (the "Supplemental Share Transfer Agreement") dated as of August 19,
2003 between Telenor, Telenor's Designee and SFMT's Designee.
The acquisition of the GTI Shares by Telenor is subject to a number of terms,
covenants and conditions contained in the Share Exchange Agreement and,
therefore, there can be no assurance that the acquisition of the GTI Shares will
occur. Set forth below is a description of the material provisions of the Share
Exchange Agreement and certain related agreements entered into by Telenor in
connection with its proposed acquisition of the GTI Shares.
Description of the Share Exchange Agreement
-------------------------------------------
Share Exchange Terms
The Share Exchange Agreement contemplates that GTI will issue to
Telenor the GTI Shares in an "Offshore Transaction," as such term is defined in
Regulations S under the Securities Act of 1933, as amended (the "Securities
Act"), in exchange for the sale and transfer by Telenor and Telenor's Designee
to SFMT and SFMT's Designee, respectively, of shares comprising all of the
issued and outstanding shares of capital stock in Comincom (the "Acquisition").
The Share Exchange Agreement provides for the following post closing
adjustment in connection with the Acquisition. Within 30 days of the Closing
Date, (i) GTI will deliver to Telenor a balance sheet prepared for GTI on a
consolidated basis as of the Closing Date, together with a supporting schedule
setting forth a determination of the indebtedness for GTI on a consolidated
basis as of the Closing Date, and (ii) Telenor will deliver to GTI a balance
sheet prepared for Comincom and certain of its subsidiaries on a consolidated
basis as of the Closing Date, together with a supporting schedule setting forth
a determination of the indebtedness for Comincom and such subsidiaries on a
consolidated basis as of the Closing Date. If such financial statements show
that Comincom has failed to meet certain indebtedness targets specified in the
Share Exchange Agreement, Telenor must pay GTI the difference between the
indebtedness reflected in the financial statements and Comincom's indebtedness
targets. If such financial statements show that GTI has failed to meet certain
indebtedness targets specified in the Share Exchange Agreement, GTI must pay
Telenor the difference between the indebtedness reflected in the financial
statements and GTI's indebtedness targets. If each of GTI and Telenor are
required to make such a payment, only the net amount of such payment will be
required to be made by either GTI or Telenor, as the case may be. Such payments
are to be made in U.S. dollars.
Conditions Precedent to Share Exchange
Under Section VI of the Share Exchange Agreement, for Telenor to be
obligated to sell and transfer to SFMT all of the issued and outstanding shares
of capital stock in Comincom, with the sole exception of five shares of
Comincom's common stock, in exchange for the GTI Shares, the following
conditions precedent, among others, must have been satisfied: (i) certain of the
representations and warranties of each of SFMT and GTI must be true and correct
on the Closing Date and each of SFMT and GTI must have delivered to Telenor a
certificate to that effect signed by an authorized representative of each of
SFMT and GTI; (ii) each and all of the covenants and agreements of SFMT and GTI
to be performed or complied with prior to or on the Closing Date must have been
duly performed or complied with by each of SFMT and GTI, respectively, and each
of SFMT and GTI must have delivered to Telenor a certificate to that effect
signed by an authorized representative of each of SFMT and GTI; (iii) any and
all authorizations required from any governmental entity to proceed with the
transactions contemplated by the Share Exchange Agreement must have been
obtained by each of the parties, including (a) SFMT and SFMT's Designee
obtaining the requisite approval of the Russian Ministry for Antimonopoly Policy
and Support for Entrepreneurship and (b) compliance with all provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder, the expiration or termination of the respective
waiting periods thereunder, and the termination or closing of any investigation
opened thereunder; (iv) the absence of any injunction prohibiting or restraining
the transactions contemplated by the Share Exchange Agreement or the Related
Agreements (as defined
10
in the Share Exchange Agreement) or any action commenced by any governmental
entity to restrain or challenge such transactions or seeking material damages
from Telenor if such transactions are consummated; (v) each of the Related
Agreements must have been duly entered into by all the parties thereto (other
than Telenor) and must be in full force and effect as of the closing; (vi) all
action necessary to authorize the execution, delivery and performance of the
Share Exchange Agreement and the Related Agreements and the consummation of the
transactions contemplated thereby must have been duly and validly taken by the
appropriate governing body of SFMT, GTI and GTI's stockholders, as applicable,
including the approval of GTI's stockholders for the issuance of the GTI Shares
to the extent required by the rules of the Nasdaq National Market; (vii) all
third party consents and approvals required in connection with the Acquisition
or as otherwise required by the Share Exchange Agreement must have been
delivered to Telenor; (viii) Telenor must have received the legal opinion of
counsel to SFMT and GTI; (ix) SFMT's Designee must have duly executed and
delivered the Supplemental Share Transfer Agreement and such agreement must be
in full force and effect; (x) GTI must have delivered a certificate signed by a
duly authorized representative of GTI confirming the total number of shares of
GTI's capital stock that will be issued and outstanding as of the Closing Date
after taking into account the issuance of the GTI Shares; (xi) Telenor must have
applied to the Norwegian Ministry of Finance for, and must have received, a tax
exemption in respect of the transactions contemplated by the Share Exchange
Agreement; and (xii) GTI must have complied with certain financial conditions
precedent, including (a) GTI's US GAAP accounts for the 2003 period ending on
the last day of the quarter ending immediately preceding the Closing Date must
show proportionately consolidated EBITDA of no less than certain targets
specified in the Share Exchange Agreement and proportionately consolidated
indebtedness and capital expenditures of no more than certain targets specified
in the Share Exchange Agreement, subject to certain exceptions, and (b) the
delivery by GTI to Telenor of certain financial statements for each quarter
beginning with the quarter ending September 30, 2003 through the last full
quarter prior to the Closing Date.
Undertakings of GTI
Under Article VII of the Share Exchange Agreement, GTI has undertaken
to Telenor to perform and comply with certain covenants for certain periods of
time. From and after August 19, 2003, and prior to the Closing Date, GTI has,
among other things, agreed that it will not, and that it will not permit certain
of its subsidiaries listed in the Share Exchange Agreement (the "Key GTI
Companies") to, engage in any of the following, without Telenor's prior
approval: (i) subject to certain exceptions, changing or altering GTI's or any
Key GTI Company's corporate structure or amending its charter documents or
by-laws or other governing or organizational documents, or initiating or
undertaking any liquidation or dissolution of GTI or any Key GTI Company; (ii)
solely in relation to shares of capital stock of GTI and except for grants under
GTI's equity incentive plan within the limits established and in effect on
August 19, 2003 or the issuance of shares of Common Stock of GTI upon exercise
of options thereunder, issuing or selling any shares of GTI's capital stock or
any other securities or issuing any securities convertible into or exchangeable
for, or options, warrants to purchase, scrip, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or entering into any
contract, understanding or arrangement with respect to the issuance of any
shares of GTI's capital stock or any of GTI's other securities, or entering into
any arrangement or contract with respect to the purchase, redemption or voting
of GTI's capital stock, or adjusting, splitting, reacquiring, redeeming,
combining or reclassifying any of GTI's securities, or making any other changes
in its capital structure; (iii) declaring, setting aside or paying any dividends
in the form of shares of capital stock or other securities on any capital stock
or other ownership, membership or equity interests of GTI or any Key GTI Company
(except in case such dividends are due to GTI or any Key GTI Company); (iv)
subject to certain exceptions, selling or otherwise transferring or leasing any
properties or assets or canceling any debt or claim or waiving any right, other
than (a) in the ordinary course of business; (b) transfers among GTI or any of
its subsidiaries, or (c) in any case where the amount involved does not exceed
US$2,000,000 (or the equivalent thereof in any other currency), except for
transfers among GTI or any of its subsidiaries; (v) granting to any employee,
officer or director of GTI or any Key GTI Company any retirement, severance,
termination or other severance-related benefits in respect of which the
aggregate potential liability to GTI or any Key GTI Company is in excess of
US$250,000 (or the equivalent thereof in any other currency), or adopting any
profit sharing or similar plan; (vi) incurring (contingently or otherwise) any
indebtedness, other than (A) in the ordinary course of business, provided that
in no event shall the aggregate amount of such indebtedness incurred in the
ordinary course of business exceed US$5,000,000 (or the equivalent thereof in
any other currency), and (B) indebtedness incurred by GTI or any subsidiary of
GTI under a loan agreement to be entered into by GTI and certain of its
subsidiaries with the European Bank for Reconstruction and Development; (vii)
changing
11
the manner in which GTI or any Key GTI Company accounts for its tax
liabilities, or deviating from past practice in preparing and filing any tax
returns, unless required to do so by applicable law; (viii) making any material
change in its accounting methods or practices, except as may be required by
applicable law; (ix) taking any action to delist GTI's capital stock from the
Nasdaq National Market; or (x) agreeing, in writing or otherwise, to do any of
the foregoing.
Investment Undertakings of Telenor
Under Article VIII of the Share Exchange Agreement, Telenor has
undertaken to SFMT and GTI to perform and comply with certain investment
covenants upon the issuance of the GTI Shares to Telenor. Telenor has agreed (i)
subject to clause (iv) of this sentence, that none of the GTI Shares will be
offered or sold in the absence of registration under the Securities Act and any
applicable states securities laws or, in the opinion of counsel acceptable to
GTI, pursuant to an exemption from the registration requirements of the
Securities Act and any applicable state securities laws; (ii) that it will not
transfer any of the GTI Shares in violation of the provisions of any applicable
federal, state or foreign securities laws; (iii) that no hedging transactions
involving the GTI Shares will be conducted unless such transactions are
conducted in compliance with the Securities Act and the Securities Exchange Act
of 1934, as amended (the "Exchange Act"); and (iv) except as otherwise permitted
under the Shareholders Agreement (as defined below), for a period of 6 months
after the Closing Date, that it will not offer, contract to sell, pledge or
otherwise dispose of, directly or indirectly, any of the GTI Shares or
securities convertible into or exchangeable or exercisable for any of the GTI
Shares, or publicly disclose the intention to make any such offer, sale, pledge,
disposition or filing, without GTI's prior written consent.
Termination
The Share Exchange Agreement will terminate if the Closing Date has not
occurred on or before January 31, 2004 (the "Cut Off Date"), unless the parties
agree otherwise in writing; provided that if the sole remaining conditions to be
satisfied by the Cut Off Date are one or more of certain financial conditions
precedent set forth in the Share Exchange Agreement and the party entitled to
the benefit of such condition is unable to determine whether such conditions
precedent have been satisfied due to the fact that the applicable quarterly
financial statements have not been delivered by the party obligated to make such
delivery, despite such party's reasonable efforts to do so, then the Cut Off
Date will automatically be extended until the fifth business day after the date
on which the quarterly financial statements have been delivered by the party
obligated to make such delivery in accordance with the terms of the Share
Exchange Agreement.
In addition, (i) if a party materially breaches any term or condition
of the Share Exchange Agreement to be complied with at or before the Closing
Date or the obligations of such party become incapable of fulfillment prior to
the Closing Date, and such breach or noncompliance has not been waived by the
other party or parties thereto, then the Share Exchange Agreement may be
terminated, the Closing Date will not occur and the transactions contemplated
thereby may be abandoned upon written notice by the nonbreaching party to the
breaching party; and (ii) the Share Exchange Agreement may be terminated at any
time prior to the closing by mutual written agreement of the parties.
In connection with its investment in the GTI Shares, in addition to the Share
Exchange Agreement, Telenor has entered into the following agreements:
(a) a Shareholders Agreement dated as of August 19, 2003 (the
"Shareholders Agreement") among GTI, Alfa Telecom Limited, a
British Virgin Islands company ("Alfa"), Telenor, OAO
Rostelecom, a Russian open joint stock company ("RTK"),
Capital International Global Emerging Markets Private Equity
Fund, L.P., a Delaware limited partnership ("CIG"), Cavendish
Nominees Limited, a Guernsey limited liability company
("Cavendish"), and First NIS Regional Fund SICAV, a Luxembourg
private institutional fund ("First NIS" and, together with
Cavendish, "First NIS/Cavendish");
(b) a Standstill Agreement dated as of August 19, 2003 (the
"Standstill Agreement") among Alfa, Telenor, RTK, CIG,
Cavendish, First NIS and GTI; and
12
(c) a Registration Rights Agreement dated as of August 19, 2003
(the "Registration Rights Agreement") among GTI, Alfa,
Telenor, RTK, CIG, Cavendish and First NIS.
In addition, Telenor ASA will enter into a Guaranty (the "Guaranty") among
Telenor ASA, GTI and SFMT on the Closing Date.
Description of the Shareholders Agreement
-----------------------------------------
As a condition precedent to Telenor's obligation to sell and transfer
to SFMT all of the issued and outstanding shares of capital stock in Comincom
(with the sole exception of five shares of Comincom's common stock) in exchange
for the GTI Shares under the Share Exchange Agreement, GTI, Alfa, RTK, CIG,
Cavendish and First NIS have entered into the Shareholders Agreement with
Telenor under which the parties have agreed, among other things, to certain
rights regarding the nomination and removal of directors to and from the 10
member board of directors of GTI (the "Board"), certain purchase rights in
connection with new issuances of securities by GTI, certain rights and
limitations regarding tender offers, certain limitations on the parties' ability
to engage in certain business combinations, certain rights of first offer,
tag-along rights and other rights in connection with the transfer of Common
Stock and certain rights in connection with pledges of Common Stock. Alfa,
Telenor, RTK, CIG, Cavendish and First NIS are hereinafter referred to from time
to time each individually as a "Shareholder" and collectively as the
"Shareholders." The Shareholders Agreement, and the rights and obligations
provided thereunder, will become effective on the latter to occur of (a) the
date on which the board of directors of RTK has ratified and approved RTK's
execution of the Shareholders Agreement, the Standstill Agreement and the
Registration Rights Agreement and (b) the Closing Date (the "Effective Date").
Nomination and Removal of Directors
The Shareholders Agreement provides that, until such date as the Board
determines otherwise, the Board will consist of 10 directors. The parties have
further, among other things, agreed that:
(i) subject to paragraph (xi) below, GTI and each Shareholder
will take all action necessary to maintain a sufficient number of "Independent
Directors" (as defined by the Marketplace Rules of the National Association of
Securities Dealers (the "NASD") and the rules of the Securities and Exchange
Commission (the "SEC")) and Independent Directors who are "Financial Experts"
(as defined by the NASD's Marketplace Rules and the rules of the SEC) on the
Board to satisfy the standards for audit committees and Independent Directors
and other requirements for board composition as set forth in the NASD's
Marketplace Rules and in any other applicable law, rule or regulation;
(ii) commencing on the Effective Date and until the earlier of
(x) the second anniversary of the Effective Date and (y) with respect to any
Shareholder, the date on which such Shareholder's Board membership is adjusted
as described below in paragraphs (v) through (viii), GTI and each Shareholder
will take all action necessary to maintain the membership on the Board of (a)
three directors designated by Alfa; (b) two directors designated by Telenor; (c)
two directors designated by RTK (one of whom must be an Independent Director);
(d) one director designated by CIG (who must be an Independent Director); (e)
one director designated by First NIS/Cavendish (who must be an Independent
Director); (f) one director (who must be an Independent Director and, if at such
time there is no other director who is a Financial Expert, a Financial Expert)
designated by the directors sitting on the Board on the date of the Board
meeting at which the Board adopts the resolutions concerning the annual meeting
of stockholders of GTI, including the resolution in which the Board nominates
individuals to stand for election as directors for the year following the annual
meeting of stockholders; and (g) to the extent permitted by the NASD's
Marketplace Rules and at the election of each Shareholder who owns 15% or more
of the issued and outstanding shares of voting stock ("Voting Stock") of GTI,
permit, subject to certain conditions, a person designated by such Shareholder
(who need not be a director) to attend all meetings of the audit committee of
the Board as an observer;
(iii) GTI and each Shareholder will take all such actions as
are necessary to remove (a) any director that ceases to be a designee of any
Shareholder, upon notice from such Shareholder to GTI and the other
13
Shareholders; and (b) any Independent Director or Financial Expert that ceases
to qualify as an Independent Director or Financial Expert, as the case may be,
as set forth in the NASD's Marketplace Rules, if requested by the Board;
(iv) if a director designated by a Shareholder (an "Affected
Shareholder") dies, resigns or is removed as described above in paragraph (iii),
GTI and each Shareholder will take all such actions as are necessary to elect as
director an individual designated by the Affected Shareholder, provided that, if
any Independent Director (or a person that ceases to qualify as an Independent
Director) dies, resigns or is removed, such Independent Director (or such person
that ceases to qualify as an Independent Director) will be replaced by another
Independent Director;
(v) if on any date prior to or on the second anniversary of
the Effective Date (A) First NIS/Cavendish or CIG, as the case may be, owns less
than 3% of all the issued and outstanding Voting Stock, the right of First
NIS/Cavendish or CIG, as the case may be, to continued Board representation and
the obligations of First NIS/Cavendish or CIG, as the case may be, described
above in paragraphs (i) through (iv) and below in paragraph (xi) will terminate,
and First NIS/Cavendish or CIG will cause its designee to resign, or if such
designee does not resign, the Shareholders and GTI will take such actions as may
be necessary to remove such director; or (B) the director designated by First
NIS/Cavendish or CIG, as the case may be, resigns and First NIS/Cavendish or
CIG, as the case may be, does not designate a replacement within 10 business
days, the right of First NIS/Cavendish or CIG, as the case may be, to continued
Board representation and the obligations of First NIS/Cavendish or CIG, as the
case may be, described above in paragraphs (i) through (iv) and below in
paragraph (xi) will terminate;
(vi) if on any date prior to or on the second anniversary of
the Effective Date (A) RTK owns less than 10% but more than 3% of all of the
issued and outstanding shares of Voting Stock, RTK will be entitled to designate
one director; provided that if RTK owns less than 3% of all of the issued and
outstanding shares of Voting Stock, the right of RTK to continued Board
representation and the obligations of RTK described above in paragraphs (i)
through (iv) and below in paragraph (xi) will terminate, and RTK will cause its
designee to resign as a director, or, if such designee does not resign, the
Shareholders and GTI will take such actions as may be necessary to remove such
director; or (B) RTK owns less than 10% but more than 3% of all of the issued
and outstanding shares of Voting Stock and the director designated by RTK
resigns and RTK does not designate a replacement within 30 business days, the
right of RTK to continued Board representation and the obligations of RTK
described above in paragraphs (i) through (iv) and below in paragraph (xi) will
terminate;
(vii) the designation rights of any Shareholder (other than
First NIS/Cavendish, CIG or RTK) who, as of the Effective Date, is entitled to
designate more directors than it would otherwise be entitled to designate under
the designation table provided below in paragraph (ix), will continue until the
earlier of (x) the second anniversary of the Effective Date and (y) the date on
which the ownership by such Shareholder of shares of Voting Stock falls below
the relevant Adjustment Percentage (as defined in the following sentence) and
the number of directors designated by such Shareholder will then be reduced to
the applicable number indicated in the designation table, and each such
Shareholder will cause such number of directors designated by it to resign so
that it has the number of designees set forth in the designation table opposite
the percentage of issued and outstanding shares of Voting Stock then owned by it
or if such director(s) do not resign, the Shareholders and GTI will take such
actions as may be necessary to remove such director(s). The "Adjustment
Percentage" means (a) in the case of any Shareholder who, as of the Effective
Date, is entitled to designate three directors, 30% of all of the issued and
outstanding shares of Voting Stock and (b) in the case of any Shareholder who,
as of the Effective Date, is entitled to designate two directors, 10% of all of
the issued and outstanding shares of Voting Stock;
(viii) except as otherwise permitted above in paragraphs (i)
through (vii), from and after such time as the ownership by a Shareholder of
issued and outstanding shares of Voting Stock falls below any of the applicable
thresholds specified in the designation table provided below in paragraph (ix),
the number of directors designated by any such Shareholder will be reduced to
the applicable number specified in the designation table, and each such
Shareholder will cause such number of directors designated by it to resign so
that it has the number of designees set forth in the designation table opposite
the percentage of issued and outstanding shares of Voting Stock then owned by
it, or, if such director(s) do not resign, the Shareholders and GTI will take
such actions as may be necessary to remove such director(s);
(ix) subject to the procedures set forth above in paragraph
(viii), following any change in ownership in the issued and outstanding shares
of Voting Stock that causes one or more Shareholders' ownership of
14
shares of Voting Stock to reach, exceed or fall below the thresholds specified
below, the right to designate directors will be allocated among the Shareholders
as follows:
Percent of issued and outstanding shares of Voting Stock
owned by Shareholder Number of Designees
-------------------- -------------------
10% or less 0
More than 10% but less than 20% 1
20% or more but less than or equal to 30% 2
More than 30% but less than 40% 3
40% or more 3; plus the right to designate an Independent Director (who
will be a Financial Expert and qualified and willing to serve
on the audit committee of the Board)
provided that the size of the Board will not be increased beyond 10 members, and
a Shareholder who would be entitled to designate an additional director due to
such Shareholder's acquisition of additional shares of Voting Stock may only
exercise such right when another Shareholder loses the right to designate a
director;
(x) any vacancies on the Board not addressed by the procedures
set forth above in paragraphs (i) through (ix) will be filled by a vote of a
simple majority of the remaining directors then in office; and
(xi) if it becomes necessary (as determined by GTI and the
Shareholders holding a majority of the issued and outstanding shares of Voting
Stock) to treat GTI as a "controlled company" under the NASD's Marketplace
Rules, (a) the Shareholders will indicate in their respective filings on
Schedule 13D that they are members of a "group" (as such term is used in Rule
13d-1 under the Exchange Act), (b) GTI will indicate in its annual meeting proxy
on Schedule 14A that it is a "controlled company," and (c) GTI and the
Shareholders will take any such other actions as may be required for GTI to
qualify for treatment as a "controlled company" under the NASD's Marketplace
Rules.
In addition, the Shareholders Agreement provides that directors who
have a direct or indirect financial interest in a matter subject to
consideration by the Board must disclose the material facts relating to the
relationship giving rise to such direct or indirect financial interest and the
nature of such interest and, if requested by a simple majority of the
disinterested directors, will not participate in the Board's discussion of such
matter. Any such matter shall be approved by a simple majority of the
disinterested directors, even if such disinterested directors are less than a
quorum. The Shareholders Agreement also provides for special procedures pursuant
to which any two directors may, under certain circumstances, delay for up to 45
days the consideration by the Board of any transaction or series of related
transactions involving, directly or indirectly, a value exceeding 5% of the
total consolidated assets of GTI and its subsidiaries.
Purchase Rights of Shareholders
The Shareholders Agreement provides that, with respect to the issuance
by GTI of any shares of Voting Stock or any other shares of capital stock of GTI
and any options, warrants, convertible securities, or other rights to acquire
Voting Stock or other capital stock of GTI or securities exercisable or
convertible for Voting Stock or other capital stock of GTI (collectively, "New
Securities") as a result of which a Shareholder's percentage of beneficial
ownership of Voting Stock would be reduced, either immediately upon issuance of
such New Securities or upon the exercise or conversion thereof, GTI will give
prior notice of such issuance to each Shareholder and, subject to the terms of
the Standstill Agreement, each Shareholder will have the right, but not the
obligation, to elect to purchase up to its pro
15
rata share of such New Securities (calculated on a fully diluted basis). Such
pro rata share for any Shareholder will be the ratio of (a) the sum, without
duplication, of the total number of shares of Voting Stock and any other shares
of capital stock of GTI held by such Shareholder prior to the issuance of New
Securities (assuming the full exercise or conversion of any options, warrants,
convertible securities exercisable or convertible for Voting Stock or other
capital stock of GTI) to (b) the sum, without duplication, of the total number
of shares of Voting Stock and any other shares of capital stock of GTI
outstanding immediately prior to the issuance of New Securities held by all
stockholders of GTI, (assuming the full exercise or conversion of any options,
warrants, convertible securities exercisable or convertible for Voting Stock or
other capital stock of GTI). Each Shareholder's purchase must be on the same
terms and conditions as the balance of such issuance of New Securities;
provided, however, if the sale price at which GTI proposes to issue, deliver or
sell any New Securities is to be paid with consideration other than cash, then
the purchase price at which a Shareholder may acquire its portion of such New
Securities will be equal in value to such consideration (as determined in good
faith by the Board) but payable entirely in cash.
Tender Offers
The Shareholders Agreement provides that no Shareholder will,
individually or together with any of its affiliates, directly or indirectly, in
any manner, acquire beneficial ownership of any share or shares of Voting Stock
(including, without limitation, through the acquisition of ownership or control
of another Shareholder or a controlling person of another Shareholder) if after
giving effect thereto, such Shareholder and its affiliates would beneficially
own, in the aggregate, 50% or more of the issued and outstanding shares of
Voting Stock, unless such share or shares are acquired by such Shareholder
and/or one of its affiliates pursuant to a tender offer in accordance with
Section 14 of the Exchange Act and the rules and regulations thereunder to
purchase any and all of the issued and outstanding shares of GTI which is
accepted by stockholders holding a simple majority of the issued and outstanding
shares of Voting Stock (excluding any shares of Voting Stock held by such
Shareholder and its affiliates) (a "Tender Offer"); provided that, if at any
time (i) a person who has made a filing with the SEC on Schedule 13D or Form TO
with respect to the acquisition of shares of capital stock of GTI other than (a)
a Shareholder or any affiliate of any Shareholder or (b) a person acting for or
together with any Shareholder or any affiliate of any Shareholder (a "Tender
Offer Third Party Investor") makes a bona fide tender offer to purchase such
percentage of the issued and outstanding shares of Voting Stock that when
aggregated with any of the issued and outstanding shares of Voting Stock then
owned by such Tender Offer Third Party Investor and its affiliates would equal
more than 50% of the issued and outstanding shares of Voting Stock, and a
Shareholder or any of its affiliates thereafter makes a Tender Offer during the
period in which the tender offer made by such Tender Offer Third Party Investor
is still in effect, or (ii) a Tender Offer Third Party Investor makes a bona
fide tender offer during the period in which a Tender Offer made by a
Shareholder or any of its affiliates is still in effect, then the requirement in
the definition of "Tender Offer" that the Tender Offer made by such Shareholder
be accepted by stockholders of GTI holding a simple majority of the issued and
outstanding shares of Voting Stock (excluding any shares of Voting Stock held by
such Shareholder and its affiliates) will not apply. In addition, if any person,
individually or together with any of its affiliates, directly or indirectly,
acquires beneficial ownership of any share or shares of Voting Stock from a
Shareholder (other than through a Public Sale (as defined in the Shareholders
Agreement) of shares) and, after giving effect thereto, such person and its
affiliates own 10% or more of the issued and outstanding shares of Voting Stock,
then such person will be required, and each Shareholder will undertake to cause
such person, to execute an endorsement pursuant to which such person will be
bound by the provisions of the Shareholders Agreement relating to tender offers.
Limitations on Business Combinations
The Shareholders Agreement provides that, except with respect to Tender
Offers and participation in an auction of GTI pursuant to the provisions of the
Standstill Agreement described below, each Shareholder will not, nor will it
permit any of its affiliates to, engage in any "Business Combination" as defined
under Section 203(c)(3) of the Delaware General Corporation Law with GTI without
the prior approval of the Board, which approval will be effective only if it
includes the affirmative vote of a majority of directors who are neither an
officer nor an employee of GTI, nor a person employed, designated as a member of
the Board or otherwise controlled by or under common control with any
Shareholder or any of its controlling persons or affiliates proposing to engage
in such Business Combination ("Business Combination Disinterested Directors").
If no Business Combination Disinterested Directors are in office, then each
Shareholder will not, nor will it permit any of its affiliates to, engage in any
Business
16
Combination with GTI unless such Business Combination is approved by the Board
and authorized at a meeting of stockholders by the affirmative vote of holders
of at least 66 2/3% of the outstanding Voting Stock which is not owned by such
Shareholder.
Transfers
Under the Shareholders Agreement, each Shareholder has agreed to
certain rights and conditions described below with respect to any direct or
indirect sale, exchange, transfer, assignment, distribution or other
disposition, or issuance or creation of any option or any voting proxy, voting
trust or other voting agreement in respect of any person or instrument, whether
in a single transaction or a series of related transactions (a "Transfer"), of
any shares of Common Stock or other capital stock of GTI, or any option right,
subscription, warrant, phantom stock right or other contract right to receive
shares of Common Stock or such other capital stock, or any bonds, notes,
debentures or other securities of any kind whatsoever, that are, or may become,
convertible into or exchangeable for, shares of Common Stock or such other
capital stock of GTI ("Shares"). No Shareholder may Transfer any or all of its
Shares to, or create or permit any lien on any of its Shares in favor of, any
person other than in accordance with the terms and conditions of the
Shareholders Agreement.
Transfers to Permitted Transferees
The Shareholders Agreement provides that each Shareholder may
Transfer any of its Shares (a) to any controlling person of such Shareholder or
any affiliate of such controlling person or Shareholder that is controlled by
such controlling person or Shareholder, as the case may be, subject to certain
exceptions (a "Permitted Transferee") or (b) in a Public Sale of such Shares, in
each case, without the need to comply with the terms and conditions described
below relating to rights of first offer, tag-along rights and purchases from
First NIS/Cavendish or CIG; provided that any Shares so transferred to a
Permitted Transferee will be subject to the terms and conditions of the
Shareholders Agreement, the Standstill Agreement and the Registration Rights
Agreement and all of the rights and obligations of the transferor thereunder,
and such Permitted Transferee must execute, and each Shareholder must cause such
person to execute, an endorsement pursuant to which such Permitted Transferee
will be bound by the provisions of the Shareholders Agreement. In addition, a
Shareholder may not transfer any of its rights and obligations under the
Shareholders Agreement to any person other than a Permitted Transferee.
The Shareholders Agreement further provides that RTK must, in
connection with any proposed Transfer of any of its Shares to any RTK Transferee
(as defined in the Shareholders Agreement), in addition to complying with the
requirements described in the paragraph above, prior to the effectiveness of
such Transfer, deliver to GTI, with copies to each of the other Shareholders,
(i) any permits required by applicable Russian law in connection with such
Transfer, (ii) an amendment to RTK's existing license issued by the Central Bank
of the Russian Federation or a new license issued by the Central Bank of the
Russian Federation, in each case, permitting such Transfer, (iii) a certificate
executed by a senior officer of each RTK Transferee to whom any Shares are being
transferred, identifying the shareholders of such RTK Transferee as of the
proposed date of effectiveness of such Transfer and specifying such
shareholders' respective percentage ownership interests in such RTK Transferee,
and (iv) if RTK has the ability to elect a majority of the board of directors of
RTC-Leasing OJSC at the time of the proposed Transfer, a guarantee of RTK in
respect of the obligations of such RTK Transferee under the Shareholders
Agreement, duly executed by an authorized signatory of RTK and otherwise in form
and substance satisfactory to GTI, provided that such guarantee will remain in
effect only for so long as RTK retains the ability to elect a majority of the
board of directors of RTC-Leasing OJSC.
Rights of First Offer
Under the Shareholders Agreement, during the period commencing
on the Effective Date and ending on the fifth anniversary thereof, any
Shareholder and its affiliates (or, under certain circumstances, a group of
Shareholders and their respective affiliates) owning 10% or more of the issued
and outstanding shares of Voting Stock (a "Significant Selling Shareholder") and
wishing to effect a Transfer of any Shares (the "Offered Shares"), must provide
prior notice of such Transfer to Alfa, Telenor and RTK (each a "Right Holder") ,
any of whom may offer to purchase, for cash, in the aggregate, all (but not less
than all) of the Offered Shares at a purchase price determined by
17
such Right Holder but otherwise subject to all other terms and conditions of the
proposed Transfer. If the Right Holder's purchase price is the same (or higher)
than the purchase price of the proposed Transfer, the Significant Selling
Shareholder must sell the Offered Shares to such Right Holder at the Right
Holder's purchase price; provided that, if two or more Right Holders offer to
buy the Offered Shares and their proposed purchase prices are the same, then the
Significant Selling Shareholder must sell to each such Right Holder such number
of the Offered Shares (a) as is equal to the total number of Offered Shares
multiplied by a fraction, the numerator of which is the number of shares of
Voting Stock owned by such Right Holder and the denominator of which is the
total number of shares of Voting Stock owned by the Right Holders who have
delivered such matching purchase offers or (b) as the Right Holders who have
delivered such matching purchase offers may agree among themselves. If none of
the Right Holders offer to purchase the Offered Shares or if the Significant
Selling Shareholder is not obliged to sell the Offered Shares to any Right
Holder because the purchase price of the proposed Transfer is higher than the
Right Holder(s)' purchase price, then the Selling Shareholder may Transfer all
(but not less than all) of the Offered Shares to any other person for a purchase
price payable in cash equal to or greater than the purchase price of such
proposed Transfer and otherwise on the same terms and conditions of such
proposed Transfer.
Telenor's and Alfa's Tag-Along Rights
The Shareholders Agreement provides that, during the period
commencing on the Effective Date and ending on the third anniversary thereof,
if, after compliance with the terms and conditions relating to rights of first
of offer, (a) Alfa accepts a bona fide offer (an "Offer") to purchase its Shares
from a person who, together with its affiliates, is principally engaged in, and
generates a majority of its gross revenues from, the telecommunications
business, or (b) Telenor accepts an Offer from a financial/industrial investor
(other than an investment fund) whose principal investments are in the Russian
Federation (in each case, the "Offering Shareholder"), then Alfa or Telenor, if
it is not the Offering Shareholder (the "Other Shareholder"), will receive prior
notice from the Offering Shareholder offering such Other Shareholder the option
to participate in such proposed Transfer pro rata with the Offering Shareholder
and to sell to the proposed transferee up to the number of Shares as are
determined pro rata on the basis of the Other Shareholder's and the Offering
Shareholder's respective ownership of shares of Voting Stock. If the Other
Shareholder opts to participate in such proposed Transfer, then the Offering
Shareholder must use all reasonable efforts to cause the proposed transferee to
agree to acquire all the Shares of the Offering Shareholder and the Other
Shareholder, on substantially the same terms and conditions as the Offer. If the
proposed transferee is unwilling or unable to acquire such additional Shares
upon such terms, then the Offering Shareholder may elect either to cancel such
proposed Transfer or to allocate the maximum number of Shares that such
transferee is willing to purchase pro rata between the Offering Shareholder and
the Other Shareholder.
Other Shareholders' Tag-Along Rights
The Shareholders Agreement provides that Alfa will not, in any
one transaction or series of related transactions, Transfer Shares to any person
other than a Shareholder or any affiliate of any Shareholder (a "Tag Along Third
Party Investor"), who will own, directly or through affiliates, no less than 1/3
of the Shares immediately after such purchase (a "Third Party Offer"), unless
the terms and conditions of the Third Party Offer include an offer, at the same
price and on the same terms as the Transfer by Alfa, to include, at the option
of CIG, RTK and/or First NIS/Cavendish, in the sale or other disposition to the
Tag Along Third Party Investor, a portion of the Shares owned by CIG, RTK and/or
First NIS/Cavendish. Alfa must give prior written notice to CIG, RTK and First
NIS/Cavendish of the Third Party Offer, and each of CIG, RTK and First
NIS/Cavendish will have the right to sell pursuant to the Third Party Offer such
number of its Shares as is equal to the product of (i) its pro rata ownership of
shares of Voting Stock and (ii) the total number of Shares covered by the Third
Party Offer. The terms and consideration payable per Share to be Transferred by
CIG, RTK and First NIS/Cavendish in such sale or other disposition must be the
same in all respects as the consideration payable to Alfa per Share so
Transferred by Alfa. However, such tag-along rights of CIG, RTK and First
NIS/Cavendish will not apply if Alfa Transfers Shares to an internationally
recognized financial institution, a person who, together with its affiliates, is
principally engaged in, and generates a majority of its gross revenues from, the
telecommunications business or an international investment fund with a majority
of capital provided by reputable institutional or governmental shareholders.
18
Purchases from First NIS/Cavendish or CIG
The Shareholders Agreement provides that, if Alfa, Telenor
and/or any of their respective affiliates enters into an agreement with First
NIS/Cavendish or CIG, as the case may be, in respect of the purchase of any
Shares from First NIS/Cavendish or CIG, as the case may be, then the purchasing
Shareholder will give prior notice of such contemplated purchase to the other
Shareholder and the other Shareholder may elect to participate in such purchase
and will be entitled to purchase up to 50% of the Shares then being sold by
First NIS/ Cavendish or CIG, as applicable, for the same price per share as is
paid by the purchasing Shareholder. The consideration for any such acquisition
will be cash.
Pledges
The Shareholders Agreement provides that any Shareholder (a "Pledging
Shareholder") may pledge Shares to any person (a "Pledgee") to secure a bona
fide obligation; provided that the following terms and conditions are satisfied:
(i) The Pledging Shareholder must provide to each of the
non-pledging Shareholders (i) written notice of the pledge describing the terms
of the pledge, (ii) copies of the relevant pledge agreement and (iii) a written
acknowledgement from the Pledgee that the Pledgee agrees to the terms and
conditions of the Shareholders Agreement relating to pledges.
(ii) Any such pledge must be governed by a pledge agreement,
which must be binding on the Pledgee and provide that:
(a) the Pledgee, prior to taking any action to
enforce its rights in or to any of the pledged Shares (an "Enforcement Action"),
must give prior written notice of such intention to each of the non-pledging
Shareholders; and
(b) each of the non-pledging Shareholders will have
the right, at the option of such non-pledging Shareholder, to purchase from the
Pledgee (pro rata according to the respective percentage of Voting Stock owned
by each non-pledging Shareholder exercising its purchase rights hereunder (each,
a "Purchasing Shareholder" and, collectively, the "Purchasing Shareholders")
relative to the total number of shares of Voting Stock owned by all other
Purchasing Shareholders, or in such other proportion as such Purchasing
Shareholders may agree among themselves) the underlying obligation at a purchase
price equal to the lesser of (a) the Fair Market Value (as defined in the
Shareholders Agreement) of the pledged Shares being purchased by such Purchasing
Shareholder(s) or (b) the principal amount of the relevant underlying obligation
being purchased by such Purchasing Shareholder(s), plus any interest, penalties
and other similar payments (if any) accrued and owing thereon up to, but
excluding, the purchase date thereof. Concurrently with such purchase of the
underlying obligation, the pledge agreement will be automatically assigned to
the Purchasing Shareholder(s). Thereafter, the Pledging Shareholder will
Transfer the relevant pledged Shares to each such Purchasing Shareholder, free
and clear of all liens, in exchange for cancellation of the underlying
obligation with respect to such pledged Shares, without any additional purchase
price owed or payable with respect thereto.
(iii) If any Enforcement Action would result in the Transfer
of Shares such that a person, together with any of its affiliates, would acquire
more than 50% of the issued and outstanding shares of Voting Stock, and the
non-pledging Shareholders do not elect to purchase in the aggregate all of the
pledged Shares as described above in subparagraph (ii)(b), then the non-pledging
Shareholders will each have the right, exercisable by written notice to the
Pledging Shareholder and the Pledgee, to elect to sell in the proposed Transfer
of pledged Shares to such person, all or any portion of such non-pledging
Shareholders' Shares, free and clear of any liens other than obligations under
the Shareholders Agreement. The Transfer of Shares by the non-pledging
Shareholders will be at a price equal to the Fair Market Value thereof or, at
the election of such non-pledging Shareholders, such other price as may be
agreed between the Pledgee and the non-pledging Shareholders electing to
Transfer their Shares (which may not be less than the Fair Market Value
thereof).
19
(iv) Each non-pledging Shareholder must be an express
third-party beneficiary of the pledge agreement with respect to each such
non-pledging Shareholder's rights set forth under the Shareholders Agreement.
(v) If any pledged Shares are Transferred, the transferee
which acquires the Shares agrees to be bound by the terms and conditions of the
Shareholders Agreement and to execute an endorsement evidencing such agreement
to be bound.
(vi) The Pledgee must be either:
(a) a licensed Russian bank with equity capital of at
least US$200 million which is not subject to administration by the Russian
Agency for Restructuring of Credit Organizations ("ARCO") and in which ARCO does
not possess any controlling or blocking rights;
(b) a non-Russian bank with an investment grade
rating from Moody's Corporation or Standard & Poor's, as such ratings are
determined at the time of the pledge; or
(c) any other lender or supplier of vendor financing
that has a long-term debt rating of Baa or higher from Moody's Corporation or a
rating of BBB or higher from Standard & Poor's, as such ratings are determined
at the time of the pledge.
(vii) Pledged Shares must be pledged to the Pledgee under one
pledge only, and the underlying obligation secured by such pledge must not be
secured by any collateral other than the pledged Shares.
(viii) Any breach by the Pledgee of any provision of the
Shareholders Agreement to be observed by the Pledgee will be deemed a breach of
the Shareholders Agreement by the Pledging Shareholder.
Certain Limitations Regarding Proxies, Voting Agreements, Shareholders
Agreements and Other Arrangements
Under the Shareholders Agreement, each Shareholder has, among other
things, agreed that, except for the Shareholders Agreement, the Share Exchange
Agreement, the Standstill Agreement and the Registration Rights Agreement, (a)
no Shareholder will grant any proxy or enter into or agree to be bound by any
understanding or any voting trust, voting proxy or other agreement with respect
to any matters relating to GTI, its management or any Shares, (b) nor will any
Shareholder enter into any shareholders agreement or other arrangement of any
kind with any person with respect to any matters relating to GTI, its management
or any Shares, and (c) nor will any Shareholder act, for any reason, as a member
of a group or in concert with any other person in connection with the
acquisition, Transfer or other disposition or voting of Shares in any manner
which is inconsistent with any obligation of such Shareholder under the
Shareholders Agreement; provided that each Shareholder will be permitted to
Transfer its Shares in accordance with the terms of the Shareholders Agreement.
Termination
The Shareholders Agreement will remain in effect until the earlier of
(i) the date on which all of the parties agree to its termination; and (ii) the
date on which any person owns, individually or collectively with its affiliates,
more than 50% of the issued and outstanding shares of Voting Stock; provided
that (a) any Shareholder who, together with its affiliates, having once attained
ownership of at least 3% or more of the issued and outstanding shares of Voting
Stock thereafter ceases to own, together with its affiliates, at least five
percent 3% of the issued and outstanding shares of Voting Stock will cease to be
a party to, or have any rights or obligations under, the Shareholders Agreement
from and after the date of the relevant Transfer (or dilution); and (b) no such
Transfer, dilution or termination will be deemed to relieve any party of any
obligations under the Shareholders Agreement accruing, or resulting from, any
breach, action or omission of such party occurring, prior to the date of such
Transfer, dilution or termination.
20
Description of the Standstill Agreement
---------------------------------------
As a condition precedent to Telenor's obligation to sell and transfer to
SFMT all of the issued and outstanding shares of capital stock in Comincom (with
the sole exception of five shares of Comincom's common stock), in exchange for
the GTI Shares under the Share Exchange Agreement, Alfa, RTK, CIG, Cavendish,
First NIS and GTI have entered into the Standstill Agreement with Telenor, under
which the Shareholders have agreed, among other things, to limit for a period of
18 months their ability to acquire shares of Voting Stock and to make or solicit
proxies. The Standstill Agreement, and the rights and obligations provided
thereunder, become effective on the Effective Date.
Limitations on Ability to Acquire Voting Stock and to Make or Solicit
Proxies
The Standstill Agreement provides that:
(i) each Shareholder will not, nor will it permit any of its
affiliates to, directly or indirectly, in any manner acquire, or agree to
acquire, any shares of Voting Stock, if the acquisition of such shares of Voting
Stock would increase the ownership of such Shareholder and its affiliates to
more than (a) the percentage of the shares of Voting Stock then outstanding
(calculated on a fully diluted basis) as set forth opposite each such
Shareholder's name in the column headed "Fully Diluted" below, or (b) the
percentage of the shares of Voting Stock then outstanding (calculated on a
non-fully diluted basis) set forth opposite such Shareholder's name in the
column headed "Non-Fully Diluted" below:
Shareholder Fully Diluted Non-Fully Diluted
----------- ------------- -----------------
Alfa 43.00% 49.99%
Telenor 35.00% 40.00%
RTK 30.00% 35.00%
CIG 17.20% 20.00%
First NIS/Cavendish 17.20% 20.00%
(ii) The provisions set forth above in paragraph (i) will not apply
to the following acquisitions or circumstances:
(a) a Shareholder who acquires shares of Voting Stock in a
Tender Offer;
(b) if the Board determines to conduct an auction of GTI, in
which case, each Shareholder may participate in such auction on the same terms
as all other bidders notwithstanding any provisions in the Standstill Agreement
to the contrary; or
(c) if any person other than the Shareholders or any of their
respective affiliates acquires, or has entered into a binding agreement to
acquire, beneficial ownership of greater than 15% of the shares of Voting Stock,
as evidenced by a Schedule 13D filing made by such person.
(iii) each Shareholder will not make, nor will it permit any of its
affiliates to make, or in any way participate in, any "solicitation" of
"proxies" (as such terms are used in the proxy rules of the SEC) to vote any
shares of Voting Stock in connection with the election of members of the Board
(other than proxies to vote any shares of Voting Stock beneficially owned by
such Shareholder and/or any of its affiliates or in connection with a Tender
Offer made by such Shareholder or any of its affiliates).
(iv) each Shareholder will not make, nor will it permit any of its
affiliates to make, or in any way participate in any "solicitation" of "proxies"
to vote any shares of Voting Stock, with respect to any matter, other than the
election of directors of GTI (a "Non-Election Issue"), which may be submitted to
a vote of the stockholders of GTI (other than proxies to vote any shares of
Voting Stock beneficially owned by such Shareholder and/or any of its affiliates
or in connection with a Tender Offer made by such Shareholder or any of its
affiliates) with respect to any such Non-Election Issue.
21
(v) Notwithstanding anything to the contrary contained above in
paragraphs (i) through (iv), nothing contained in the Standstill Agreement will
be construed to prevent any Shareholder or any of its affiliates from: (a)
making a Tender Offer; or (b) communicating with any other holder or holders of
GTI's outstanding securities, provided that such Shareholder does not (A)
provide to any security holder of GTI a form of proxy or other authorization
permitting such security holder (or its designee) to vote any equity security of
GTI on behalf of such Shareholder or (B) accept from any security holder of GTI
a proxy or other authorization permitting such Shareholder (or its designee) to
vote any equity security of GTI on such security holder's behalf, provided that
clauses (A) and (B) above will not be deemed to prevent the solicitation of
proxies to vote securities of GTI beneficially owned by such Shareholder, as
contemplated by paragraphs (iii) and (iv) above.
Termination
The Standstill Agreement will remain in effect until the earlier of (i)
the date on which all of the parties agree to its termination; (ii) the date 18
months following the Effective Date; (iii) the date on which any person owns,
individually or collectively with its affiliates, more than 50% of the issued
and outstanding shares of Voting Stock; and (iv) the voluntary or involuntary
filing of a petition in bankruptcy by or against GTI, the occurrence of an event
of insolvency affecting GTI or the appointment of a receiver for GTI; provided
that (a) any Shareholder who, together with its Affiliates, having once attained
ownership of at least 3% or more the shares of Voting Stock thereafter ceases to
own, together with its Affiliates, at least 3% of the shares of Voting Stock
will cease to be a party to, or have any rights or obligations under, the
Standstill Agreement from and after the date of the relevant Transfer or
dilution; and (b) no Transfer, dilution or termination will be deemed to relieve
any Shareholder of any obligations of such Shareholder under the Standstill
Agreement accruing, or resulting from any breach, action or omission of such
Shareholder occurring, prior to the date of such Transfer, dilution or
termination.
Description of the Registration Rights Agreement
------------------------------------------------
As a condition precedent to Telenor's obligation to sell and transfer to
SFMT all of the issued and outstanding shares of capital stock in Comincom (with
the sole exception of five shares of Comincom's common stock), in exchange for
the GTI Shares under the Share Exchange Agreement, GTI, Alfa, RTK, CIG,
Cavendish and First NIS have entered into the Registration Rights Agreement with
Telenor, under which GTI has agreed to grant certain registration rights to the
Shareholders with respect to (a) certain shares of Common Stock held by the
Shareholders, including the GTI Shares to be acquired by Telenor pursuant to the
Share Exchange Agreement, (b) any shares of Common Stock acquired by the
Shareholders pursuant to their purchase rights respecting New Securities under
the Shareholders Agreement and (c) any securities issued or issuable with
respect to any 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 of other reorganization (the "Registrable Securities"). The
Registration Rights Agreement, and the rights and obligations provided
thereunder, become effective on the Effective Date.
The securities entitled to the benefits of the Registration Rights
Agreement are the Registrable Securities but, with respect to any particular
Registrable Security, only until (a) it has been effectively registered under
the Securities Act and disposed of in accordance with a registration statement
covering it, (b) it has been distributed pursuant to Rules 144 or 144A under the
Securities Act (or any similar provision then in force) or (c) it has otherwise
been transferred and a new certificate or other evidence of ownership thereof
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 GTI and
no other restriction on transfer exists.
Demand Registration Rights
The Registration Rights Agreement provides that each Shareholder has the
right to request (each, a "Requesting Shareholder") that GTI effect a
registration under the Securities Act with respect to all or part of the
Registrable Securities held by such Requesting Shareholder(s) (a "Demand
Registration"). The Requesting Shareholder(s) must deliver to GTI a request for
a Demand Registration (a "Demand Request") specifying the number of Registrable
Securities to be registered, the intended method of distribution and other
relevant facts. Following delivery of a Demand Request, GTI must, among other
things, (a) give prompt notice of such Demand Request to all
22
other Shareholders, and such Shareholders will have 30 days from receipt thereof
to respond in order to have any Registrable Securities owned by such
Shareholders included in such registration, and (b) use all reasonable efforts
to effect such registration as promptly as practicable or as may be so
requested. Each of Alfa, Telenor and RTK will be entitled to request two Demand
Registrations. Each of First NIS/Cavendish and CIG will be entitled to request
one Demand Registration. GTI will not be obligated to register any Registrable
Securities pursuant to any Demand Registration unless there is requested to be
included in such registration by the Requesting Shareholder(s) at least 500,000
shares of Common Stock, subject to such adjustments as may be necessary by
reason of 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 of other
reorganization.
Piggy-Back Registration Rights
Under the Registration Rights Agreement, if GTI at any time proposes to
register any of its authorized but unissued shares of Common Stock on its own
behalf for the purposes of raising capital (other than on Form S-4 or Form S-8
or any successor or similar form), 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, it must, in each such case,
give prompt notice to each Shareholder of its intention to do so, specifying the
form and manner and the other relevant facts involved in such proposed
registration. Upon the written request of a Shareholder delivered to GTI within
30 days after such notice has been given to such Shareholder, GTI will use its
reasonable best efforts to effect the registration under the Securities Act, as
expeditiously as is reasonable, of all the Registrable Securities that GTI has
been so requested to register by such Shareholder, to the extent requisite to
permit the sale of the Registrable Securities to be so registered; provided,
however, that: (a) if, at any time after giving such written notice of its
intention to register any shares of Common Stock proposed to be registered by
GTI and prior to the effective date of the registration statement filed in
connection with such registration, GTI determines for any reason not to register
such shares of Common Stock, GTI will, at its election, give written notice of
such determination to each Shareholder, and thereupon GTI will be relieved of
its obligation to register any Registrable Securities in connection with such
registration; and (b) if the managing underwriter of such offering advises GTI
that, in its judgment, the number of shares 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
shares of Common Stock proposed to be included in such offering, then GTI will
promptly advise each Shareholder thereof and may require that, to the extent
necessary to meet such limitation, all holders of Registrable Securities and of
other shares of Common Stock proposing to sell shares of Common Stock in such
offering will share pro rata in the number of shares of Common Stock to be
excluded from such offering, such sharing to be based on the respective numbers
of Registrable Securities and other shares of Common Stock as to which
registration has been requested by such holders, and that the distribution of
such Registrable Securities and other shares of Common Stock as are so excluded
be deferred (in case of a deferral as to a portion of such Registrable
Securities and other shares of Common Stock, such portion to be allocated among
such holders in proportion to the respective numbers of shares of Common Stock
so requested to be registered by such holders) until the completion of the
distribution of such shares of Common Stock and any other securities by such
underwriters.
Transfer of Registration Rights
The Registration Rights Agreement provides that the registration rights of
each Shareholder with respect to any Registrable Securities may be transferred
to Permitted Transferees or to another Shareholder; provided, however, that (a)
the transferring Shareholder must give GTI 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 the
Registration Rights Agreement are being transferred, (b) such transferee must
agree in writing, in form and substance reasonably satisfactory to GTI, to be
bound by the provisions of the Registration Rights Agreement, and (c) the terms
of such transfer must make clear how the transferor Shareholder and the
transferee will utilize the Demand Registrations provided to each Shareholder
thereunder.
23
Termination
The Registration Rights Agreement will remain in effect until the date on
which all of the parties agree to its termination.
Description of the Guaranty
---------------------------
Under the Guaranty to be entered into among Telenor ASA, GTI and SFMT on
the Closing Date, Telenor ASA will guarantee to GTI and SFMT the performance of
Telenor's obligations under the Share Exchange Agreement. Subject to certain
exceptions, Telenor ASA's obligations under the Guaranty will expire 18 months
from the Closing Date, except that, with respect to certain representations and
warranties made under the Share Exchange Agreement, such obligations will expire
on the second anniversary of the Closing Date.
Disclaimer
----------
The preceding summary of certain provisions of the Share Exchange
Agreement, the Shareholders Agreement, the Standstill Agreement, the
Registration Rights Agreement, the Guaranty and the Supplemental Share Transfer
Agreement is not intended to be complete and is qualified in its entirety by
reference to the full text of such agreements, copies of which are filed as
Exhibits B, C, D, E, F and G hereto, respectively, and which are incorporated
herein by reference.
Telenor is acquiring the GTI Shares for investment purposes. Telenor reserves
the right, subject to applicable securities laws and the Share Exchange
Agreement, the Shareholder Agreement, the Standstill Agreement and the
Registration Rights Agreement, to acquire additional shares of GTI's Common
Stock or sell shares of GTI's Common Stock from time to time in open market or
privately negotiated transactions. Any determination to purchase or sell any
shares of GTI's Common Stock would be based upon the prevailing market
conditions and other factors.
Except as otherwise set forth in this Item 4, none of the Reporting Persons, or,
to the best knowledge of such parties, none of the individuals named in Item 2
hereof, has any plans or proposals which relate to or would result in any of the
actions or effects set forth in items (a) through (j) of Item 4 of Schedule 13D,
although such persons may develop such plans or proposals.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) and (b) On the basis of information available to the Reporting Persons on
the date hereof, immediately after the completion of the transactions described
in Item 4 above, Telenor will be the direct beneficial owner of 6,732,966 shares
of Common Stock of GTI, which will constitute 19.5% of the issued and
outstanding shares of Common Stock of GTI, after taking into account the effect
of such issuance. The calculation of the 6,732,966 shares to be received by
Telenor is based upon GTI's 27,795,065 total outstanding shares of Common Stock
at August 19, 2003, as disclosed to the Reporting Persons by GTI in Section 4.10
of the Share Exchange Agreement. If GTI issues any additional shares of Common
Stock after the date hereof and prior to the Closing, the number of shares of
Common Stock beneficially owed by Telenor will change. Telenor will have sole
power to vote or direct the vote of, and sole power to dispose or direct the
disposition of, the 6,732,966 shares of Common Stock retained by it, subject to
the agreements described in Item 4.
A total of 26,333,761 shares of Common Stock are subject to the Shareholders
Agreement, constituting in the aggregate approximately 76.3% of GTI's total
issued and outstanding Common Stock, after giving effect to the issuance of all
of the GTI Shares. The calculation of the preceding share amount and percentage
is based upon the respective Common Stock shareholdings at August 19, 2003 of
Alfa, RTK, CIG, Cavendish and First NIS as disclosed to the Reporting Persons by
such parties and GTI's 27,795,065 total outstanding shares of Common Stock at
August 19, 2003. However, unless and until Telenor acquires any of the GTI
Shares under the Share Exchange Agreement, Telenor will not have any power to
vote or dispose of any shares of Common Stock of GTI. Neither the filing of this
Schedule 13D nor any of its contents shall be deemed to constitute an admission
that any of the Reporting Persons is the beneficial owner of any shares of
Common Stock of GTI (other than, solely in the case of Telenor, after the
completion of the transactions described in Item 4 above, 6,732,966 shares of
Common Stock) for
24
purposes of Section 13(d) of the Exchange Act or for any other purpose, and such
beneficial ownership is expressly disclaimed.
Telenor is a direct wholly owned subsidiary of Telenor Business Solutions
Holding AS, and Telenor Business Solutions Holding AS is a direct wholly owned
subsidiary of Telenor ASA. As a result, Telenor Business Solutions Holding AS
and/or Telenor ASA may be deemed to be the indirect beneficial owner of the GTI
Shares to be acquired by Telenor. Neither the filing of this Schedule 13-D nor
any of its contents shall be deemed to constitute an admission that Telenor
Business Solutions Holding AS or Telenor ASA is the beneficial owner of the GTI
Shares to be acquired by Telenor for the purposes of Section 13(d) of the
Exchange Act or for any other purpose, and such beneficial ownership is
expressly disclaimed.
(c) None of the Reporting Persons has effected any transactions in the Common
Stock of GTI other than the transactions described herein.
(d) None of the Reporting Persons knows of any other person who has the right to
receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, the Common Stock of GTI.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
Except as provided in the Share Exchange Agreement, the Shareholders Agreement,
the Standstill Agreement, and the Registration Rights Agreement, or as set forth
herein, none of the Reporting Persons or, to the best knowledge of such parties,
none of the individuals named in Item 2 hereof has entered into any contracts,
arrangements, understandings or relationships (legal or otherwise) with any
person with respect to any securities of GTI, including, but not limited to,
transfer or voting of any securities, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees of profits, division of profits
or losses, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Attached hereto as Exhibit "A" is a conformed copy of the Joint
Filing Agreement dated August 28, 2003 by and among Nye Telenor East
Invest AS, Telenor Business Solutions Holding AS, and Telenor ASA
relating to the filing of the Joint Statement on Schedule 13D.
2. Attached hereto as Exhibit "B" is a copy of the Share Exchange
Agreement dated as of August 19, 2003 by and among SFMT-CIS, Inc.,
Nye Telenor East Invest AS and Golden Telecom, Inc.
3. Attached hereto as Exhibit "C" is a copy of the Shareholders
Agreement dated as of August 19, 2003 between and among Golden
Telecom, Inc., Alfa Telecom Limited, Nye Telenor East Invest AS, OAO
Rostelecom, Capital International Global Emerging Markets Private
Equity Fund, L.P., Cavendish Nominees Limited and First NIS Regional
Fund SICAV.
4. Attached hereto as Exhibit "D" is a copy of the Standstill Agreement
dated as of August 19, 2003 between and among Alfa Telecom Limited,
Nye Telenor East Invest AS, OAO Rostelecom, Capital International
Global Emerging Markets Private Equity Fund, L.P., Cavendish
Nominees Limited, First NIS Regional Fund SICAV and Golden Telecom,
Inc.
5. Attached hereto as Exhibit "E" is a copy of the Registration Rights
Agreement dated as of August 19, 2003 between and among Golden
Telecom, Inc., Alfa Telecom Limited, Nye Telenor East Invest AS, OAO
Rostelecom, Capital International Global Emerging Markets Private
Equity Fund, L.P., Cavendish Nominees Limited and First NIS Regional
Fund SICAV.
6. Attached hereto as Exhibit "F" is a copy of the Guaranty to be
entered into by Telenor ASA , Golden Telecom, Inc. and SFMT-CIS,
Inc.
25
7. Attached hereto as Exhibit "G" is a copy of the Supplemental Share
Transfer Agreement dated as of August 19, 2003 by and between
Alexander V. Kozhanov, Nye Telenor East Invest AS and SFMT-Rusnet,
Inc.
26
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: August 29, 2003 NYE TELENOR EAST INVEST AS
By: /s/ Jon Fredrik Baksaas
------------------------------
Name: Jon Fredrik Baksaas
Title: Chairman of the Board
TELENOR BUSINESS SOLUTIONS
HOLDING AS
By: /s/ Morten Karlsen Sorby
------------------------------
Name: Morten Karlsen Sorby
Title: Chairman of the Board
TELENOR ASA
By: /s/ Jon Fredrik Baksaas
------------------------------
Name: Jon Fredrik Baksaas
Title: Chief Executive Officer
27
Index to Exhibits
1. Attached hereto as Exhibit "A" is a conformed copy of the Joint Filing
Agreement dated August 28, 2003 by and among Nye Telenor East Invest AS,
Telenor Business Solutions Holding AS, and Telenor ASA relating to the
filing of the Joint Statement on Schedule 13D.
2. Attached hereto as Exhibit "B" is a copy of the Share Exchange Agreement
dated as of August 19, 2003 by and among SFMT-CIS, Inc., Nye Telenor East
Invest AS and Golden Telecom, Inc.
3. Attached hereto as Exhibit "C" is a copy of the Shareholders Agreement
dated as of August 19, 2003 between and among Golden Telecom, Inc., Alfa
Telecom Limited, Nye Telenor East Invest AS, OAO Rostelecom, Capital
International Global Emerging Markets Private Equity Fund, L.P., Cavendish
Nominees Limited and First NIS Regional Fund SICAV.
4. Attached hereto as Exhibit "D" is a copy of the Standstill Agreement dated
as of August 19, 2003 between and among Alfa Telecom Limited, Nye Telenor
East Invest AS, OAO Rostelecom, Capital International Global Emerging
Markets Private Equity Fund, L.P., Cavendish Nominees Limited, First NIS
Regional Fund SICAV and Golden Telecom, Inc.
5. Attached hereto as Exhibit "E" is a copy of the Registration Rights
Agreement dated as of August 19, 2003 between and among Golden Telecom,
Inc., Alfa Telecom Limited, Nye Telenor East Invest AS, OAO Rostelecom,
Capital International Global Emerging Markets Private Equity Fund, L.P.,
Cavendish Nominees Limited and First NIS Regional Fund SICAV.
6. Attached hereto as Exhibit "F" is a copy of the Guaranty to be entered
into by Telenor ASA, Golden Telecom, Inc. and SFMT-CIS, Inc.
7. Attached hereto as Exhibit "G" is a copy of the Supplemental Share
Transfer Agreement dated as of August 19, 2003 by and between Nye Telenor
East Invest AS, Mr. Alexander V. Kozhanov and SFMT-Rusnet, Inc.
28