MECHEL OAO 32,000,000 Preferred Shares (par value 10 Russian Rubles per Preferred Share) UNDERWRITING AGREEMENT
Exhibit 1.1
EXECUTED VERSION
32,000,000
Preferred Shares (par value 10 Russian Rubles per Preferred Share)
April 20, 2011
To the Managers named in Schedule I hereto
for the Underwriters named in Schedule II hereto
for the Underwriters named in Schedule II hereto
Ladies and Gentlemen:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Companies Inc., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ (each a “Selling Shareholder” and, collectively, the “Selling Shareholders”) propose to
sell to the several underwriters named in Schedule II hereto (the “Underwriters”), acting severally
and not jointly, for whom you are acting as managers (the “Managers”), the number of preferred
shares (par value 10 Russian Rubles per preferred share) of Mechel OAO, a joint stock company
organized under the laws of the Russian Federation (the “Company”), set forth in Schedule II
hereto, in the form of preferred shares (the “Shares”). The common shares (par value 10 Russian
Rubles per common share) and preferred shares (par value 10 Russian Rubles per preferred share) of
the Company to be outstanding after giving effect to the sales contemplated hereby are hereinafter
referred to as the “Company Stock.” If the firm or firms listed in Schedule II hereto include only
the Managers listed in Schedule I hereto, then the terms “Underwriters” and “Managers” as used
herein shall each be deemed to refer to such firm or firms. Schedule III hereto lists the number of
Shares each Selling Shareholder proposes to sell pursuant to the Underwriting Agreement.
VTB Capital Plc is not authorized by the FSA to conduct regulated business on behalf of retail
clients, as such term is defined in the FSA Handbook in relation to the Conduct of Business
Sourcebook section of the FSA Handbook . Therefore, and without prejudice to the rights of VTB
Capital Plc under this Agreement, including the benefit of the representations and warranties,
indemnity and undertakings given by the Selling Shareholders to the Underwriters, and
notwithstanding anything to the contrary elsewhere in this Agreement, VTB Capital Plc is not
authorized to take actions hereunder on behalf of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (together, the “Individual Selling Shareholders”) and VTB Capital Plc does not
agree to purchase Shares from such Individual Selling Shareholders. References in this Agreement to
the Selling Shareholders authorizing the Underwriters to take any actions hereunder shall be
construed to mean, in the case of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Companies Inc., authorization of each of the
Underwriters, and in the case of the Individual Selling Shareholders, authorization of each of the
Underwriters other than VTB Capital Plc.
The Company has filed with the Securities and Exchange Commission (the “Commission”) a
registration statement, including a prospectus, (the file number of which is set forth in Schedule
I hereto) on Form F-3 ASR, relating to the securities (the “Shelf Securities”), including the
Shares, to be sold from time
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to time by the selling shareholders named therein, which became effective on April 27, 2010.
The registration statement as amended to the date of this Agreement, including the information (if
any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule
430A or Rule 430 B under the Securities Act of 1933, as amended (the “Securities Act”), and
including the base prospectus dated April 26, 2010 and filed as part of the registration statement
(the “Basic Prospectus”) is hereinafter referred to as the “Registration Statement”. The Basic
Prospectus, as supplemented by the prospectus supplement specifically relating to the Shares in the
form filed pursuant to Rule 424(b) of the Securities Act (or in the form first made available to
the Underwriters by the Company to meet requests of purchasers pursuant to Rule 173 under the
Securities Act) is hereinafter referred to as the “Prospectus,” and the term “preliminary
prospectus” means any preliminary prospectus supplement specifically relating to the Shares,
together with the Basic Prospectus. For purposes of this Agreement, “free writing prospectus” has
the meaning set forth in Rule 405 under the Securities Act, “Time of Sale Prospectus” means the
preliminary prospectus together with any free writing prospectuses or pricing information
identified in Schedule I hereto, and “broadly available road show” means a “bona fide electronic
road show” as defined in Rule 433(h)(5) under the Securities Act that has been made available
without restriction to any person. “Time of Sale” means 10:00 a.m. (Moscow time) April 20, 2011 or
such other time as agreed among the Company and the Managers. As used herein, the terms
“Registration Statement,” “Basic Prospectus, ” “preliminary prospectus,” “Time of Sale Prospectus”
and “Prospectus” shall include the documents, if any, incorporated by reference therein. The terms
“supplement,” “amendment,” and “amend” as used herein with respect to the Registration Statement,
the Time of Sale Prospectus, any preliminary prospectus or free writing prospectus shall include
all documents subsequently filed by the Company with the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), that are incorporated by reference therein.
1. Representations and Warranties of the Company. The Company represents and warrants to and
agrees with each of the Underwriters that :
Registration Statement, preliminary prospectus and Prospectus
(a) The Registration Statement became effective on April 27, 2010; no stop order suspending
the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose
are pending before or threatened by the Commission. The Company is a well-known seasoned issuer
(as defined in Rule 405 under the Securities Act) eligible to use the Registration Statement as an
automatic shelf registration statement and the Company has not received notice that the Commission
objects to the use of the Registration Statement as an automatic shelf registration statement.
(b) (i) Each document, if any, filed or to be filed pursuant to the Exchange Act and
incorporated by reference in the Time of Sale Prospectus or the Prospectus complied or will comply
when so filed in all material respects with the
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Exchange Act and the applicable rules and regulations of the Commission thereunder, (ii) each
part of the Registration Statement, when such part became effective, did not contain, and each such
part, as amended or supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, (iii) the Registration Statement as of the date hereof does
not contain any untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, (iv) the Registration
Statement and the Prospectus comply, and as amended or supplemented, if applicable, will comply in
all material respects with the Securities Act and the applicable rules and regulations of the
Commission thereunder, (v) the Time of Sale Prospectus as of the Time of Sale did not contain any
untrue statement of a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading,
(vi) each broadly available road show, if any, when considered together with the Time of Sale
Prospectus, as of the Time of Sale did not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and (vii) the Prospectus does not contain
and, as amended or supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the representations and
warranties set forth in this paragraph do not apply to statements or omissions in the Registration
Statement, the Time of Sale Prospectus, any broadly available road show or the Prospectus based
upon (A) information relating to any Underwriter furnished to the Company in writing by or on
behalf of such Underwriter expressly for use therein or (B) information relating to a Selling
Shareholder furnished in writing to the Company by or on behalf of such Selling Shareholder
expressly for use therein.
(c) The Company is not an “ineligible issuer” in connection with the offering pursuant to
Rules 164, 405 and 433 under the Securities Act. Any free writing prospectus that the Company is
required to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with
the Commission in accordance with the requirements of the Securities Act and the applicable rules
and regulations of the Commission thereunder. Each free writing prospectus that the Company has
filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that was
prepared by or behalf of or used or referred to by the Company complies or will comply in all
material respects with the requirements of the Securities Act and the applicable rules and
regulations of the Commission thereunder. Except for the free writing prospectuses, if any,
identified in Schedule I hereto forming part of the Time of Sale Prospectus, and electronic road
shows, if any, each furnished to you before first use, the Company has not prepared, used or
referred to, and will not, without your prior consent, prepare, use or refer to, any free writing
prospectus.
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(d) Any third-party statistical data included in any preliminary prospectus, the Prospectus or
the Registration Statement are based on or derived from sources that the Company believes to be
reliable and accurate, and the Company has obtained the consent to the use of such data to the
extent, to the best of its actual knowledge, is required.
(e) No holders of outstanding capital stock of the Company, other than the Selling
Shareholders, have rights, contractual or otherwise, to cause the Company to register under the
Securities Act any preferred shares or other equity interests in the Company, or to include any
such shares or interests in the Registration Statement or the offering contemplated thereby,
whether as a result of the filing or effectiveness of the Registration Statement or the sale of the
Shares as contemplated thereby or otherwise.
(f) The Company has not distributed any offering material in connection with the offer and
sale of Shares contemplated hereunder other than the Registration Statement or any amendment
thereto, any preliminary prospectus or the Prospectus or any amendment or supplement thereto and
the Company has not distributed any offering material in connection with the offer and sale of any
Shares in the Russian Federation.
(g) The Company has not made any offers of Shares to, nor solicited any offers to buy Shares
from, any persons other than the Underwriters.
(h) There are no contracts, agreements or understandings between the Company and any person
that would give rise to a valid claim against the Company or any Underwriter for a brokerage
commission, finder’s fee or other like payment in connection with the offer and sale of Shares
contemplated hereby.
(i) The Company meets the requirements for use of Form F-3ASR for the offering and sale of the
Shares as contemplated by this Agreement
Regulatory Approvals
(j) The Company has made all necessary filings and received all licenses and approvals
(including all corporate and stock exchange approvals), registrations and permissions necessary to
effect the transactions contemplated by this Agreement.
Due Incorporation and Valid Existence
(k) Each of the Company and its Principal Subsidiaries as set forth in Schedule IV has been
duly incorporated, is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Time of Sale Prospectus and the Prospectus, except to the
extent that the failure to be so duly incorporated, validly existing or qualified or be in good
standing or have full power and authority would not have a material adverse
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effect on the Company and its subsidiaries, taken as a whole (a “Material Adverse Effect”);
and the Company and each of its subsidiaries is duly qualified to do business as a foreign
corporation in good standing in all jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualifications, except where the failure to do so would
not have a Material Adverse Effect.
(l) The Company has not received any notice from the Federal Antimonopoly Service objecting to
the acquisition of any of its Principal Subsidiaries.
Capital Stock and Dividends
(m) The authorized capital stock of the Company conforms as to legal matters to the
description thereof contained in each of the Time of Sale Prospectus and the Prospectus; the Shares
and all other outstanding shares of capital stock of the Company have been duly authorized and
registered; all outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and non-assessable. No stockholders of the Company are entitled as such to any
preemptive rights, resale rights, rights of first refusal or other rights to subscribe for any of
the Shares; and the Company is not currently prohibited, directly or indirectly, other than as
described in the Time of Sale Prospectus and the Prospectus, from paying any dividends or making
any other distribution on its capital stock.
(n) All of the issued shares of capital stock of each Principal Subsidiary that are owned by
the Company, directly or indirectly, have been duly authorized and validly issued, are fully paid
and non-assessable and, except as set forth in the Time of Sale Prospectus and the Prospectus, are
owned by the Company, directly or indirectly, free and clear of any security interests, liens,
preemptive or similar rights, encumbrances, equities or claims; and, except as set forth in the
Time of Sale Prospectus and the Prospectus, no Principal Subsidiary of the Company is currently
prohibited, directly or indirectly, from paying any dividends to its shareholders, or from making
any other distribution on its capital stock, from repaying to the Company any loans or advances to
such subsidiary received from the Company.
(o) Except as set forth in the Time of Sale Prospectus and the Prospectus, under current laws
and regulations of Russia, all dividends and other distributions declared and payable on the Shares
may be paid by the Company to the holder thereof in Russian rubles that may be converted into
foreign currency and transferred out of Russia either freely or with certain restrictions that
apply to individuals and legal entities (other than credit organizations) which are Russian
residents for Russian currency control purposes; all such payments made to holders of such Shares
who are non-residents of Russia are subject to withholding taxes in the Russian Federation as
described in the Time of Sale Prospectus and the Prospectus, and may be paid without the necessity
of obtaining any
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governmental authorization in Russia from any political subdivision or any taxing authority
thereof or therein.
(p) The statements set forth in the Time of Sale Prospectus and the Prospectus under the
captions “Description of Preferred Shares” insofar as such statements purport to constitute a
summary of the terms of the Shares, are fair summaries of such terms in all material respects.
Corporate Power and Authority
(q) The Company has full power and authority to enter into this Agreement and to perform its
obligations hereunder; and this Agreement has been duly authorized, executed and delivered by the
Company, and constitutes a valid and legally binding agreement of the Company, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws affecting or relating to creditors’ rights generally
and to general principles of equity.
(r) The execution and delivery by the Company of, and the performance by the Company of its
obligations under, this Agreement will not contravene any provision of applicable law, regulation
or stock exchange rules or the constitutional documents or by-laws, including resolutions of its
corporate authorities, of the Company or any agreement or other instrument binding upon the Company
or any of its subsidiaries that is material to the Company and its subsidiaries, taken as a whole,
or any judgment, order or decree of any governmental body, agency or court having jurisdiction over
the Company or any subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the performance by the Company
of its obligations under this Agreement, except such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale of the Shares.
Titles, Licenses and Consents
(s) Except as set forth in the Time of Sale Prospectus and the Prospectus, each of the Company
and its Principal Subsidiaries possesses all licenses, certificates, authorizations and permits
issued by appropriate governmental agencies or bodies and has made all necessary filings required
under any federal, state, local or foreign law, regulation or rule, and has obtained all necessary
authorizations, consents and approvals from other persons, necessary to conduct the business now
conducted by it except, in each case, where the failure to do so would not, individually or in the
aggregate, have a Material Adverse Effect; and neither the Company nor any of its Principal
Subsidiaries is in violation of, or in default under, or has received notice of any proceedings
relating to the revocation or modification of, any such license, certificate, authorization or
permit or any federal, state, local or foreign law, regulation or rule, or any decree, order or
judgment applicable to the Company or any of its Principal Subsidiaries, except where such
violation, default, revocation or
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modification would not, individually or in the aggregate, have a Material Adverse Effect.
(t) Except as set forth in the Time of Sale Prospectus and the Prospectus, each of the Company
and its Principal Subsidiaries (i) has good and marketable title to all items of real property
owned by it and good and marketable title to all other property and assets owned by it, in each
case free and clear of any security interests, liens, encumbrances, equities, claims and other
defects that would affect the value thereof or interfere with the use made or proposed to be made
thereof by it, and (ii) holds any real property and buildings leased by it under valid, subsisting
and enforceable leases with no exceptions that would interfere with the use made or proposed to be
made thereof by it, except, in each of the cases (i) and (ii), where the failure to do so would
not, individually or in the aggregate, have a Material Adverse Effect.
(u) The Company and each of its Principal Subsidiaries owns, possesses or has legal basis to
use all patents, patent applications, trademarks, service marks, trade names, licenses, copyrights
and proprietary or other confidential information currently employed by it in connection with its
business (collectively, “intellectual property rights”), except, in each case, where the failure to
do so would not, individually or in the aggregate, have a Material Adverse Effect; and neither the
Company nor any of its subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual property rights that, if determined
adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a
Material Adverse Effect.
(v) Each of the subsoil licenses described in the Time of Sale Prospectus and the Prospectus
is registered in the name of the Company or one of its subsidiaries; in addition, except as set
forth in the Time of Sale Prospectus and the Prospectus or, where the failure so to have would not
have a Material Adverse Effect, the Company or its subsidiaries, as the case may be, have all
necessary proprietary interests or rights, surface rights, water rights and rights in water, rights
of way, licenses, easements, ingress, egress and access rights, and all other necessary rights and
interests granting the Company or its subsidiaries, as the case may be, the rights and ability to
operate the mines described in the Time of Sale Prospectus and the Prospectus in the manner
currently operated.
Financial Statements and Internal Accounting Controls
(w) The consolidated financial statements of the Company included in the Time of Sale
Prospectus and the Prospectus, together with the related notes (the “Consolidated Financial
Statements”), present fairly, in all material respects, the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates shown and their consolidated results of
operations and cash flows for the periods shown, comply in all material respects with the
applicable accounting requirements of the Securities Act and the related rules and regulations
adopted by the Commission and have been prepared in conformity
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with generally accepted accounting principles in the United States of America (“U.S. GAAP”)
applied on a consistent basis, except as stated therein; the Company and the subsidiaries do not
have any material liabilities or obligations, direct or contingent (including any off-balance sheet
obligations), not disclosed in the Time of Sale Prospectus and the Prospectus which would be
required to be disclosed under U.S. GAAP in the consolidated financial statements of the Company.
(x) To the actual knowledge of the Company, Ernst & Young LLC, who has certified the
Consolidated Financial Statements, and delivered their report with respect to the Consolidated
Financial Statements included in the Time of Sale Prospectus and the Prospectus, are independent
public accountants as required by the rules and regulations of the Commission and by Article 2-01
of Regulation S-X under the Securities Act.
(y) Except as disclosed in the Time of Sale Prospectus and the Prospectus, the Company and its
subsidiaries, taken as a whole (the “Group”) maintains an effective system of internal accounting
controls sufficient to provide reasonable assurance that (A) transactions are executed in
accordance with management’s general or specific authorisations; (B) transactions are recorded as
necessary to permit preparation of financial statements in conformity with U.S. GAAP and to
maintain asset accountability; (C) access to assets is permitted only in accordance with
management’s general or specific authorisation; (D) the recorded valuation of assets is compared
with the existing assets at reasonable intervals, as determined by a designated financial officer
of the Company, and appropriate action is taken with respect to any differences and (E) all
material information relating to the Group is made known to the officer of the Company responsible
for financial and accounting matters; and since the date of the most recent evaluation of such
internal controls, there have been no significant changes in internal controls or in other factors
that could significantly affect internal controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.
(z) No material outstanding indebtedness of the Company or any subsidiary has become repayable
before its stated maturity, nor has any security in respect of such indebtedness become enforceable
by reason of default by the Company or any subsidiary and no event has occurred or is, to the best
knowledge of the Company, impending which, with the lapse of time or the fulfillment of any
condition or the giving of notice or the compliance with any other formality, may result in any
such indebtedness becoming so repayable or any such security becoming enforceable and no person to
whom any material indebtedness of the Company or any subsidiary which is repayable on demand is
owed has demanded or threatened to demand repayment of, or to the Company to take steps to enforce
any security for, the same.
Litigation, Constitutive Documents and Contracts
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(aa) (A) The Company has not received notice of any legal or governmental proceedings, and (B)
to the Company’s best knowledge, there are no threatened legal or governmental proceedings to which
the Company or any of its subsidiaries is a party or to which any of the properties of the Company
or any of its subsidiaries is subject other than, in either case, proceedings described in the Time
of Sale Prospectus and the Prospectus and proceedings that would not have a Material Adverse
Effect, or a material adverse effect on the power or ability of the Company to perform its
obligations under this Agreement or to consummate the transactions contemplated by the Time of Sale
Prospectus and the Prospectus.
(bb) Neither the Company nor any of its subsidiaries is in violation of its charter or by-laws
or other constitutive documents; and no default exists, and no event has occurred which, with
notice or lapse of time or both, would constitute a default in the due performance and observance
of any term, covenant or condition of any agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which
any of their respective properties is subject, except, in each case, where such default or event
would not, individually or in the aggregate, have a Material Adverse Effect.
(cc) The Company has not received any notice of any investigations, there are no outstanding
fines or orders, and, to the Company’s actual knowledge, there are no threatened investigations, in
each case, under applicable competition, antitrust or similar laws to which the Company or any of
its subsidiaries or any of their properties is subject, except in each case as disclosed in the
Time of Sale Prospectus and the Prospectus.
Labor
(dd) There are no labor disputes, strikes, slowdowns or stoppages involving the employees of
the Company or any of its subsidiaries that exist or, to the best knowledge of the Company, that
are threatened, except where such would not, individually or in the aggregate, have a Material
Adverse Effect.
Health, Safety and Environment
(ee) The Company and its Principal Subsidiaries (i) are in compliance with all applicable
foreign, federal, state and local laws, regulations, orders and judgments relating to the
protection of human health and safety, pollution or protection of the environment, or hazardous or
toxic substances or wastes, chemicals, petroleum, pollutants or contaminants (“Environmental
Laws”), (ii) have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits, licenses or approvals
would not, individually or in the aggregate, have a Material Adverse Effect.
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Taxes
(ff) Each of the Company and its subsidiaries has filed all tax returns that are required to
be filed by it or has requested extensions thereof, except where any failure to do so would not,
individually or in the aggregate, have a Material Adverse Effect, and has paid all taxes required
to be paid by it and any other tax-related assessment, fine or penalty levied against it, to the
extent that any of the foregoing is due and payable, except for any such tax-related assessment,
fine or penalty that is currently being contested in good faith or the Company intends to contest
in good faith.
No Material Adverse Change
(gg) Since the respective dates as of which information is included in the Time of Sale
Prospectus and the Prospectus, except as otherwise set forth therein, (i) there has not occurred
any material adverse change, or any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Time of Sale Prospectus, (ii) the
Company and its subsidiaries, taken as a whole, have not incurred any material liability or
obligation, direct or contingent (including any off-balance sheet obligations), or entered into any
transaction not in the ordinary course of its business, (iii) the Company has not purchased any of
its outstanding capital stock, nor declared, paid or otherwise made any dividend or distribution of
any kind in respect of its capital stock and (iv) there has been no material change in the capital
stock, short-term debt or long-term debt of the Company and its consolidated subsidiaries, taken as
a whole.
Market Manipulation
(hh) Neither the Company nor any of its affiliates (as defined in Rule 405 under the
Securities Act) has (i) taken, directly or indirectly, any action designed to cause or to result
in, or that has constituted or might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale or resale of the
Shares or (ii) paid or agreed to pay to any person any compensation for soliciting another to
purchase any securities of the Company or otherwise entered into any contractual arrangement with
respect to the distribution of any securities (except for the sale of the Shares by the
Underwriters under this Agreement).
Listing
(ii) The Shares have been admitted to trading (without listing) on the Russian Trading System
Stock Exchange (the “RTS”) and Moscow Interbank Currency Exchange (the “MICEX”).
Other Representations
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(jj) Except as disclosed in the Time of Sale Prospectus and the Prospectus, there are no
contracts, agreements or understandings between the Company and any person granting such person the
right to require the Company to file a registration statement under the Securities Act with respect
to any securities of the Company or to require the Company to include such securities with the
Shares registered pursuant to the Registration Statement.
(kk) No receiver or liquidator (or similar person) has been appointed in respect of the
Company or any Principal Subsidiary of the Company or in respect of any part of the assets of the
Company or any Principal Subsidiary of the Company; no resolution, order of any court, regulatory
body, governmental body or otherwise, or petition or application for an order, has been passed,
made or presented for the winding up of the Company or any Principal Subsidiary of the Company or
for the protection of the Company or any such subsidiary from its creditors; and the Company has
not, and no Principal Subsidiary of the Company has, stopped or suspended payments of its debts,
become unable to pay its debts or otherwise become insolvent.
(ll) The Company’s shareholder register is duly held by Registrar NIKoil Company (JSC) (the
“Registrar”) in compliance in all material respects with all applicable Russian laws and
regulations, and the Registrar qualifies as an “independent” registrar under the requirements of
applicable Russian laws and regulations.
(mm) The Company is not an “investment company” as such term is defined in the Investment
Company Act of 1940, as amended.
(nn) The Company believes it is not a Passive Foreign Investment Company (“PFIC”) and does not
expect to become a PFIC in the future.
(oo) Neither the Company nor, to the knowledge of the Company, any director or officer is
aware of or has taken any action, directly or indirectly, that would result in a violation by such
persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “FCPA”).
(pp) The operations of the Company and its subsidiaries are and have been conducted at all
times in material compliance with all applicable financial recordkeeping and reporting
requirements, including those of the Bank Secrecy Act, as amended by Title III of the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
Act of 2001 (USA PATRIOT Act), and the applicable anti-money laundering statutes of jurisdictions
where the Company and its subsidiaries conduct business, the rules and regulations thereunder and
any related or similar rules, regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the “Anti-Money Laundering Laws”), and the Company has no notice
of any action, suit or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any of its
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subsidiaries with respect to the Anti-Money Laundering Laws, and to the best knowledge of the
Company, no such action, suit or proceeding is threatened.
(qq) (i) The Company represents that neither the Company nor any of its subsidiaries or
affiliates over which it exercises control, nor any director, officer, or employee (collectively,
the “Entity”) nor, to the Company’s actual knowledge, any agent or representative of the Entity, is
an individual or entity (“Person”) that is, or is owned or controlled by a Person that is:
(A) the subject of any sanctions administered or enforced by the U.S.
Department of Treasury’s Office of Foreign Assets Control (“OFAC”) or other
relevant sanctions authority in the Russian Federation or Kazakhstan
(collectively, together with OFAC, “Sanctions”), nor
(B) located, organized or resident in a country or territory that is the
subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran,
North Korea, Sudan and Syria) in violation of Sanctions.
(ii) The Company represents that it has not since 1 January 2008 knowingly engaged in and is
not now knowingly engaged in any dealings or transactions with any Person that at the time of the
dealing or transaction is or was subject to Sanctions in violation of Sanctions.
(rr) The Company is subject to civil and commercial law with respect to its obligations under
this Agreement, and the execution, delivery and performance of this Agreement by it constitute
private and commercial acts rather than public or governmental acts; under the laws of the Russian
Federation, neither the Company nor any of its assets has any immunity (sovereign or otherwise)
from set-off, the jurisdiction of any court of the Russian Federation or any legal process in any
court of the Russian Federation (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise).
2. Representations and Warranties of the Selling Shareholders. Each Selling Shareholder,
severally and not jointly, represents and warrants to and agrees with each of the Underwriters
that:
(a) Such Selling Shareholder has, and at the time of delivery of the Shares to be sold by such
Selling Shareholder hereunder on the Delivery Date will have, valid title to such Shares and upon
sale and delivery of, and payment for, such Shares, as provided herein, such Selling Shareholder
will convey valid title to such Shares, free and clear of any security interests, liens,
encumbrances, equities or claims.
(b) Such Selling Shareholder has full right, power and capacity to enter into this Agreement
and to perform its obligations hereunder, and this
13
Agreement has been duly executed and delivered by the Selling Shareholder; and such Selling
Shareholder has complied with the requirements of Russian law and regulations applicable to the
offering of the Shares in the form of preferred shares in the Russian Federation; and in deciding
to sell the Shares to be sold by him, she or it hereunder, such Selling Shareholder has relied upon
his, her or its own judgment and such independent financial and legal advice as he, she or it has
seen fit to obtain, and has not relied upon any of the Underwriters or their advisers for any such
advice.
(c) The Selling Shareholders have not made any offer of Shares to, nor solicited any offers to
buy Shares from, any persons other than the Underwriters and as required under any
applicable laws and regulations.
(d) No stamp or other issuance or transfer taxes or duties and no withholding or other taxes
are payable by or on behalf of the Underwriters (except any income, capital gains, withholding or
other taxes imposed upon the Underwriters that would not have been imposed but for a connection
between the Underwriters and the jurisdiction imposing such taxes, other than a connection arising
as a result of the transaction contemplated by this Agreement) in connection with (i) the sale and
delivery by such Selling Shareholder of the Shares to be sold by him, her or it or (ii)the sale and
delivery by the Underwriters of such Shares to the initial purchasers thereof in the manner
contemplated in the Time of Sale Prospectus and the Prospectus.
(e) From the date and time at which the Registration Statement became effective and at all
times subsequent thereto through the latest of the Closing Date or the termination of the offering
of the Shares, the Registration Statement and Prospectus, and any supplements or amendments
thereto, in each case, as relate to such Selling Shareholder, will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(f) The execution and delivery by each Selling Shareholder of each transaction document to
which it, he or she is a party, and the consummation of the transactions contemplated hereby or
thereby by such Selling Shareholder, will not require the consent of any spouse of such Selling
Shareholder pursuant to the applicable laws of any jurisdiction, including, but not limited to,
those of the United States of America or the Russian Federation, except as have been obtained.
(g) Neither the Selling Shareholders nor any of its affiliates (as defined in Rule 405 under
the Securities Act) has (i) taken, directly or indirectly, any action designed to cause or to
result in, or that has constituted or might reasonably be expected to constitute, the stabilization
or manipulation of the price of any security of the Selling Shareholders to facilitate the sale or
resale of the Shares or (ii) paid or agreed to pay to any person any compensation for soliciting
another to purchase any Shares of the Selling Shareholders or otherwise entered into any
14
contractual arrangement with respect to the distribution of any Shares (except for the sale of
the Shares by the Underwriters under this Agreement).
(h) The operations of the Selling Shareholders and their respective subsidiaries are and have
been conducted at all times in material compliance with all applicable financial recordkeeping and
reporting requirements, including those of the Bank Secrecy Act, as amended by Title III of the
Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (USA PATRIOT Act), and the applicable Anti-Money Laundering Laws, and no
action, suit or proceeding by or before any court or governmental agency, authority or body or any
arbitrator involving the Selling Shareholders or any of their respective subsidiaries with respect
to the Anti-Money Laundering Laws is pending or, to the best knowledge of any of the Selling
Shareholders, threatened.
(i) (i) The Selling Shareholders represent that neither the Selling Shareholders nor any of
their respective subsidiaries or affiliates, nor any director, officer, or employee (collectively,
the “Selling Entity”) nor, to the any of the Selling Shareholders’ knowledge, any agent or
representative of the Selling Entity, is an individual or entity (“Person”) that is, or is owned or
controlled by a Person that is:
(A) the subject of any sanctions administered or enforced by OFAC, nor
(B) located, organized or resident in a country or territory that is the
subject of any sanctions administered or enforced by OFAC (including, without
limitation, Burma/Myanmar, Cuba, Iran, North Korea, Sudan and Syria).
(ii) The Selling Shareholders represent and covenant that they have not knowingly engaged in,
are not now knowingly engaged in, and will not engage in, any dealings or transactions with any
Person, or in any country or territory, that at the time of the dealing or transaction is or was
subject to any sanctions administered or enforced by OFAC.
3. Agreements to Sell and Purchase. The Selling Shareholders hereby agree to sell to the
several Underwriters, and each Underwriter, upon the basis of the representations and warranties
herein contained, but subject to the conditions hereinafter stated, agrees, severally and not
jointly, to purchase from the Selling Shareholders the respective numbers of Shares set forth in
Schedule II hereto opposite its name at the share price set forth in Schedule I hereto (the “Share
Price”), provided that VTB Capital Plc shall be required to purchase Shares only from ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ Companies Inc.
4. Offering by Underwriters.
15
(i) The Company is advised by you that the Underwriters propose to make a public offering of
their respective portions of the Shares as set forth in the Prospectus. The Company is further
advised by you that the Shares are to be offered to the public upon the terms set forth in the
Prospectus.
(ii) VTB Capital Plc represents that it will not effect any offers or sales of any Shares in
the United States, including any Shares that it is obligated to purchase pursuant to Section 13
below, unless such sale is through one or more U.S. registered broker-dealers (which may be one of
its affiliates) where and to the extent required by U.S. securities laws and regulations.
5. Payment and Delivery.
(a) Payment of the purchase monies for the Shares (calculated by multiplying the number of
Shares by the Share Price, less the expenses reimbursable to the Underwriters by the Selling
Shareholders pursuant to Section 8(a)) shall be made by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated (the
“Settlement Manager”) on behalf of the Underwriters in U.S. dollars and shall be paid by transfer
to the account(s) previously designated by the Selling Shareholders in writing, unless notified
otherwise, on the Closing Date, the Second Payment Date and the Final Payment Date, each as set
forth in Schedule I, or such other earlier date or dates as the Selling Shareholders and the
Underwriters shall determine in writing, as follows (i) the amount transferred to the Selling
Shareholders on the Closing Date shall be the Share Price multiplied by the number of Shares for
which the Underwriters have received payment from the initial purchasers of the Shares in U.S.
dollars on or prior to the immediately preceding Business Day less expenses reimbursable to the
Underwriters by the Selling Shareholders pursuant to Section 8(a); (ii) the amount transferred to
the Selling Shareholders on the Second Payment Date shall be Share Price multiplied by the number
of Shares for which the Underwriters have received payment from the initial purchasers of the
Shares in U.S. dollars on or prior to the immediately preceding Business Day less any amounts
previously paid pursuant to Section 5(a)(i); and (iii) the amount transferred to the Selling
Shareholders on the Final Payment Date shall be all amounts due but not previously paid to the
Selling Shareholders pursuant to Sections 5(a)(i) and (ii) above. Payment pursuant to Sections
5(a)(i) and Section 5(a)(ii) shall only be made where the amount payable on the Closing Date or the
Second Payment Date, as the case may be (without taking account of any deductions pursuant to
Section 8(a)) is at least US$20 million. In the event no payment is made by the Underwriters to
the Selling Shareholders on the Closing Date or the Second Payment Date, the Underwriters shall
deduct the expenses reimbursed to them by the Selling Shareholders pursuant to Section 8(a) on the
Second Payment Date or the Final Payment Date, as the case may be.
(b) Not later than on 09:00 (Moscow time) on the Delivery Date as set forth in Schedule I,
each of the Selling Shareholders shall deliver or procure the delivery of the Shares, free of
payment, to the designated depo account of the
16
Settlement Manager with Closed Joint Stock Company “Depository Clearing Company” acting as
nominee holder for the Settlement Manager on behalf of the Underwriters. The Selling Shareholders
will procure that the Registrar issue the relevant extracts from the share register and deliver
such extracts to the Settlement Manager on or prior to the date indicated in this clause above.
6. Conditions to the Underwriters’ Obligations. The several obligations of the Underwriters
are subject to the following conditions:
(a) No Material Change. Subsequent to the execution and delivery of this Agreement and prior
to the Final Payment Date there shall not have occurred any change, or any development reasonably
likely to involve a prospective change, in the condition, financial or otherwise, or in the
business or operations of the Company and its subsidiaries, taken as a whole, from that set forth
in the Time of Sale Prospectus as of the date of this Agreement that, in your reasonable judgment
and after consultation with the Company, is material and adverse and that, in your reasonable
judgment and after consultation with the Company, makes it impracticable to market the Shares on
the terms and in the manner contemplated in the Time of Sale Prospectus.
(b) Officer’s Certificate. The Underwriters shall have received on the Delivery Date and the
Closing Date (i) a certificate, dated such date and signed by an executive officer of the Company,
to the effect that the representations and warranties of the Company contained in this Agreement
are true and correct as of such date and that the Company has complied in all material respects
with all of the agreements and satisfied all of the conditions on its part to be performed or
satisfied hereunder on or before such date, and (ii) certificates dated the Delivery Date and the
Closing Date and signed by an executive officer of the Company attesting to the true and accurate
copies of (1) the resolutions of the Company’s board of directors that approved the Underwriting
Agreement; (2) recent extract from the Russian Unified State Register of Legal Entities in relation
to the Company; and (3) the Company’s charter with all amendments thereto.
The officer signing and delivering such certificates may rely upon the best of his or her
knowledge as to proceedings threatened.
(c) Opinion of Counsel for the Company. The Underwriters shall have received on the Delivery
Date and the Closing Date opinions and negative assurance letters, in agreed form, dated as of the
Delivery Date or the Closing Date, as the case may be, of: (i) ▇▇▇▇▇ & Overy LLP, U.S. counsel for
the Company and (ii) Liniya Prava, Russian counsel for the Company.
(d) Opinion of Counsel of the Selling Shareholders. The Underwriters shall have received on
the Delivery Date and the Closing Date opinions, dated as of the Delivery Date or the Closing Date,
as the case may be, in agreed form, of: (i) ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, U.S. counsel for the Selling
Shareholders and (ii) ▇▇▇▇, Russian counsel for the Selling Shareholders.
17
(e) Opinion of Counsel for the Underwriters. The Underwriters shall have received on the
Delivery Date and the Closing Date (i) an opinion and negative assurance letter, dated as of the
Delivery Date or the Closing Date, as the case may be, in agreed form, of Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ (UK) LLP, U.S. counsel for the Underwriters and (ii) an opinion dated as of the
Delivery Date or the Closing Date, as the case may be, in agreed form, of Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP Russian counsel for the Underwriters.
(f) Auditor’s Comfort Letters. The Underwriters shall have received, on each of the date
hereof, the Delivery Date (if other than the date hereof) and the Closing Date, a letter dated as
of the date hereof, the Delivery Date or the Closing Date, as the case may be, in agreed form from
Ernst & Young LLC, independent public accountants.
(g) Lock-up Agreements. The “lock-up” agreements between you and each of Skyblock Limited and
▇▇. ▇▇▇▇ ▇▇▇▇▇▇, substantially in the forms set forth in Exhibits A and B, respectively, relating
to sales and certain other dispositions of shares of Company Stock or certain other securities,
delivered to you on or before the date hereof, shall be in full force and effect on the Delivery
Date.
(h) Mining Expert Letter. On the Delivery Date and the Closing Date, letters from ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ and ▇▇▇▇ International, Inc., in agreed form, dated as of the Delivery Date or the Closing
Date, as the case may be, shall have been delivered.
If any payment for the Shares remains outstanding on the Final Payment Date, without prejudice
to any other rights of the Company and the Selling Shareholders hereunder, the Underwriters shall
be obligated to return the Shares on or prior to 12.00 noon (Moscow time) on the fifth Business Day
(as such term is defined in Schedule I hereto) following the Final Payment Date, failing which, to
the extent the Shares are not returned, the Underwriters shall by 12:00 noon (New York time) on the
same date transfer to the Selling Shareholder’s bank account an amount equal to the Share Price
multiplied by the number of the Shares not returned less amounts previously paid to the Selling
Shareholders and amounts reimbursed to the Underwriters in respect of their expenses.
7. Covenants of the Company. The Company covenants with each Underwriter as follows:
(a) To furnish to each of the Underwriters, without charge, one conformed copy of the
Registration Statement (including exhibits thereto and documents incorporated by reference therein)
and to deliver to each of the Underwriters during the period mentioned in Section 7(e) or 7(f)
below, as many copies of the Time of Sale Prospectus, the Prospectus, any documents incorporated by
reference therein and any supplements and amendments thereto or to the Registration Statement as
you may reasonably request.
18
(b) Before amending or supplementing the Registration Statement, the Time of Sale Prospectus
or the Prospectus, to furnish to you a copy of each such proposed amendment or supplement and not
to file any such proposed amendment or supplement to which you reasonably object.
(c) To furnish to you a copy of each proposed free writing prospectus to be prepared by or on
behalf of, used by, or referred to by the Company and not to use or refer to any proposed free
writing prospectus to which you reasonably object.
(d) Not to take any action that would result in an Underwriter or the Company being required
to file with the Commission pursuant to Rule 433(d) under the Securities Act a free writing
prospectus prepared by or on behalf of the Underwriter that the Underwriter otherwise would not
have been required to file thereunder.
(e) If the Time of Sale Prospectus is being used to solicit offers to buy the Shares at a time
when the Prospectus is not yet available to prospective purchasers and any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the Time of Sale
Prospectus in order to make the statements therein, in the light of the circumstances, not
misleading, or if any event shall occur or condition exist as a result of which the Time of Sale
Prospectus conflicts with the information contained in the Registration Statement then on file, or
if, in the opinion of outside counsel for the Underwriters, following consultation with U.S.
counsel to the Company, it is necessary to amend or supplement the Time of Sale Prospectus to
comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own
expense, to the Underwriters and to any dealer upon request, either amendments or supplements to
the Time of Sale Prospectus so that the statements in the Time of Sale Prospectus as so amended or
supplemented will not, in the light of the circumstances when the Time of Sale Prospectus is
delivered to a prospective purchaser, be misleading or so that the Time of Sale Prospectus, as
amended or supplemented, will no longer conflict with the Registration Statement, or so that the
Time of Sale Prospectus, as amended or supplemented, will comply with applicable law.
(f) If, during such period after the first date of the public offering of the Shares as in the
opinion of counsel for the Underwriters the Prospectus (or in lieu thereof the notice referred to
in Rule 173(a) of the Securities Act) is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements therein, in the
light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule
173(a) of the Securities Act) is delivered to a purchaser, not misleading, or if, in the opinion of
counsel for the Underwriters, it is necessary to amend or supplement the Prospectus to comply with
applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to
the Underwriters and to the dealers (whose names and addresses you will furnish to the Company) to
19
which Shares may have been sold by you on behalf of the Underwriters and to any other dealers
upon request, either amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the circumstances when the
Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is
delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will
comply with applicable law.
(g) To endeavor to qualify the Shares for offer and sale under the securities or Blue Sky laws
of such jurisdictions as you shall reasonably request.
(h) Whether or not the transactions contemplated in this Agreement are consummated or this
Agreement is terminated, to pay or cause to be paid, if necessary, the internal cost of the time of
the Company’s directors, officers and employees spent in connection with these transactions and
expenses associated therewith, including telephone, copying, fax and travel and accommodations
(except in connection with the road show, for which the Selling Shareholders shall be responsible
pursuant to Section 8(a)) and communication costs of the Company’s employees.
(i) If at any time prior to the Final Payment Date a stop order is issued, or the Registration
Statement is no longer effective, it will notify the Underwriters promptly, and in any case not
later than the next Business Day, upon receipt of a stop order notice suspending or revoking the
effectiveness of the Registration Statement.
The Company also covenants with each Underwriter that, without the prior written consent of
the Manager identified in Schedule I with the authorization to release this lock-up on behalf of
the Underwriters, it will not, during the restricted period set forth in Schedule I hereto, (1)
issue, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Company Stock or any securities
convertible into or exercisable or exchangeable for Company Stock or (2) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Company Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Company Stock or such other securities, in cash or otherwise
or (3) file any registration statement with the Commission relating to the offering of any shares
of Company Stock or any securities convertible into or exercisable or exchangeable for Company
Stock. The foregoing sentence shall not apply to (a) the issuance by the Company of shares of
Company Stock upon the exercise of an option or warrant or the conversion of a security outstanding
on the date hereof of which the Underwriters have been advised in writing, (b) the establishment
of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of
Company Stock, provided that such plan does not provide for the transfer of Company Stock during
the 90-day restricted period, and no public announcement or filing under the
20
Exchange Act regarding the establishments of such plan shall be required of or voluntarily
made by or on behalf of the undersigned of the Company, (c) a transfer of Company Stock (or any
securities convertible into or exchangeable into Company Stock, including American Depositary
Shares (“ADSs”) representing Company Stock) to a single transferee or group of transferees as
consideration for the acquisition of assets by the Company, provided that the transferee(s) agree
to lock-up arrangements substantially the same as the foregoing for the remainder of the restricted
period, (d) transfers of Company Stock among or between any of the Company’s subsidiaries, provided
that the transferee(s) agree to a lock-up substantially the same as the foregoing for the remainder
of the restricted period, (e) transfers of Company Stock to any third party, provided that such
third party agrees to a lock-up substantially the same as the foregoing for the remainder of the
restricted period, or (f) any mortgage, charge, pledge, lien, option, restriction, third-party
right or interest, encumbrance or security interest of any kind, or another type of preferential
arrangement (including the use of derivative instruments, such as forward and futures contracts)
having similar effect, or any agreement of arrangement to create any of the same in relation to the
preferred shares, in connection with debt financing to the Company or any of its subsidiaries from
a financial institution, provided that any such arrangement does not permit a disposal of such
preferred shares during the remainder of the restricted period. For purposes of the foregoing
sentence, “transfer” shall be broadly construed to include any type of transfer set out in clauses
(1) and (2) above.
8. Covenants of the Selling Shareholders.
(a) Each of the Selling Shareholders, severally and not jointly, covenants and agrees, whether
or not the transactions contemplated in this Agreement are consummated or this Agreement is
terminated, to pay or cause to be paid, or reimburse the Company for, as applicable, all expenses
incident to the performance of the Selling Shareholders’ and the Company’s obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the Selling Shareholders’
counsel, Company’s counsel and the Company’s accountants, in connection with the registration and
delivery of the Shares under the Securities Act and all other fees or expenses in connection with
the preparation and filing of any preliminary prospectus, the Time of Sale Prospectus, the
Prospectus, any free writing prospectus prepared by or on behalf of, used by, or referred to by the
Company and amendments and supplements to any of the foregoing, including the filing fees, if any,
payable to the Commission relating to the Shares (within the time required by Rule 456 (b)(1), if
applicable), all printing costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove specified, (ii) all costs
and expenses related to the transfer and delivery of the Shares to the Underwriters, including any
transfer or other taxes payable thereon, (iii) the cost of printing or producing any Blue Sky or
Legal Investment memorandum in connection with the offer and sale of the Shares under state
securities laws and all expenses in connection with the qualification of the Shares for offer and
sale under state securities laws as
21
provided in Section 7(g) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky or Legal Investment memorandum, (iv) all costs and expenses incident
to admission of the Shares to trading (without listing) on the RTS and the MICEX, (v) the costs and
charges of any transfer agent or registrar, (vi) the costs and expenses of the Company relating to
investor presentations on any “road show” undertaken in connection with the marketing of the
offering of the Shares, including, without limitation, expenses associated with the preparation or
dissemination of any electronic road show, expenses associated with the production of road show
slides and graphics, fees and expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the cost of any aircraft
chartered in connection with the road show, (vii) the document production charges and expenses
associated with printing this Agreement, (viii) the out-of-pocket expenses of the Underwriters
(including the fees and disbursements of their counsel) reasonably incurred by such Underwriters in
connection with this Agreement or the offering contemplated hereunder, and (ix) all other costs and
expenses incident to the performance of the obligations of the Selling Shareholders and the Company
hereunder for which provision is not otherwise made in this Section. It is understood, however,
that except as provided in Section 11 entitled “Indemnity and Contribution” and the last paragraph
of Section 13 below, the Underwriters will pay stock transfer taxes payable on resale of any of the
Shares by them and any advertising expenses connected with any offers they may make; provided,
however, the Selling Shareholders shall not reimburse the Company’s internal cost of the time of
the Company’s directors, officers and employees spent in connection with these transactions and
expenses associated therewith, including telephone, copying, fax and travel and accommodations
(except in connection with the road show) and communication costs of the Company’s employees.
(b) In order to document the Underwriters’ compliance with the reporting and withholding
provisions of the Tax Equity and Fiscal Responsibility Act of 1982 with respect to the transactions
herein contemplated, such Selling Shareholder will deliver to you prior to or at the Delivery Date
a properly completed and executed United States Treasury Department Form W-8, W-9, or other
applicable form or statement specified by Treasury Department regulations in lieu thereof.
(c) Each of the Selling Shareholders, severally and not jointly, covenants and agrees that in
the event any dividends are declared, based on the full year results for the year ended December
31, 2010, and paid by the Company to it in respect of its Shares, it shall within five Business
Days from receipt of such dividends transfer such amounts as are received (net of any withholding
tax deducted by the Company, if applicable) to the Settlement Manager, on behalf of the
Underwriters, and the Underwriters shall, in turn, transfer such amounts as soon as practicable
thereafter to the initial purchasers of the Shares.
22
(d) Prior to the distribution of the Shares (as determined by the Underwriters) neither the
Selling Shareholders nor any of their affiliates will take, directly or indirectly, any action
which is designed to cause or result in, or that constitutes or might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security of the Company to
facilitate the sale and resale of the Shares.
(e) Each Selling Shareholder represents and covenants that it will not, directly or
indirectly, use the proceeds of the offering, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other Person:
(A) to fund or facilitate any activities or business of or with any Person or in
any country or territory that, at the time of such funding or facilitation, is
the subject of Sanctions; or (B) in any other manner that will result in a
violation of Sanctions by any Person (including any Person participating in the
offering, whether as underwriter, advisor, investor or otherwise).
(f) Each of the Selling Shareholders, severally and not jointly, covenants and agrees that if
the Time of Sale Prospectus is being used to solicit offers to buy the Shares at a time when the
Prospectus is not yet available to prospective purchasers and any event shall occur or condition
exist as a result of which it is necessary to amend or supplement the Time of Sale Prospectus in
order to make the statements therein as such statements relate to such Selling Shareholder, in the
light of the circumstances, not misleading, or if any event shall occur or condition exist as a
result of which the Time of Sale Prospectus conflicts with such Selling Shareholder information
contained in the Registration Statement then on file, or if, in the opinion of outside counsel for
the Underwriters, following consultation with U.S. counsel to the Company, it is necessary to amend
or supplement the Time of Sale Prospectus to comply with applicable law, forthwith to provide to
the Company and the Underwriters all necessary information so that the statements in the Time of
Sale Prospectus as so amended or supplemented will not, in the light of the circumstances when the
Time of Sale Prospectus is delivered to a prospective purchaser, be misleading or so that the Time
of Sale Prospectus, as amended or supplemented, will no longer conflict with the Registration
Statement, or so that the Time of Sale Prospectus, as amended or supplemented, will comply with
applicable law.
(g) Each of the Selling Shareholders, severally and not jointly, covenants and agrees that if,
during such period after the first date of the public offering of the Shares as in the opinion of
counsel for the Underwriters the Prospectus (or in lieu thereof the notice referred to in Rule
173(a) of the Securities Act) is required by law to be delivered in connection with sales by an
Underwriter or dealer, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements therein as such
statements relate to such Selling Shareholder, in the light of the circumstances when the
Prospectus (or in lieu thereof the notice referred to in
23
Rule 173(a) of the Securities Act) is delivered to a purchaser, not misleading, or if, in the
opinion of counsel for the Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to provide to the Company and the Underwriters all necessary
information so that the statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule
173(a) of the Securities Act) is delivered to a purchaser, be misleading or so that the Prospectus,
as amended or supplemented, will comply with applicable law.
The Selling Shareholders also covenant with each Underwriter that, without the
prior written consent of the Managers identified in Schedule I with the
authorization to release this lock-up on behalf of the Underwriters, it will not,
during the restricted period set forth in Schedule I hereto, (a) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, lend,
or otherwise transfer or dispose of, directly or indirectly, any shares of
Company Stock or any securities convertible into or exercisable or exchangeable
for Company Stock or (b) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership of
the Company Stock, whether any such transaction described in clause (a) or (b)
above is to be settled by delivery of Company Stock or such other securities, in
cash or otherwise, except, (1) as a bona fide gift or gifts, including as a
result of the operation of law or estate or intestate succession, (2) to any
trust, partnership, limited liability company or other entity for the direct or
indirect benefit of a Selling Shareholder or the immediate family of a Selling
Shareholder (for purposes of this paragraph, “immediate family” shall mean any
relationship by blood, marriage or adoption, not more remote than first cousin),
(3) as a distribution to limited partners or stockholders of a Selling
Shareholder, or (4) to a Selling Shareholder’s affiliates or to any investment
fund or other entity controlled or managed by a Selling Shareholder, or (5)
transfers of Company Stock to any third party or (6) as contemplated by this
Agreement and in the Prospectus; provided that in connection with each of
cases (1), (2), (3) (4) and (5) above (A) the Selling Shareholder receives and
delivers to the Managers identified in Schedule I hereto a signed lock-up
agreement substantially in the form of this paragraph for the balance of the
restricted period set forth in Schedule I hereto from each donee, trustee,
distributee or transferee, as the case may be, (B) any such transfer shall not
involve a disposition for value, (C) such transfers are not required to be
reported in any public report or filing with the Securities and Exchange
Commission, or otherwise and (D) the Selling Shareholder does not otherwise
voluntarily effect any
24
public filing or report regarding such sales. For purposes of this provision,
“transfer” shall be broadly construed to include any type of transfer set out in
clauses (a) and (b) above.
9. Covenants of the Underwriters.
(a) Each Underwriter severally covenants with the Company not to take any action that would
result in the Company being required to file with the Commission under Rule 433(d) a free writing
prospectus prepared by or on behalf of such Underwriter that otherwise would not be required to be
filed by the Company thereunder, but for the action of the Underwriter and not to use or refer to
any free writing prospectus without the prior written consent of the Company.
(b) To the extent requested by the Company, the Underwriters shall provide evidence of (i) the
authorization of their respective signatories hereto to act on their behalf, and (ii) their
corporate status.
10. Selling Restrictions.
(a) United Kingdom. Each of the Underwriters severally represents, warrants and agrees with
the Company that:
(A) it has only communicated or caused to be communicated and will only
communicate or cause to be communicated any invitation or inducement to engage in
investment activity (within the meaning of section 21 of FSMA) received by it in
connection with the issue or sale of any Shares in circumstances in which section
21(1) of FSMA does not apply; and
(B) it has complied and will comply with all applicable provisions of FSMA with
respect to anything done by it in relation to the Shares in, from or otherwise
involving the United Kingdom.
(b) European Economic Area. Each of the Underwriters agrees with the Company that, in relation
to each Member State of the European Economic Area that has implemented the Prospectus Directive
(each, a “Relevant Member State”), an offer of Shares may not be made in that Relevant Member State
prior to the publication of a prospectus in relation to the Shares which has been approved by the
competent authority in that Relevant Member State or, where appropriate, approved in another
Relevant Member State and notified to the competent authority in that Relevant Member State, all in
accordance with the Prospectus Directive, except that an offer of Shares to the public in that
Relevant Member State may be made at any time under the following exceptions under the Prospectus
Directive, if they have been implemented in that Relevant Member State:
25
(A) to legal entities that are authorized or regulated to operate in the
financial markets or, if not so authorized or regulated, whose corporate purpose
is solely to invest in securities;
(B) to any legal entity that has two or more of (1) an average of at least 250
employees during the last financial year; (2) a total balance sheet of more than
€43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in
its last annual or consolidated accounts;
(C) to fewer than 100 or, if the Relevant Member State has implemented the
relevant provision of the Amending Directive, 150 natural or legal persons (other
than qualified investors as defined in the Prospectus Directive) subject to
obtaining the prior consent of the other underwriters; or
(D) in any other circumstances falling within Article 3(2) of the Prospectus
Directive.
For the purposes of this provision, the expression “an offer of Shares to the public” in relation
to any preferred shares in any Relevant Member State means the communication to persons in any form
and by any means of sufficient information on the terms of the offer and the Shares to be offered
so as to enable an investor to decide to purchase or subscribe the Shares, as the same may be
varied in that Member State by any measure implementing the Prospectus Directive in that Member
State; the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto,
including the Amending Directive, to the extent implemented in the Relevant Member State) and
includes any relevant implementing measure in each Relevant Member State; and “Amending Directive”
means Directive 2010/73/EU.
11. Indemnity and Contribution.
(a) Indemnification of the Underwriters by the Company. The Company agrees to indemnify and
hold harmless each Underwriter, each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and each
affiliate of any Underwriter within the meaning of Rule 405 under the Securities Act from and
against any and all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof, any preliminary prospectus, the
Time of Sale Prospectus, any issuer free writing prospectus as defined in Rule 433(h) under the
Securities Act, any Company information that the Company has filed, or is required to file,
pursuant to Rule 433(d) under the Securities Act, or the
26
Prospectus or any amendment or supplement thereto, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged untrue statement or omission based
upon (i) information relating to any Underwriter furnished to the Company in writing by or on
behalf of such Underwriter expressly for use therein or (ii) information relating to a Selling
Shareholder furnished to the Company in writing by or on behalf of such Selling Shareholder
expressly for use therein.
(b) Indemnification of the Underwriters by the Selling Shareholders. Each Selling Shareholder,
severally but not jointly, agrees to indemnify and hold harmless the Company, each Underwriter,
each person, if any, who controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act and each affiliate of any Underwriter within the
meaning of Rule 405 under the Securities Act from and against any and all losses, claims, damages
and liabilities (including, without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by any untrue statement
or alleged untrue statement of a material fact relating to such Selling Shareholder contained in
the Registration Statement or any amendment thereof, any preliminary prospectus, the Time of Sale
Prospectus, any issuer free writing prospectus as defined in Rule 433(h) under the Securities Act,
any Company information that the Company has filed, or is required to file, pursuant to Rule 433(d)
under the Securities Act, or the Prospectus or any amendment or supplement thereto, or caused by
any omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with reference to information
relating to such Selling Shareholder furnished in writing to the Company by or on behalf of such
Selling Shareholder expressly for use in the Registration Statement or any amendment thereof, any
preliminary prospectus, the Time of Sale Prospectus, any issuer free writing prospectus as defined
in Rule 433(h) under the Securities Act, any Company information that the Company has filed, or is
required to file, pursuant to Rule 433(d) under the Securities Act, or the Prospectus or any
amendment or supplement thereto, and except insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged untrue statement or omission based
upon information relating to any Underwriter furnished to the Selling Shareholders in writing by
such Underwriter expressly for use therein. The liability of the Selling Shareholder under the
indemnity agreement contained in this paragraph shall be limited to an amount equal to the total
gross proceeds from the offering of the Shares purchased under this Agreement received by such
Selling Shareholder.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the
Company, the Selling Shareholders, the directors of the Company, officers of the Company who sign
the Registration Statement and each person, if any, who controls the Company within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the
27
foregoing indemnity of such Underwriter by the Company, but only with reference to information
relating to such Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement or any amendment thereof, any preliminary
prospectus, the Time of Sale Prospectus, any issuer free writing prospectus as defined in Rule
433(h) under the Securities Act or the Prospectus or any amendment or supplement thereto.
(d) Notice of Procedures. In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be sought pursuant to
Section 11(a) or 11(b) such person (the “indemnified party”) shall promptly notify the person
against whom such indemnity may be sought (the “indemnifying party”) in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any indemnified party shall have
the right to retain its own counsel, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall
have mutually agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them. It is understood that the indemnifying
party shall not, in respect of the legal expenses of any indemnified party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such indemnified parties and
that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by the Manager authorized to appoint counsel under this Section set forth in
Schedule I hereto. The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(e) Contribution. To the extent the indemnification provided for in Section 11(a) or 11(b) is
unavailable to an indemnified party or insufficient to hold harmless an indemnified party in
respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying
party under such paragraph,
28
in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i)
in such proportion as is appropriate to reflect the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party or parties on the other hand from the
offering of the Shares or (ii) if the allocation provided by clause 11(e)(i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause 11(e)(i) above but also the relative fault of the indemnifying party or
parties on the one hand and of the indemnified party or parties on the other hand in connection
with the statements or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits received by the Company
and the Selling Shareholders on the one hand and the Underwriters on the other hand in connection
with the offering of the Shares shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Shares (before deducting expenses) received by the Company and
the Selling Shareholders and the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. The relative fault of the indemnifying party on the
one hand and the indemnified party on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the indemnifying party
or by the indemnified party and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Underwriters’ respective
obligations to contribute pursuant to this Section 11 are several in proportion to the respective
number of Shares they have purchased hereunder, and not joint.
(f) Limitation or Liability. The parties agree that it would not be just or equitable if
contribution pursuant to this Section 11 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method of allocation that
does not take account of the equitable considerations referred to in Section 11(e). The amount
paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities
referred to in Section 11(e) shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the provisions of this
Section 11, no Underwriter shall be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters’ obligations to contribute pursuant to this
29
Section 11 are several in proportion to their respective purchase obligations hereunder and
not joint. The remedies provided for in this Section 11 are not exclusive and shall not limit any
rights or remedies which may otherwise be available to any indemnified party at law or in equity.
(g) The respective representations, warranties, agreements, indemnities and other statements
of the Company and each Selling Shareholder or their officers and of the Underwriters set forth or
made pursuant to this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any Selling Shareholder or
any of the officers, directors or controlling persons referred to in Section 12 hereof, and will
survive delivery of and payment for the Shares. The provisions of Sections 8(a), 11, 14(c), 16,
17, 18, 19, 20, 21, 22 and 23 shall survive any termination of this Agreement (including a
termination under Section 12).
12. Termination. The Underwriters may terminate this Agreement with prior consultation and by
notice given by you to the Company and the Selling Shareholders, if after the execution and
delivery of this Agreement and prior to the Final Payment Date (i) trading generally shall have
been suspended or materially limited on, or by, as the case may be, any of the New York Stock
Exchange, NASDAQ Global Market, the London Stock Exchange, the RTS or the MICEX, (ii) trading of
any equity securities of the Company shall have been suspended on any exchange on which they are
listed, (iii) a material disruption in securities settlement, payment or clearance services in the
United States or the Russian Federation shall have occurred, (iv) any moratorium on commercial
banking activities shall have been declared by Federal, New York State or Russian authorities or
(v) there shall have occurred any outbreak or escalation of hostilities, or any change in financial
markets, currency exchange rates or controls or any calamity or crisis that, in your judgment, is
material and adverse and which, singly or together with any other event specified in this clause
(v), makes it, in your judgment, impracticable or inadvisable to proceed with the offer, sale or
delivery of the Shares on the terms and in the manner contemplated in the Time of Sale Prospectus
or the Prospectus.
If this Agreement is terminated pursuant to this Section 12 after the Delivery Date, this
Agreement shall not terminate as to the Shares which the Underwriters have delivered to the initial
purchasers thereof prior to such termination.
13. Effectiveness; Defaulting Underwriters.
(a) This Agreement shall become effective upon the execution and delivery hereof by the
parties hereto.
(b) If, on the Final Payment Date any one or more of the Underwriters shall fail or refuse to
purchase Shares that it has or they have agreed to purchase
30
hereunder on such date, and the aggregate number of Shares which such defaulting Underwriter
or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Shares set forth opposite their
respective names in Schedule II bears to the aggregate number of Shares set forth opposite the
names of all such non-defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase on such date; provided that in no event shall the number of Shares that any Underwriter
has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 13 by an
amount in excess of one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Final Payment Date, any Underwriter or Underwriters shall fail or refuse
to purchase Shares and the aggregate number of Shares with respect to which such default occurs is
more than one-tenth of the aggregate number of Shares to be purchased on such date, and
arrangements satisfactory to you and the Company for the purchase of such Shares are not made
within 36 hours after such default, this Agreement shall terminate without liability on the part of
any non-defaulting Underwriter or the Company. In any such case either you or the Company shall
have the right to postpone the Final Payment Date, but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement, in the Time of Sale
Prospectus, in the Prospectus or in any other documents or arrangements may be effected.
(c) If this Agreement shall be terminated by the Underwriters, or any of them, because of any
failure or refusal on the part of the Selling Shareholders to comply with the terms or to fulfill
any of the conditions of this Agreement, or if for any reason the Selling Shareholders shall be
unable to perform their obligations under this Agreement, the Selling Shareholders will reimburse
the Underwriters or such Underwriters as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the fees and disbursements of
their counsel) reasonably incurred by such Underwriters in connection with this Agreement or the
offering contemplated hereunder.
14. Entire Agreement.
(a) This Agreement, together with any contemporaneous written agreements and any prior written
agreements (to the extent not superseded by this Agreement) that relate to the offering of the
Shares, represents the entire agreement between the Company, the Selling Shareholders and the
Underwriters with respect to the preparation of any preliminary prospectus, the Time of Sale
Prospectus, the Prospectus, the conduct of the offering, and the purchase and sale of the Shares.
For the avoidance of doubt, the Company shall not be responsible for any actions or omissions by,
or breaches of or defaults with respect to, the obligations or liabilities of any of the Selling
Shareholders hereunder.
(b) The Company acknowledges that in connection with the offering of the Shares (i) the
Underwriters have acted at arms length, are not agents of, and
31
owe no fiduciary duties to, the Company or any other person, (ii) the Underwriters owe the
Company only those duties and obligations set forth in this Agreement and prior written agreements
(to the extent not superseded by this Agreement), if any, and (iii) the Underwriters may have
interests that differ from those of the Company. The Company waives to the full extent permitted by
applicable law any claims it may have against the Underwriters arising from an alleged breach of
fiduciary duty in connection with the offering of the Shares.
(c) The Selling Shareholders acknowledge that in connection with the offering of the Shares
(i) the Underwriters have acted at arms length, are not agents of, and owe no fiduciary duties to,
the Selling Shareholders or any other person, (ii) the Underwriters owe the Selling Shareholders
only those duties and obligations set forth in this Agreement and prior written agreements (to the
extent not superseded by this Agreement), if any, and (iii) the Underwriters may have interests
that differ from those of the Selling Shareholders. The Selling Shareholders waive to the full
extent permitted by applicable law any claims it may have against the Underwriters arising from an
alleged breach of fiduciary duty in connection with the offering of the Shares.
15. Counterparts. This Agreement may be signed in two or more counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and hereto were upon the
same instrument.
16. Applicable Law. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York.
17. Submission to Jurisdiction; Appointment of Agent.
(a) Subject to Section 18 hereof, the Company and each of the Selling Shareholders
agrees that any suit, action or proceeding against it brought by any Underwriter, the
directors and officers of any Underwriter, or by any person who controls any Underwriter,
arising out of or relating to this Agreement or the transactions contemplated hereby may
be instituted in any State or Federal court in the Borough of Manhattan, The City of New
York, New York (a “New York Court”) and waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of venue of any such
proceeding, and irrevocably submits to the non-exclusive jurisdiction of such courts in
any such suit, action or proceeding. The Company has appointed C T Corporation System
with address at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (“C T Corporation”) as its
authorized agent in New York (such agent or any subsequent agent which the Company may
appoint, the “Company’s Authorized Agent”), and the Selling Shareholders have appointed C
T Corporation as their authorized agent in New York (such agent or any subsequent agent
which the Selling Shareholders may appoint, the “Selling Shareholders’ Authorized Agent”),
upon whom process may be served in any manner permitted by applicable law in any such
suit, action or proceeding in New York, and each of the Company
32
and the Selling Shareholders expressly accepts the non-exclusive jurisdiction of any
New York Court in respect of any such suit, action or proceeding. The Company and the
Selling Shareholders hereby severally represent and warrant that the Company’s Authorized
Agent and the Selling Shareholders’ Authorized Agent, respectively, have accepted such
appointments and have agreed to act as said agents for service of process, and each of the
Company and the Selling Shareholders severally agrees to take any and all action,
including the filing of any and all documents and instruments, that may be necessary to
continue such appointments in full force and effect as aforesaid for a period of five
years from the date hereof. Service of process upon the Company’s Authorized Agent or the
Selling Shareholders’ Authorized Agent shall be, to the fullest extent permitted by law,
deemed, in every respect, effective service of process upon the Company or any Selling
Shareholder, as the case may be. EACH OF YOU, EACH SELLING SHAREHOLDER AND THE COMPANY
(ON ITS BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS
STOCKHOLDERS AND AFFILIATES) WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) IN ANY WAY ARISING OUT OF
OR RELATING TO THIS AGREEMENT.
(b) Renaissance Securities (Cyprus) Limited appoints RenCap Securities Inc., with its address
at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, as its authorized agent in New York, upon whom
process may be served in any manner permitted by applicable law in any such suit, action or
proceeding in New York.
(c) VTB Capital Plc appoints C T Corporation, as its authorized agent in New York, upon whom
process may be served in any manner permitted by applicable law in any such suit, action or
proceeding in New York.
18. Dispute Resolution.
(a) Any dispute, controversy or claim arising out of, relating to or in connection with this
Agreement, or the breach, termination or validity hereof (“Dispute”), shall be finally and
exclusively settled by arbitration in accordance with the Arbitration Rules of the United Nations
Commission on International Trade Law then in effect (the “Rules”), except as modified herein or by
agreement of the parties, provided, however, that you may elect, at your sole discretion, to submit
any Dispute to an appropriate New York Court instead of submitting it to arbitration as provided in
this Section 18. The arbitration shall be held and the award shall be tendered in New York, New
York. The arbitration proceedings shall be conducted, and the award shall be rendered, in the
English language. For the purpose of the arbitration, the Company and the Selling Shareholders
shall be treated as a single party.
33
(b) There shall be five arbitrators, one appointed by the Company, one appointed by the
Selling Shareholders, one appointed by you, each within 30 days of receipt by the respondent of the
notice of arbitration. The three party-appointed arbitrators shall choose the fourth and fifth
arbitrators, one of which will act as the presiding arbitrator of the tribunal, within 30 days of
the appointment of the third arbitrator. The appointing authority, which shall appoint any
arbitrator not timely selected, shall be the International Court of Arbitration of the
International Chamber of Commerce (“ICC Court”).
(c) The notice of arbitration shall include a statement of claim. The statement of defense
shall be delivered to the claimant within 30 days of respondent’s receipt of the claimant’s notice
of arbitration and statement of claim. The hearing shall commence no later than 120 days following
the appointment of the fifth arbitrator, and the award shall be rendered no later than 30 days
following the close of the hearing. Consistent with the expedited nature of the arbitration, each
party will, upon the written request of the other party, promptly provide the other with copies of
documents relevant to the issues raised by any claim or counterclaim. All pre-hearing discovery
shall be completed within 75 days following the appointment of the arbitral tribunal. All time
limits contained herein may be extended by agreement of the parties or by the arbitral tribunal for
good cause shown.
(d) The award shall be final and binding upon the parties. The arbitral tribunal shall be
authorized in its discretion to grant pre-award and post-award interest at commercial rates. Any
costs, fees or taxes incident to enforcing the award (including attorneys’ fees) shall, to the
maximum extent permitted by law, be charged against the party resisting such enforcement. Judgment
upon any award may be entered in any court having jurisdiction thereof.
(e) This Agreement and the rights and obligations of the parties shall remain in full force
and effect pending the award in any arbitration proceeding hereunder.
(f) The arbitral tribunal shall have full authority to grant provisional remedies or modify or
vacate any temporary or preliminary relief issued by a court, and to award damages for the failure
of any party to respect the arbitral tribunal’s orders to that effect.
(g) In order to facilitate the comprehensive resolution of related disputes, all Disputes
between any of the parties to this Agreement may be brought in a single arbitration. Upon the
request of any party to an arbitration proceeding involving a Dispute between any of the parties
hereto, the arbitration tribunal shall consolidate such arbitration proceeding with any other
arbitration proceeding involving a Dispute between any of the parties hereto, if the arbitrators
determine that (i) there are issues of fact or law common to the proceedings so that a consolidated
proceeding would be more efficient than separate proceedings, and (ii) no party would be unduly
prejudiced as a result of such consolidation through undue delay or otherwise. The arbitration
tribunal
34
constituted first in time shall make such ruling and, unless the parties otherwise agree,
shall serve as the tribunal for the consolidated arbitration.
19. Judgment Currency — Company. If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder into any currency other than United States dollars, the
parties hereto agree, to the fullest extent permitted by law, that the rate of exchange used shall
be the rate at which in accordance with normal banking procedures the Underwriters could purchase
United States dollars with such other currency in The City of New York on the Business Day
preceding that on which final judgment is given. The obligation of the Company with respect to any
sum due from it to any Underwriter or any person controlling any Underwriter shall, notwithstanding
any judgment in a currency other than United States dollars, not be discharged until the first
Business Day following receipt by such Underwriter or controlling person of any sum in such other
currency, and only to the extent that such Underwriter or controlling person may in accordance with
normal banking procedures purchase United States dollars with such other currency. If the United
States dollars so purchased are less than the sum originally due to such Underwriter or controlling
person hereunder, the Company agrees as a separate obligation and notwithstanding any such
judgment, to indemnify such Underwriter or controlling person against such loss. If the United
States dollars so purchased are greater than the sum originally due to such Underwriter or
controlling person hereunder, such Underwriter or controlling person agrees to pay to the Company
an amount equal to the excess of the dollars so purchased over the sum originally due to such
Underwriter or controlling person hereunder.
20. Judgment Currency — Selling Shareholders. If for the purposes of obtaining judgment in
any court it is necessary to convert a sum due hereunder into any currency other than United States
dollars, the parties hereto agree, to the fullest extent permitted by law, that the rate of
exchange used shall be the rate at which in accordance with normal banking procedures the
Underwriters could purchase United States dollars with such other currency in The City of New York
on the Business Day preceding that on which final judgment is given. The obligation of the Selling
Shareholders with respect to any sum due from it to any Underwriter or any person controlling any
Underwriter shall, notwithstanding any judgment in a currency other than United States dollars, not
be discharged until the first Business Day following receipt by such Underwriter or controlling
person of any sum in such other currency, and only to the extent that such Underwriter or
controlling person may in accordance with normal banking procedures purchase United States dollars
with such other currency. If the United States dollars so purchased are less than the sum
originally due to such Underwriter or controlling person hereunder, the Selling Shareholders agree
as a separate obligation and notwithstanding any such judgment, to indemnify such Underwriter or
controlling person against such loss. If the United States dollars so purchased are greater than
the sum originally due to such Underwriter or controlling person hereunder, such Underwriter or
controlling person agrees to pay to the Selling Shareholders an amount equal to the excess of the
dollars so
35
purchased over the sum originally due to such Underwriter or controlling person hereunder.
21. Original Agreement. In the event of any discrepancies between the English original and any
Russian or other translation of this Agreement or any dispute regarding the interpretation of any
provision in the English original or Russian translation of this Agreement, the English original of
this Agreement shall prevail and questions of interpretation shall be addressed solely in the
English language.
22. Headings. The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.
23. Notices. All communications hereunder shall be in writing and effective only upon receipt
and if to the Underwriters shall be delivered, mailed or sent to you at the address set forth in
Schedule I hereto; and if to the Company shall be delivered, mailed or sent to the address set
forth in Schedule I hereto; and if to the Selling Shareholders shall be delivered, mailed or sent
to the address set forth in Schedule I hereto.
36
| Very truly yours, | ||||||
| Mechel OAO | ||||||
| By: | ||||||
| Title: Chief Financial Officer | ||||||
| Authorized Signatory pursuant to the Power of Attorney dated April 12, 2011 | ||||||
| By: | ||||||
| Title: Chief Accountant | ||||||
37
| ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Companies Inc. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| By: | ||||
| Name: | ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇ | |||
| By: | ||||
| Name: | ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III | |||
| By: | ||||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
38
| Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated Renaissance Capital |
||||
| Acting severally on behalf of themselves and the several Underwriters named in Schedule II hereto. |
||||
By:
|
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated | |||
By: |
||||
| Title: | ||||
By:
|
Renaissance Securities (Cyprus) Limited | |||
By: |
||||
| Title: | ||||
By:
|
VTB Capital Plc | |||
By: |
||||
| Title: | ||||
By: |
||||
| Title: | ||||
39
SCHEDULE I
Managers: |
||
Manager authorized to release
lock-up under Sections 7 and
8:
|
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated Renaissance Securities (Cyprus) Limited |
|
| VTB Capital Plc | ||
Manager authorized to appoint
counsel under Section 11(d):
|
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated Renaissance Securities (Cyprus) Limited |
|
| VTB Capital Plc | ||
Registration Statement File No.:
|
333-166309 | |
Time of Sale Prospectus
|
1. Prospectus dated April 12, 2011
relating to the Shares |
|
2. Form 6-K dated April 12, 2011
and incorporated by reference into
the Company’s Registration
Statement |
||
3. Free writing prospectus filed
pursuant to Rule 433, Registration
No. 333-166309, dated April 20,
2011 |
||
Company Lock-up Restricted Period:
|
90 days | |
Selling Shareholders Lock-up Restricted Period
|
360 days | |
Title of Shares to be purchased:
|
preferred shares (par value 10 Russian Rubles per preferred share) | |
Number of Shares
|
32,000,000 | |
Public Offering Share Price
|
$16.50 per preferred share | |
Share Price:
|
$16.01325 per preferred share |
I-1
Selling Concession
|
$0.29205 per preferred share | |
Delivery Date:
|
April 21, 2011 | |
Closing Date:
|
May 3, 2011 | |
Closing Time:
|
17:00 (London time) | |
Second Payment Date and Time:
|
May 10, 2011 17:00 (London time) | |
Final Payment Date and Time:
|
May 16, 2011 17:00 (London time) | |
Business Day
|
a day on which banks are open for business in London, New York and Moscow | |
Closing Location:
|
Electronic Closing | |
Address for Notices to Underwriters:
|
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇.▇.▇. Attn: Equity Syndicate Desk, with a copy to the Legal Department |
|
| and | ||
| Renaissance Securities (Cyprus) Limited Arch. Makariou III ▇-▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ of Cyprus and VTB Capital PLC ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Attn: Co-Head of Global Banking |
||
Address for Notices to the Company:
|
Mechel OAO 1 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ |
▇-▇
| ▇▇▇▇▇▇ Attn: ▇▇▇▇▇▇▇▇▇ ▇. Ploshchenko |
||
Address for Notices to the Selling
Shareholders:
|
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇.▇.▇. Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, General Counsel |
I-3
SCHEDULE II
| Number of Shares in | ||||
| the form of | ||||
| preferred shares to | ||||
| Underwriter | be Purchased | |||
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated |
13,830,560 | |||
Renaissance Securities (Cyprus) Limited |
13,830,560 | |||
VTB Capital Plc |
4,338,880 | |||
Total: |
32,000,000 | |||
II-1
SCHEDULE III
| Number | ||||
| Selling Shareholder | of Shares | |||
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Companies Inc. |
6,080,000 | |||
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇ |
13,251,200 | |||
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III |
9,123,200 | |||
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ |
3,545,600 | |||
Total: |
32,000,000 | |||
III-1
SCHEDULE IV
PRINCIPAL SUBSIDIARIES
Chelyabinsk Metallurgical Plant OAO
Mechel Mining OAO
Southern Kuzbass Coal Company OAO
OJSHC Yakutugol
Korshunov Mining Plant OAO
Mechel Trading House OOO
Oriel Resources Ltd.
Mechel Trading AG
Mechel Service Global B.V.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Inc.
Mechel Carbon ▇▇
▇▇-1
EXHIBIT A
FORM OF LOCK-UP LETTER OF SKYBLOCK LIMITED
April 20, 2011
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
Renaissance Securities (Cyprus) Limited
2-4 Archbishop Makarios ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
2-4 Archbishop Makarios ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
VTB Capital PLC
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Ladies and Gentlemen:
Skyblock Limited, a company registered in Cyprus with registration number HE 216625 issued on
December 19, 2007, whose registered office is located at ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇, ▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ (“Skyblock”), acknowledges that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, Renaissance
Securities (Cyprus) Limited and VTB Capital Plc (the “Underwriters”) propose to enter into an
Underwriting Agreement (the “Underwriting Agreement”) with Mechel OAO, a joint stock company
organized under the laws of the Russian Federation (the “Company”) and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ Companies Inc., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (collectively, the “Selling
Shareholders”), providing for the public offering (the “Public Offering”) by the several
Underwriters of 32,000,000 preferred shares (par value 10 Russian Rubles per preferred share). The
common (par value 10 Russian Rubles per common share) and preferred shares (par value 10 Russian
Rubles per preferred share) of the Company to be outstanding after giving effect to the sales
contemplated in the Underwriting Agreement are hereinafter referred to as the “Company Stock.”
A-1
To induce the Underwriters that may participate in the Public Offering to continue their
efforts in connection with the Public Offering, Skyblock hereby agrees that, without the prior
written consent of the Managers on behalf of the Underwriters, it will not, during the period
commencing on the date hereof and ending 90 days after the date of the final prospectus relating to
the Public Offering (the “Prospectus”), (1) offer, pledge, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares
of Company Stock beneficially owned (as such term is used in Rule 13d-3 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)), by Skyblock or any other securities so owned
convertible into or exercisable or exchangeable for Company Stock or (2) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Company Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Company Stock or such other securities, in cash or otherwise.
The foregoing sentence shall not apply to (a) transactions relating to shares of Company Stock or
other securities acquired in open market transactions after the completion of the Public Offering,
provided that no public filing shall be voluntarily made in connection with subsequent sales of
Company Stock or other securities acquired in such open market transactions, (b) the establishment
of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of
Company Stock, provided that such plan does not provide for the transfer of Company Stock during
the restricted period and no public announcement or filing under the Exchange Act regarding the
establishment of such plan shall be required of or voluntarily made by or on behalf of Skyblock or
the Company, (c) a transfer of Company Stock (or any securities convertible into or exchangeable
into Company Stock, including ADSs representing Company Stock) to a single transferee or group of
transferees as consideration for the acquisition of assets by the Company, provided that the
transferee(s) agree to a lock-up substantially the same as the foregoing for the remainder of the
restricted period, (d) transfers of Company Stock to the Company or any of its other subsidiaries,
provided that the transferee(s) agree to a lock-up substantially the same as the foregoing for the
remainder of the restricted period, (e) transfers of Company Stock to any third party, provided
that such third party agrees to a lock-up substantially the same as the foregoing for the remainder
of the restricted period, or (f) any mortgage, charge, pledge, lien, option, restriction,
third-party right or interest, encumbrance or security interest of any kind, or another type of
preferential arrangement (including the use of derivative instruments, such as forward and futures
contracts) having similar effect, or any agreement of arrangement to create any of the same in
relation to the preferred shares, in connection with debt financing to the Company or any of its
subsidiaries from a financial institution, provided that any such arrangement does not permit a
disposal of such preferred shares during the remainder of the restricted period. For purposes the
foregoing sentence, “transfer” shall be broadly construed to include any type of transfer set out
in
A-2
clauses (1) and (2) above. In addition, the undersigned agrees that, without the prior written
consent of the Managers on behalf of the Underwriters, it will not, during the period commencing on
the date hereof and ending 90 days after the date of the Prospectus, make any demand for or
exercise any right with respect to, the registration of any shares of Company Stock or any security
convertible into or exercisable or exchangeable for Company Stock. Skyblock also agrees and
consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar
against the transfer of Skyblock’s shares of Company Stock except in compliance with the foregoing
restrictions.
Skyblock acknowledges that the Company, the Underwriters and the Selling Shareholders are
relying upon this agreement in proceeding toward consummation of the Public Offering. Skyblock
further acknowledges that this agreement is irrevocable and shall be binding upon its heirs, legal
representatives, successors and assigns.
In addition, Skyblock represents and warrants that it has full power and authority to enter
into this lock-up agreement and to perform its obligations hereunder; and this lock-up agreement
has been duly authorized, executed and delivered by Skyblock, and constitutes a valid and legally
binding agreement of Skyblock, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws affecting
or relating to creditors’ rights generally and to general principles of equity.
Whether or not the Public Offering actually occurs depends on a number of factors, including
market conditions. Any Public Offering will only be made pursuant to an Underwriting Agreement,
the terms of which are subject to negotiation between the Company, the Underwriters and the Selling
Shareholders.
This letter shall be governed by and construed in accordance with New York law. The provisions
of Section 19 of the Underwriting Agreement shall apply mutatis mutandis to this letter.
[Remainder of the page intentionally left blank; signature page follows]
A-3
| Very truly yours, | ||||||
| Skyblock Limited | ||||||
| By: | ||||||
Authorized signatory pursuant to the Power of Attorney dated April 12, 2011 |
||||||
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Renaissance Capital
Renaissance Capital
Acting severally on behalf of themselves and
the several Underwriters named in Schedule II hereto.
the several Underwriters named in Schedule II hereto.
By:
|
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated | |||
By: |
||||
| Title: | ||||
By:
|
Renaissance Securities (Cyprus) Limited | |||
By: |
||||
| Title: | ||||
By:
|
VTB Capital Plc | |||
By: |
||||
| Title: | ||||
By: |
||||
| Title: |
A-4
EXHIBIT B
FORM OF LOCK-UP LETTER FOR ▇▇▇▇ ▇▇▇▇▇▇
April 20, 2011
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
Renaissance Securities (Cyprus) Limited
2-4 Archbishop Makarios ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
2-4 Archbishop Makarios ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
VTB Capital PLC
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Ladies and Gentlemen:
The undersigned understands that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, Renaissance Securities
(Cyprus) Limited and VTB Capital Plc (the “Underwriters”) propose to enter into an Underwriting
Agreement (the “Underwriting Agreement”) with Mechel OAO, a joint stock company organized under the
laws of the Russian Federation (the “Company”) and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Companies
Inc., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (collectively, the “Selling Shareholders”),
providing for the public offering (the “Public Offering”) by the several Underwriters of 32,000,000
preferred shares (par value 10 Russian Rubles per preferred share). The common (par value 10
Russian Rubles per common share) and preferred shares (par value 10 Russian Rubles per preferred
share) of the Company to be outstanding after giving effect to the sales contemplated in the
Underwriting Agreement are hereinafter referred to as the “Company Stock.”
To induce the Underwriters that may participate in the Public Offering to continue their
efforts in connection with the Public Offering, the undersigned hereby agrees that, without the
prior written consent of the Managers on behalf of
B-1
the Underwriters, he will not and will ensure that his Personal Investment Companies shall
not, during the period commencing on the date hereof and ending 90 days after the date of the final
prospectus relating to the Public Offering (the “Prospectus”), sell any of the common shares
beneficially held by him and them as of the date hereof. The foregoing sentence shall not apply to
(a) transactions relating to shares of Company Stock or other securities acquired in open market
transactions after the completion of the Public Offering, provided that no public filing shall be
voluntarily made in connection with subsequent sales of Company Stock or other securities acquired
in such open market transactions, (b) the establishment of a trading plan pursuant to Rule 10b5-1
under the Exchange Act for the transfer of shares of Company Stock, provided that such plan does
not provide for the transfer of Company Stock during the restricted period and no public
announcement or filing under the Exchange Act regarding the establishment of such plan shall be
required of or voluntarily made by or on behalf of the undersigned or the Company, (c) transfers of
Company Stock to members of the undersigned’s immediate family or to persons or entities under
common control with any of them, other than the Company and its subsidiaries, provided that the
transferee(s) agree to a lock-up substantially the same as the foregoing for the remainder of the
restricted period, or (d) transfers of Company Stock to any third party, provided that such third
party agrees to a lock-up substantially the same as the foregoing for the remainder of the
restricted period. In addition, the undersigned agrees that, without the prior written consent of
the Managers on behalf of the Underwriters, it will not, during the period commencing on the date
hereof and ending 90 days after the date of the Prospectus, make any demand for or exercise any
right with respect to, the registration of any common shares or any security convertible into or
exercisable or exchangeable for common shares. The undersigned also agrees and consents to the
entry of stop transfer instructions with the Company’s transfer agent and registrar against the
transfer of the undersigned’s common shares except in compliance with the foregoing restrictions.
For the avoidance of doubt, the above shall not prohibit the entry by the undersigned, or any
of his Personal Investment Companies, or another company under their common control, into any
mortgage, charge, pledge, lien, option, restriction, third-party right or interest, encumbrance or
security interest of any kind, or another type of preferential arrangement (including the use of
derivative instruments, such as forward and futures contracts) having similar effect, or into any
agreement or arrangement to create any of the same (but for the avoidance of doubt excluding a
title transfer or any similar arrangement where the title to securities is transferred in favour of
another party) involving or relating to the common shares in connection with any financing or
refinancing.
As used in this letter, “Personal Investment Companies” shall refer to any or all of:
B-2
| • | Calridge Limited, a limited liability company registered under the laws of the Republic of Cyprus whose registered office is located at 3 Themistokli ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ of Cyprus; | ||
| • | Dalewave Limited, a limited liability company registered under the laws of the Republic of Cyprus whose registered office is located at 3 Themistokli ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ of Cyprus; | ||
| • | Bellasis Holdings Limited, a limited liability company registered under the laws of the Republic of Cyprus whose registered office is located at 3 Themistokli ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ of Cyprus; | ||
| • | Cyberwood Limited, a limited liability company registered under the laws of the Republic of Cyprus whose registered office is located at 3 Themistokli ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ of Cyprus; | ||
| • | Armolink Limited, a limited liability company registered under the laws of the Republic of Cyprus whose registered office is located at 3 Themistokli ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ of Cyprus; | ||
| • | MetHol OOO, a limited liability company registered under the laws of the Russian Federation whose registered office is located at 1st Schipkovsky per., d. 3, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇; | ||
| • | and Actiondeal Limited, a limited liability company registered under the laws of the Republic of Cyprus whose registered office is located at 3 Themistokli ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ of Cyprus. |
The undersigned understands that the Company, the Underwriters and the Selling Shareholders
are relying upon this agreement in proceeding toward consummation of the Public Offering. The
undersigned further understands that this agreement is irrevocable and shall be binding upon the
undersigned’s heirs, legal representatives, successors and assigns.
B-3
Whether or not the Public Offering actually occurs depends on a number of factors, including
market conditions. Any Public Offering will only be made pursuant to an Underwriting Agreement,
the terms of which are subject to negotiation between the Company, the Underwriters and the Selling
Shareholders.
The undersigned further represents and warrants to the Underwriters that he: (i) has legal
capacity (deesposobnost) to execute this Lock-Up Agreement and perform his obligations hereunder
and his legal capacity is not limited under the laws of the jurisdiction or jurisdictions
applicable to him and/or his legal acts and/or court decisions (ogranicheniye deesposobnosti); (ii)
is not subject to guardianship (▇▇▇▇▇), curatorship (popechitelstvo) or patronage (patronazh); and
(iii) is in a condition in which he is capable of understanding the significance of his actions and
of controlling them.
This letter shall be governed and construed in accordance with the internal laws of the State
of New York. Any dispute arising out of or in connection with this Agreement (including a dispute
regarding the existence, validity or termination of this Agreement) shall be referred to and
finally resolved by arbitration under the Arbitration Rules (the “Rules”) of the LCIA Court. The
arbitral tribunal shall consist of three arbitrators. The claimant(s) shall nominate one
arbitrator; the respondents shall nominate the second arbitrator; and a third arbitrator, who shall
serve as Chairman, shall be nominated by the party-appointed arbitrators within 15 days of the
appointment of the latter of the two party-nominated arbitrators, failing which shall be appointed
by the LCIA Court. The seat of arbitration shall be London, England and the language of the
arbitration shall be English.
[Remainder of the page intentionally left blank; signature page follows]
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| Very truly yours, | ||||||
| Igor Vladimirovich ▇▇▇▇▇▇ | ||||||
| By: | ||||||
Authorized signatory pursuant to the Power of Attorney dated April 12, 2011 |
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Renaissance Securities (Cyprus) Limited
Renaissance Securities (Cyprus) Limited
Acting severally on behalf of themselves and
the several Underwriters named in Schedule II hereto.
the several Underwriters named in Schedule II hereto.
By:
|
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated | |||
By: |
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| Title: | ||||
By:
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Renaissance Securities (Cyprus) Limited | |||
By: |
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| Title: | ||||
By:
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VTB Capital Plc | |||
By: |
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| Title: | ||||
By: |
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| Title: |
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