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DRAFT - April 28, 2000
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or 240.14a-12
CARRIER 1 INTERNATIONAL S.A.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
- --------------------------------------------------------------------------------
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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DRAFT - April 28, 2000
[CARRIER1 LOGO]
CARRIER1 INTERNATIONAL S.A.
SOCIETE ANONYME
Stig Johansson
Director, President and Chief Executive Officer
[______, 2000]
To Our Shareholders:
We have set our 2000 annual meeting of shareholders for Tuesday, June
13, 2000, to commence at 11:00 a.m. (local time) at [address to be determined].
At the annual meeting, shareholders will consider and vote on
matters we are required to submit to you under the law of Luxembourg, the
country of our organization. These matters consist of approval of our
statutory accounts and the related reports of our Board of Directors and our
statutory auditors, the allocation of the financial result for the year ended
December 31, 1999 and the discharge under Luxembourg Law of our Board's and
our statutory auditors' execution of their mandates for the year ended
December 31, 1999. The annual meeting will be followed immediately by a
special meeting to approve amendments to our articles of incorporation,
including an increase in our authorized capital, the insertion of a new
article to authorize the Board to fix record dates for future shareholders'
meetings, dividend entitlement and other specified purposes, and the
elimination of a shareholder's option to receive bearer shares. These are
important matters and we urge each of you to sign, date, and return the
enclosed proxy cards as promptly as possible, even if you plan to attend the
meetings.
We appreciate the continuing support of our shareholders.
On behalf of the Board of Directors,
/s/ Stig Johansson
Stig Johansson
Director, President and
Chief Executive Officer
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[CARRIER1 LOGO]
CARRIER1 INTERNATIONAL S.A.
SOCIETE ANONYME
---------------
NOTICE OF ANNUAL MEETING AND SPECIAL MEETING OF SHAREHOLDERS
---------------
DATE: Tuesday, June 13, 2000
TIME: 11:00 a.m.
PLACE: [The site remains to be selected by Carrier1]
MATTERS TO BE VOTED UPON AT THE ANNUAL MEETING:
1. Approval of the Company's statutory accounts for the year ended
December 31, 1999, and the reports of the Company's statutory auditors
and the Board of Directors on the statutory accounts, dated
[__________, 2000].
2. Determination to carry forward the loss reported by the Company for the
year ended December 31, 1999 to the year commencing January 1, 2000.
3. Discharge of the Board of Directors of the Company--pursuant to Article
74 of Luxembourg's Company Law--from the execution of their mandate as
directors for the year ended December 31, 1999.
4. Discharge of the statutory auditors of the Company--pursuant to Article
74 of Luxembourg's Company Law--from the execution of their mandate as
statutory auditors for the year ended December 31, 1999.
5. Any other matter properly brought before the shareholders at the annual
meeting or any adjournment thereof, including procedural matters
relating to the conduct of the meeting under the Luxembourg Company
Law.
MATTERS TO BE VOTED UPON AT THE SPECIAL MEETING:
6. Amendment to the Company's Articles of Incorporation to increase the
number of shares that the Board of Directors is authorized to issue
from 55,000,000 to 100,000,000.
7. Amendment to the Company's Articles of Incorporation to authorize the
Board of Directors to fix record dates for shareholders' meetings,
dividend entitlement and other specified purposes.
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8. Amendment to the Company's Articles of Incorporation to eliminate
the shareholder's option for shares to be issued in bearer form.
9. Any other matter properly brought before the shareholders at the
special meeting or any adjournment thereof, including procedural
matters relating to the conduct of the meeting under the Luxembourg
Company Law.
The address of the Company's registered office is Route d'Arlon 3,
L-8009 Strassen, Luxembourg and its telephone number is 411 297 2600. The
Company is organized in Luxembourg as a Societe Anonyme with registrar number RC
Luxembourg B 65864.
On Behalf of the Board of Directors,
Stig Johansson
Director, President
and Chief Executive Officer
[________, 2000]
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[CARRIER1 LOGO]
CARRIER1 INTERNATIONAL S.A.
SOCIETE ANONYME
ROUTE D'ARLON 3
L-8009 STRASSEN, LUXEMBOURG
---------------
PROXY STATEMENT
Your votes at the annual meeting and at the special meeting are
important to us. Please vote your common shares of the Company's capital by
completing the enclosed proxy cards and returning them to us in the enclosed
envelopes. This Proxy Statement has information about the annual meeting and the
special meeting and was prepared by the Company's management for the Board of
Directors. This Proxy Statement was first mailed to shareholders on May [ ],
2000.
CONTENTS
<TABLE>
<S> <C>
GENERAL INFORMATION ABOUT VOTING.......................................................................5
PROPOSAL NOS. 1 -4 PROPOSALS FOR SUBMISSION TO THE SHAREHOLDERS UNDER LUXEMBOURG LAW...................8
PROPOSAL NO. 6 PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED CAPITAL......9
PROPOSAL NO. 7 PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION TO AUTHORIZE THE BOARD TO FIX
RECORD DATES FOR SHAREHOLDER MEETINGS, DIVIDEND ENTITLEMENT AND OTHER SPECIFIED PURPOSES.......10
PROPOSAL NO. 8 PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION TO ELIMINATE A SHAREHOLDER'S OPTION
TO RECEIVE BEARER SHARES.......................................................................11
DIRECTORS AND EXECUTIVE OFFICERS......................................................................11
BOARD OF DIRECTORS....................................................................................16
EXECUTIVE COMPENSATION................................................................................17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................................................20
BENEFICIAL OWNERSHIP..................................................................................24
OTHER MATTERS.........................................................................................28
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING.........................................................28
MATERIAL INCORPORATED BY REFERENCE....................................................................28
</TABLE>
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GENERAL INFORMATION ABOUT VOTING
WHO IS SOLICITING YOUR VOTE?
These proxy materials are furnished in connection with the solicitation
by the Board of Directors of Carrier1 International S.A. ("Carrier1" or the
"Company") of proxies to be voted at the Company's 2000 annual meeting, at a
special meeting to be held immediately following the annual meeting and at any
meeting following an adjournment, postponement, or continuation of either
meeting.
WHO CAN VOTE?
You can vote your shares of the Company's capital if our records show
that you owned the shares on June 13, 2000. If your shares are held in the name
of your broker, a bank, or other nominee, that party may have other procedures
for determining your entitlement to vote. You should contact that party for more
information about this. A total of 41,719,178 common shares of the Company's
capital can vote at the meetings. You get one vote for each common share of the
Company's capital. The enclosed proxy cards show the number of shares you can
vote.
WHO ARE THE PROXYHOLDERS?
The persons named in the enclosed proxy are directors or officers of
the Company. A shareholder has the right to appoint a person (who need not be a
shareholder of the Company) as proxy to attend and act on such shareholder's
behalf at the annual meeting and the special meeting.
HOW DO I VOTE BY PROXY?
Follow the instructions on the enclosed proxy cards to vote on each
proposal to be considered at each of the annual meeting and the special meeting.
Sign and date the proxy cards and mail them back to us in the enclosed
envelopes. The common shares of the Company's capital represented by any valid
proxy in favor of management's nominees named in the accompanying proxy will be
voted for, against, or withheld from voting (abstain) on all matters specified
in the form of proxy, in accordance with any specification or instruction made
by a shareholder on the proxy. In the absence of any such specification or
instruction, such common shares of the Company's capital will be voted for,
against, or withheld from voting (abstain) on all of the matters specified in
the form of proxy as the proxyholder shall determine, in his discretion.
The accompanying proxies for the annual meeting and the special meeting
confer discretionary authority upon the persons named therein with respect to
amendments or variations to matters identified in this notice and proxy
statement and with respect to such
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other business or matters which may properly come before the annual meeting, the
special meeting or any adjournment.
WHAT IF OTHER MATTERS COME UP AT THE MEETINGS?
The matters described in this proxy statement are the only matters we
know of that will be voted on at the annual meeting and the special meeting. If
other matters are properly presented at the meeting, the proxyholders will vote
your shares as they see fit.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARDS?
Yes. At any time before the vote on a proposal, you can change your
vote either by giving us a written notice revoking your proxy card or by
signing, dating, and returning to us a new proxy card. We will honor the proxy
card with the latest date.
CAN I VOTE IN PERSON AT THE ANNUAL MEETING OR SPECIAL MEETING RATHER THAN BY
COMPLETING THE PROXY CARDS?
Although we encourage you to complete and return the proxy cards to
ensure that your vote is counted, you can attend the annual meeting and the
special meeting and vote your shares in person.
WHAT DO I DO IF MY SHARES ARE HELD IN "STREET NAME"?
If your shares are held in the name of your broker, a bank, or other
nominee, that party should give you instructions for voting your shares. Please
contact the person responsible for your account and give instructions for a
proxy card to be signed representing your common shares of the Company's
capital. We urge you to confirm in writing your instructions to the person
responsible for your account and to provide a copy of those instructions to our
proxy solicitation firm, Innisfree M & A Incorporated so that we may be aware of
all instructions given and can attempt to ensure that such instructions are
followed. You can contact Innisfree from within the United States at
888-750-5834, or from outside the United States at (212) 750-5833. Their address
is 501 Madison Avenue, New York, New York 10022, U.S.A.
WHO PAYS FOR THIS PROXY SOLICITATION?
We do. In addition to sending you these materials, some of our
employees may contact you by telephone, by mail, or in person. None of these
employees will receive extra compensation for doing this. We have retained
Innisfree M & A Incorporated to assist us in soliciting your proxy for a fee of
$8,500, plus reasonable out-of-pocket expenses.
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WE WILL REQUEST THAT BANKS, BROKERAGE HOUSES, AND OTHER CUSTODIANS, NOMINEES,
AND FIDUCIARIES FORWARD OUR PROXY SOLICITATION MATERIALS TO THE BENEFICIAL
OWNERS OF COMMON SHARES OF OUR CAPITAL THAT SUCH INSTITUTIONS HOLD OF RECORD. WE
WILL REIMBURSE SUCH INSTITUTIONS FOR THEIR REASONABLE OUT-OF-POCKET EXPENSES.
HOW ARE VOTES COUNTED?
Under Luxembourg law, actions requiring the approval of shareholders
can generally be taken at an ordinary meeting, including the annual meeting, by
approval of the holders of a simple majority of shares present or represented,
and voting, without regard to any minimum quorum requirements. At a special
meeting, a quorum of 50% of the outstanding shares and the approval of the
holders of two thirds of the shares present or represented are required to amend
the articles of incorporation. Other actions specified by Luxembourg law or the
articles of incorporation may require a super-majority vote or a specified
quorum. If a quorum that is required is not achieved, a new meeting may be
called at which no quorum is required.
At special meetings, for which a quorum is required, abstentions and
broker non-votes are each included in the determination of the number of shares
present. A broker "non-vote" occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner. Abstentions and broker
non-votes will have the effect of "AGAINST" votes on matters at the special
meeting because the vote of two thirds of the shares present is required to
approve a proposal. However, because abstentions and broker non-votes are not
votes cast, they will not be counted among the shares voted on matters at the
annual meeting which require the approval of the majority of shares voted.
Our register of shareholders indicates that one shareholder of record,
Carrier One LLC, holds enough shares by itself to approve each of the proposals
presented here. We believe Carrier One LLC will vote "FOR" approval of the
proposals. Information about the beneficial owners of Carrier1 and Carrier One
LLC appears in this proxy statement.
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PROPOSAL NOS. 1 - 4
PROPOSALS FOR SUBMISSION TO THE
SHAREHOLDERS UNDER LUXEMBOURG LAW
The Board will submit to the shareholders at the annual meeting for
their consideration and approval the following matters as required by
Luxembourg's Company Law:
1. A proposal to approve the Company's statutory accounts for the year
ended December 31, 1999, and the reports of the Company's statutory
auditors and the Board of Directors on the statutory accounts, dated
[__________, 2000];
2. A proposal to carry forward the loss reported by the Company for
the year ended December 31, 1999 to the year commencing
January 1, 2000.
3. A proposal to discharge the Board of Directors of the Company--pursuant
to Article 74 of Luxembourg's Company Law--from the execution of their
mandate as directors for the year ended December 31, 1999.
4. A proposal to discharge the statutory auditors of the Company--pursuant
to Article 74 of Luxembourg's Company Law--from the execution of their
mandate as statutory auditors for the year ended December 31, 1999.
WE RECOMMEND THAT YOU VOTE "FOR" APPROVAL OF THESE PROPOSALS.
Our statutory accounts and the related reports appear in our Annual
Report for 1999, which we are sending with these proxy materials. Because these
accounts and reports are presented to you only for purposes of Luxembourg law,
we urge you to read them together with the consolidated financial statements and
other information that are also included in our Annual Report.
The approval of Proposals 3. and 4. will have the effect of preventing
the Company from making claims against a director or our statutory auditors,
respectively, for breach of his or their duties under Luxembourg law from the
period of our organization through December 31, 1999.
Our independent statutory auditors for the year ended December 31, 1999
were Deloitte & Touche SA, Luxembourg. A representative of our statutory
auditors is not expected to be present at the annual meeting or the special
meeting and will therefore not be available to respond to questions.
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PROPOSAL NO. 6
PROPOSED AMENDMENT TO ARTICLES OF
INCORPORATION TO INCREASE THE AUTHORIZED CAPITAL
We propose to amend our Articles of Incorporation to increase the
number of shares that the Board of Directors is authorized to issue (the
"Authorized Capital") from 55,000,000 to 100,000,000. If the proposal is
approved, the additional 45,000,000 shares will be a part of the existing class
of common shares. If issued, they will have the same rights and privileges as
the shares presently outstanding. The proposal will not change the par value of
each common share, which will remain at $2.00 per share.
We believe the availability of these additional shares will provide us
with the flexibility to issue common shares for a variety of proper corporate
purposes as our Board may deem advisable. These purposes could include, among
other things, the sale of shares to obtain additional capital funds, the
purchase of property, the acquisition of other companies, the use of additional
shares for various equity compensation and other employee benefit plans, the
future declaration of share dividends or other employee benefit plans, and the
future declaration of share dividends or distributions. The issuance of
additional shares could have a dilutive effect: (i) on earnings and book value
per share, and (ii) for a shareholder who does not purchase additional shares to
maintain his/her pro rata interest, on a shareholder's percentage voting power
in the Company. We have no present intention to use the additional shares to
deter a change in control. In any event, the additional shares would be unlikely
to have such a deterring affect because more than a majority of our shares are
held by a single shareholder of record.
The additional shares would be available for issuance without further
action by our shareholders, except as may be required by law, regulation or
stock exchange rules. On some specified occasions, the rules of the Nasdaq
National Market, on which our American Depositary Receipts are quoted, require a
shareholder vote for the issuance of shares.
Under an existing provision of our Articles of Incorporation, our Board
is specifically permitted to issue shares up to the total Authorized Capital
without reserving for shareholders a preferential or pre-emptive right to
subscribe for the shares to be issued.
As of May 1, 2000, we had 41,719,178 shares outstanding. Of our
authorized but unissued shares, the Articles specifically reserve shares for
exercises of employee options and outstanding warrants. Reserving shares does
not limit the use of additional authorized shares for the same or similar
purposes, but shares reserved for a specific purpose are not permitted to be
issued for any other purpose.
WE RECOMMEND THAT YOU VOTE "FOR" APPROVAL OF THIS PROPOSAL.
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TEXT OF THE AMENDMENT. If shareholders approve this proposal, the second
paragraph of Article 5 of our Articles of Incorporation will be amended as
follows (with deletions struck through and insertions double underlined):
"The authorized capital of the corporation is fixed at TWO HUNDRED
MILLION UNITED STATES DOLLARS (200,000,000.-USD) to be divided into
ONE HUNDRED MILLION SHARES (100,000,000) shares with a par value of
TWO UNITED STATES DOLLARS (2.- USD) each."
EFFECTIVE DATE OF AMENDMENT. If the shareholders adopt the proposed amendment,
it will become effective as of the date of the special meeting.
PROPOSAL NO. 7
PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION
TO AUTHORIZE THE BOARD TO FIX RECORD DATES FOR
SHAREHOLDER MEETINGS, DIVIDEND ENTITLEMENT
AND OTHER SPECIFIED PURPOSES
We propose to amend our Articles of Incorporation to authorize the
Board of Directors to fix record dates for shareholders' meetings from time to
time for the purpose of determining the shareholders of the Company entitled to
notice of or to vote at any such meeting, or any adjournment of such meeting,
and for certain other specified purposes.
If the proposal is approved, the Board will be authorized to fix, in
advance of a shareholders' meeting, including both an annual meeting and a
special meeting, a record date which must be between sixty and ten days before
the date of such meeting.
The authority to select a record date is important because it will
allow the Company to determine in advance of a meeting the identity of
shareholders entitled to receive notice of or to vote at that meeting. We
believe that this will assist the Company to conduct future meetings more
efficiently and to provide proxy information to shareholders on a timely basis.
In addition to having the authority to fix record dates for this
purpose, the Board will also be authorized to fix record dates for purposes
including determining the shareholders entitled to receive dividends or other
distributions or to exercise certain other rights.
WE RECOMMEND THAT YOU VOTE "FOR" APPROVAL OF THIS PROPOSAL.
TEXT OF THE AMENDMENT. If shareholders approve this proposal, a new paragraph
will be inserted in Article 5 of our Articles of Incorporation, immediately
preceding Article 6, reading in its entirety as follows:
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"For the purpose of determining the shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment thereof,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect
of any change, conversion or exchange of stock or for the purpose of
any other lawful action, the board of directors may fix, in advance, a
record date, which shall not be more than sixty days nor less than ten
days before the date of such meeting, nor more than fifty days prior to
any other action."
EFFECTIVE DATE OF AMENDMENT. If the shareholders adopt the proposed amendment,
it will become effective as of the date of the special meeting
PROPOSAL NO. 8
PROPOSED AMENDMENT TO ARTICLES OF
INCORPORATION TO ELIMINATE A SHAREHOLDER'S OPTION
TO RECEIVE BEARER SHARES
We propose to amend our Articles of Incorporation to eliminate the
shareholder's option for shares to be issued in bearer form. The Articles
provide that shares may be issued in registered or bearer form, at the
shareholder's option. The Company's current shareholders all hold their
shares in registered form. The proposed amendment would not affect the form
in which shares are held by current shareholders, but would preclude future
shareholders from electing to hold shares of the Company in bearer form,
unless the Board otherwise determines.
WE RECOMMEND THAT YOU VOTE "FOR" APPROVAL OF THIS PROPOSAL.
TEXT OF THE AMENDMENT. If shareholders approve this proposal, the eighth
paragraph of Article 5 of our Articles of Incorporation will be amended as
follows (with deletions struck through and insertions double underlined):
"Shares shall be issued in registered form, unless the board
of directors otherwise determines."
EFFECTIVE DATE OF AMENDMENT. If the shareholders adopt the proposed amendment,
it will become effective as of the date of the special meeting.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
directors and executive officers of Carrier1 as of December 31, 1999.
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<TABLE>
<CAPTION>
NAME AGE POSITION WITH CARRIER1
<S> <C> <C>
Stig Johansson.............................. 57 Chief Executive Officer, President and Director of
Carrier1 International
Eugene A. Rizzo............................. 48 Vice President, Sales and Marketing
Terje Nordahl............................... 52 Chief Operating Officer
Joachim W. Bauer............................ 55 Chief Financial Officer
Kees van Ophem.............................. 37 Vice President, Purchase and General Counsel
Neil E. Craven.............................. 31 Vice President, Business Development
Alex Schmid................................. 31 Vice President, Strategic Development
Glenn M. Creamer............................ 37 Director of Carrier1 International
Jonathan E. Dick............................ 41 Director of Carrier1 International
Mark A. Pelson.............................. 37 Director of Carrier1 International
Victor A. Pelson............................ 62 Director of Carrier1 International
Thomas J. Wynne............................. 59 Director of Carrier1 International
</TABLE>
STIG JOHANSSON has served as a director of Carrier1 International since
August 1998 and as our Chief Executive Officer and President since March 1998
and has more than 30 years of experience in the telecommunications industry.
Prior to founding Carrier1, Mr. Johansson was President of Unisource Carrier
Services AG from September 1996 until February 1998, where he was responsible
for transforming Unisource Carrier Services from a network development and
planning company into a fully commercial, wholesale carrier of international
traffic. Mr. Johansson was a member of Unisource N.V.'s supervisory Board from
1992 until 1996. Prior to joining Unisource Carrier Services, Mr. Johansson
worked for Telia AB, the Swedish incumbent telephone operator, where he was most
recently Executive Vice President. During his 26 years at Telia, Mr. Johansson
held a variety of positions. He began in 1970 working in engineering operations
and rose to head of strategic network planning (1977), general manager of the
Norrkoping Telecom region (1978), head of CPE-business division (1980),
executive vice president and marketing director of Televerkit/Telia AB (1984)
and Executive Vice President responsible for Telia's start-up operations in the
Nordic countries and the United Kingdom (1995). He was a member of Telia's
corporate management Board from 1985 to 1996. Mr. Johansson holds a Master's
degree in Business Economics from Hermods Institut, Sweden and a degree of
Engineer of Telecommunications from Lulea College, and he completed a senior
executive business course at IMD in Lausanne, Switzerland. He is a citizen of
Sweden.
EUGENE A. RIZZO has served as our Vice President, Sales and Marketing
since March 1998 and has over 22 years of experience in international sales and
marketing and 11 years of experience in the telecommunications industry. From
1993 to 1998, Mr. Rizzo managed sales and marketing groups for several
affiliates of Unisource NV, including Unisource Carrier Services and
AT&T-Unisource Communications Services, an international joint venture between
AT&T Corp. and Unisource NV. Prior to joining Unisource, Mr. Rizzo held various
marketing and management positions with
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International Business Machines Corporation, or "IBM", Wang Laboratories, Inc.
and Tandem Computers Inc. While at Tandem, Mr. Rizzo assisted in the start-up of
Tandem's European Telco Group. Mr. Rizzo holds a Master of Business
Administration degree from the University of Massachusetts. He is a citizen of
the United States.
TERJE NORDAHL has served as our Chief Operating Officer since March
1998 and has 26 years of experience in telecommunications operations. Mr.
Nordahl also has extensive experience in the computer and Internet industry. As
a Managing Director at Unisource Business Networks BV from 1997 to 1998, he
established and built the Unisource Business Data Network in Norway. From 1995
to 1997, Mr. Nordahl was President of Telia AS (Norway), Telia's subsidiary in
Norway, where he supervised the building of an ATM backbone network with
integrated voice and data services. From 1993 to 1995, Mr. Nordahl established
and operated Creative Technology Management AS, which provided business
development services for government and industrial organizations. Prior to
establishing CTM, Mr. Nordahl held engineering, development and marketing
positions with various companies, including IBM and telecommunications companies
affiliated with Ericsson (L.M.) Telephone Co. and ITT Corp. Mr. Nordahl holds a
First Honors Bachelor of Science degree from Heriot-Watt University, Edinburgh
and has completed the INSEAD Advanced Management Program. He is a citizen of
Norway.
JOACHIM W. BAUER has served as our Chief Financial Officer since March
1998 and has six years of experience in the telecommunications industry. From
1994 to 1998, Mr. Bauer served as Chief Financial Officer of Unisource Carrier
Services. Before joining Unisource Carrier Services, Mr. Bauer held various
management positions with IBM and its affiliates, including Controller of IBM
(Switzerland). Mr. Bauer graduated from a commercial school in Zurich, was
educated at IMEDE business school, Lausanne, Switzerland, and completed the
senior executive program of the Swiss Executive School (SKU). Mr. Bauer holds a
Certified Diploma in Accounting and Finance (CPA). He is a citizen of Germany.
KEES VAN OPHEM has served as our Vice President, Purchase and General
Counsel since March 1998, with responsibility for interconnection, licensing,
legal affairs and carrier relations. Mr. van Ophem has eight years of experience
in the telecommunications industry. Prior to joining us, he was Vice President,
Purchase and General Counsel for Unisource Carrier Services from 1994 to 1998
and was on its management Board from its inception in early 1994. From 1992 to
1994 Mr. van Ophem served as legal counsel to Royal PTT Nederland NV (KPN), with
responsibility for the legal aspects of its start-up ventures in Hungary,
Bulgaria, Czech Republic and Ukraine and the formation of Unisource Carrier
Services. Prior to joining KPN, Mr. van Ophem worked at law firms in Europe and
the United States. Mr. van Ophem holds a Juris Doctorate degree from the
University of Amsterdam and, as a Fulbright scholar, a Master of Laws degree in
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International Legal Studies from New York University. He is a citizen of The
Netherlands.
NEIL E. CRAVEN has served as our Vice President, Business Development
since March 1998 and has six years of experience in the telecommunications
industry. From 1995 to 1998, Mr. Craven was a member of the management team at
Unisource Carrier Services, initially responsible for Corporate Strategy and
Planning and later serving as Vice President of Business Development. Prior to
joining Unisource Carrier Services, Mr. Craven was employed by Siemens AG in
Germany, where he worked on various international infrastructure projects. Mr.
Craven has an Honors degree in Computer Engineering from Trinity College, Dublin
and a Master of Business Administration degree from the Rotterdam School of
Management. He is a citizen of Ireland.
ALEX SCHMID has served as our Vice President, Strategic Development
since December 1999 and has over seven years of experience in international
telecommunications, Internet technology and media industry investments.
Immediately prior to joining us, Mr. Schmid was the General Partner of personal
investment vehicles targeting the technology, Internet, telecommunications and
media industries. From February 1996 until September 1998, Mr. Schmid was a
Managing Director and Head of Private Equity for the Bank Austria Group, where
he was responsible for investing primarily in European telecommunications and
telecommunications-related companies and investment vehicles. Mr. Schmid also
served on the Board of directors of Central Europe Telecom Investment L.P., a
venture capital fund targeting investments in telecommunications and
telecommunications-related companies in Central Europe. From August 1995 until
February 1996, Mr. Schmid was a Vice President at AIG Capital Partners. From
March 1993 until August 1995, Mr. Schmid was an Associate of the Private Equity
Group at Creditanstalt. Mr. Schmid is a graduate of the Wharton School at the
University of Pennsylvania with a Bachelor of Science in Economics. He is a
German citizen.
GLENN M. CREAMER has served as a director of Carrier1 International
since August 1998. Mr. Creamer has been a Managing Director of Providence Equity
Partners Inc. since its inception in 1996 and is also a General Partner of
Providence Ventures L.P., which was formed in 1991. Mr. Creamer is a director of
American Cellular Corporation, Celpage, Inc., Epoch Networks, Inc., Digiplex
S.A. (formerly Hubco S.A.), Wireless One Network L.P. and Worldwide Fiber Inc.
Mr. Creamer received a Bachelor of Arts degree from Brown University and a
Master of Business Administration degree from the Harvard Graduate School of
Business Administration. He is a citizen of the United States.
JONATHAN E. DICK has served as a director of Carrier1 International
since August 1998. Mr. Dick has been a Managing Director of Primus Venture
Partners, Inc. since December 1993. Prior to joining Primus in June 1991, Mr.
Dick held various positions in
14
<PAGE>
sales management at Lotus Development Corporation. Mr. Dick is also a director
of Entek IRD International Corporation, Ingredients.com, Paycor, Inc., PlanSoft
Corporation and Spirian Technologies, Inc. Mr. Dick received a Bachelor of
Science degree in Applied Mathematics and Economics from Brown University and a
Master of Business Administration degree from the Harvard Graduate School of
Business Administration. He is a citizen of the United States.
MARK A. PELSON has served as a director of Carrier1 International since
August 1998. Mr. Pelson is a Principal of Providence Equity Partners Inc., which
he joined in August 1996. Prior to 1996, Mr. Pelson was a co-founder and
director, from 1995 to 1996, of TeleCorp., Inc., a wireless telecommunications
company, and from 1989 to 1995 served in various management positions with AT&T,
including most recently as a general manager of strategic planning and mergers
and acquisitions. Mr. Pelson is a director of Madison River Telephone Company,
L.L.C., GlobeNet Communications Group Limited and Language Line Holdings, LLC.
Mr. Pelson received a Bachelor of Arts degree from Cornell University and a
Juris Doctorate from Boston University. Mr. Pelson is the son of Victor A.
Pelson. He is a citizen of the United States.
VICTOR A. PELSON has served as a director of Carrier1 International
since January 1999. Mr. Pelson is a Senior Advisor to Warburg Dillon Read LLC.,
an investment banking firm. He was a Director and Senior Advisor of Dillon, Read
& Co. Inc. at the time of its merger in 1997 with SBC Warburg. Before joining
Dillon, Read in April 1996, Mr. Pelson was associated with AT&T from 1959 to
March 1996, where he held a number of executive positions, including Group
Executive and President responsible for the Communications Services Group,
Executive Vice President and member of the Management Executive Committee. At
his retirement from AT&T, Mr. Pelson was Chairman of Global Operations (for what
is now AT&T, Lucent Technologies and NCR) and a member of the Board of
directors. Mr. Pelson is also chairman of the Board of trustees of New Jersey
Institute of Technology and a director of Eaton Corporation, Dun & Bradstreet
Corporation and United Parcel Service, Inc. and Dynatech Corporation. Mr. Pelson
received a Bachelor of Science degree in Mechanical Engineering from New Jersey
Institute of Technology and a Master of Business Administration degree from New
York University. Mr. Pelson is the father of Mark A. Pelson. He is a citizen of
the United States.
THOMAS J. WYNNE has served as a director of Carrier1 International
since January 1999. Mr. Wynne is currently a partner with Sycamore Creek
Development Co. He was President and Chief Operating Officer of LCI
International Inc. and its subsidiaries from July 1991 to October 1997. From
1977 to 1991, Mr. Wynne held several executive positions with MCI Communications
Corp., including President of the West Division, Vice President of Sales and
Marketing for the Mid-Atlantic Division, and Vice President in the Midwest
Division. Mr. Wynne holds a Bachelor of Science degree in Political Science from
St. Joseph's University. He is a citizen of the United States.
15
<PAGE>
BOARD OF DIRECTORS
The general affairs and business of Carrier1 are managed by the Board
of directors. Carrier1's Articles of Incorporation provide for at least three
directors appointed by a general meeting of shareholders for terms no greater
than six years. Under the Articles, the number and terms of directors are to be
determined, and each director may be reelected or removed at any time, by a
general meeting of shareholders. Directors are not required to hold any shares
in Carrier1 by way of qualification. Carrier1 is bound by the joint signature of
two directors or the sole signature of a managing director for ordinary course
management decisions, if one has been appointed by the Board. Carrier1 currently
has six directors and has no persons appointed as corporate officers. Each
director was appointed to hold office for a term of 6 years.
The Board held 4 meetings in 1999. Each member of the Board attended at
least 75% of these Board meetings.
COMMITTEES OF THE BOARD OF DIRECTORS
Our Board has recently established an audit committee. The audit
committee, consisting of Messrs. Dick, Wynne and M. Pelson, is responsible for
reviewing the services provided by our independent auditors, our annual
financial statements and our system of internal accounting controls. The audit
committee did not meet during 1999.
The Board has adopted a written charter for the audit committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Carrier1 does not have a compensation committee. The compensation of
executive officers and other of our key employees is determined by the Board.
Stig Johansson, our President and Chief Executive Officer, is currently a member
of the Board and has participated in such determinations. See "Certain
Relationships and Related Transactions" for a description of transactions
involving some members of the Board.
COMPENSATION OF DIRECTORS
Carrier1 will reimburse the members of the Board for their reasonable
out-of-pocket expenses incurred in connection with attending Board meetings.
Additionally Carrier1 maintains directors' and officers' liability insurance.
Carrier1 has granted 20,000 options to purchase shares to each of Messrs. Wynne
and V. Pelson. Members of the Board receive no other compensation for services
provided as a director.
16
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by or paid to, our Chief Executive
Officer and our other four most highly compensated executive officers during the
periods from March 4, 1998 through December 31, 1998 and from January 1, 1999
through December 31, 1999. During 1998, these individuals held options in
Carrier One, LLC, which in turn held substantially all of the equity of
Carrier1. Pursuant to a restructuring of our management equity, these options
for Carrier One, LLC interests were cancelled and equivalent options for shares
of Carrier1 were issued in their place. The economic terms of these new options
are substantially the same as the terms of the Carrier One, LLC options.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
SHORT TERM COMPENSATION COMPENSATION
---------------------------- -----------------------------
SECURITIES
OTHER UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION PERIOD(A) SALARY(B) BONUS(B) COMPENSATION(B)(C) OPTIONS COMPENSATION(E)
--------------------------- --------- --------- -------- ------------------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Stig Johansson...................... 1999 $ 279,603 $ 43,339 $ 27,938 355,555 $ 72,823
PRESIDENT AND CHIEF EXECUTIVE 1998 245,569 46,044 22,188 (d) 39,550
OFFICER
Eugene A. Rizzo..................... 1999 197,368 30,592 26,723 355,555 31,649
VICE PRESIDENT, SALES AND 1998 173,343 32,502 22,188 (d) 27,248
MARKETING
Terje Nordahl....................... 1999 171,051 26,513 25,263 177,777 37,666
CHIEF OPERATING OFFICER 1998 135,207 25,352 19,969 (d) 24,248
Joachim W. Bauer.................... 1999 171,051 26,513 26,245 355,555 40,380
CHIEF FINANCIAL OFFICER 1998 150,230 28,168 23,147 (d) 34,793
Kees Van Ophem...................... 1999 171,051 26,513 25,111 355,555 16,788
VICE-PRESIDENT, PURCHASE AND 1998 150,230 28,168 22,188 (d) 14,756
GENERAL COUNSEL
</TABLE>
- ----------
(a) Short term compensation for the 1998 period relates to the period from
March 4, 1998 through December 31, 1998 except in the case of Terje
Nordahl, for whom the relevant 1998 period was March 26, 1998 through
December 31, 1998.
(b) We record this compensation expense in Swiss Francs. The U.S. dollar
amounts shown for 1998 were calculated using an average exchange rate of
$0.69337 to SFr1, and for 1999 were calculated using an average exchange
rate of $0.65789 to SFr1.
17
<PAGE>
(c) Consists of general business expenses and contributions under a health
plan for our executive officers. Business expenses consist of car and
travel expenses in the following approximate amounts, in thousands:
<TABLE>
<CAPTION>
1998 1999
---- ----
<S> <C> <C>
Stig Johansson............................ $22.2 $27.9
Eugene A. Rizzo........................... 22.2 26.7
Terje Nordahl............................. 20.0 25.3
Joachim W. Bauer.......................... 22.2 26.2
Kees van Ophem............................ 22.2 25.1
</TABLE>
(d) Pursuant to the equity restructuring, options to purchase Carrier One,
LLC interests, which were granted to each executive in 1998, have been
cancelled and were replaced by the economically equivalent options shown
above as granted in 1999.
(e) Consists of contributions under a defined contribution pension plan.
STOCK OPTION GRANTS AND FISCAL YEAR-END VALUES
The following tables set forth information regarding grants of options
to purchase shares of Carrier1 and the fiscal year-end value of such options,
which were granted to the executive officers listed in the Summary Compensation
Table above pursuant to the 1999 share option plan to replace options to
purchase Carrier One, LLC interests pursuant to a restructuring of our
management equity. The economic terms of these new options are substantially the
same as the terms of the Carrier One, LLC options. Options vest in equal annual
installments over the five years ending on the fifth anniversary of the grant
date of the predecessor options, subject to the executive's continuing
employment.
OPTION GRANTS IN 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO EXERCISE PRESENT VALUE
UNDERLYING EMPLOYEES IN PRICE AT DATE OF
NAME OPTIONS GRANTED 1999 ($/SHARE) EXPIRATION DATE GRANT(a)
- ---- --------------- ---- --------- --------------- --------
<S> <C> <C> <C> <C> <C>
Stig Johansson............. 355,555 14.4% $2.0 March 4, 2008 $ 106,666.65
Eugene A. Rizzo............ 355,555 14.4% 2.0 March 4, 2008 106,666.65
Terje Nordahl.............. 177,777 7.2% 2.0 March 26, 2008 53,333.25
Joachim W. Bauer........... 355,555 14.4% 2.0 March 4, 2008 106,666.65
Kees van Ophem............. 355,555 14.4% 2.0 March 4, 2008 106,666.65
</TABLE>
- ----------
(a) The fair value of options grants is estimated on the date of the grant of
the economically equivalent predecessor options to purchase Carrier One,
LLC interests, using the minimum value option-pricing model, as allowed
under SFAS
18
<PAGE>
123 for nonpublic companies, for pro-forma footnote purposes with the
following assumptions used: dividend yield of 0%, risk-free interest rate
of 5.53%, and expected option life of 5 years.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS AT
DECEMBER 31, 1999 DECEMBER 31, 1999
------------------------- -------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- -------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Stig Johansson............... 0 $ 0 71,111/284,444 $2,726,395/10,905,583
Eugene A. Rizzo.............. 0 0 71,111/284,444 2,726,395/10,905,583
Terje Nordahl................ 0 0 35,555/142,222 1,363,179/5,452,791
Joachim W. Bauer............. 0 0 71,111/284,444 2,726,395/10,905,583
Kees van Ophem............... 0 0 71,111/284,444 2,726,395/10,905,583
</TABLE>
Carrier1 has authorized the issuance of options for up to 2,747,222
shares of Carrier1 pursuant to its 1999 share option plan dated as of December
30, 1998. As of December 31, 1999, Carrier1 had outstanding options for a total
of 2,478,468 shares under the 1999 share option plan and we are completing the
process of granting an additional 97,000 options to new employees. The Board has
approved and we are in the process of implementing our 2000 share option plan
and expect to grant additional options to employees in the future. Carrier1 has
also issued options to acquire 20,000 shares to each of Messrs. Wynne and V.
Pelson outside the scope of the 1999 share option plan.
EMPLOYMENT AGREEMENTS
Each of Stig Johansson, Eugene A. Rizzo, Terje Nordahl, Joachim W.
Bauer and Kees van Ophem has entered into an employment agreement with a wholly
owned subsidiary of Carrier1. The employment agreements provide that the
executive shall serve in his current capacity and that the executive shall be
paid base salary, bonus and pension plan contributions as set forth in the
Summary Compensation Table. Such agreements include, among others, the following
terms:
TERM. The employment agreements continue for an unspecified period of time and
may be terminated by either party upon six months' notice.
NONDISCLOSURE, NONCOMPETITION AND NONSOLICITATION COVENANTS. Each of the above
executives has agreed that during his period of employment and the eighteen
months thereafter he will not participate in any business that is engaged in the
provision of international long distance telecommunications services or that is
otherwise in
19
<PAGE>
competition with any business conducted by Carrier One, LLC or its subsidiaries.
Additionally, each of the above executives has agreed that during this
non-compete period, he will not induce or attempt to induce any of our employees
to leave our employ, nor will he attempt to induce any of our suppliers,
distributors or customers to cease doing business with us. Each of the above
executives has also agreed that he will refrain from disclosing confidential
information. In addition, each of the above executives is subject to
nondisclosure, noncompetition and nonsolicitation covenants pursuant to deeds of
covenant entered into among Carrier One, LLC, Carrier One Limited, Providence
and the executives.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
EQUITY INVESTMENTS
As of December 31, 1999, shares of Carrier1 were held by Carrier1's
management and employees, Providence Equity Partners L.P. (which holds one
share) and Carrier One, LLC. Messrs. Johansson, Bauer, Rizzo, van Ophem, Craven
and Nordahl are among the management that have subscribed and paid for
outstanding shares.
Carrier One, LLC is the vehicle through which Providence and Primus
participate in the equity investment in Carrier1. In addition, Thomas J. Wynne
and Victor A. Pelson, who are directors of Carrier1, hold interests in Carrier
One, LLC through arrangements arrived at separately with Providence and Primus.
Mr. Wynne owns (directly or through trusts organized for the benefit of family
members) 400,000 Class A Units in Carrier One, LLC, acquired at a purchase price
of $1.00 per Class A Unit. Mr. Wynne disclaims beneficial ownership of any Class
A Units in any such trusts. Mr. Pelson owns 100,000 Class A Units in Carrier
One, LLC, acquired at a purchase price of $1.00 per Class A Unit. Messrs. Wynne
and Pelson do not directly hold any outstanding shares of Carrier1
International.
In 1999, we completed a restructuring of our management equity
arrangements. Pursuant to this restructuring, each of Messrs. Johansson, Bauer,
Rizzo, van Ophem, Craven and Nordahl in effect exchanged his equity interests
and options that he had held in Carrier One, LLC to acquire an equivalent dollar
amount of shares and options to purchase shares of Carrier1. Each effected this
exchange through a series of transactions with Carrier One, LLC, Providence and
Primus and Carrier1. These individuals' portions of the total equity investment
in Carrier1 did not change significantly as a result of this restructuring, but
each of these individuals holds shares and options to acquire shares of Carrier1
directly. In addition, Carrier1 has granted Thomas J. Wynne and Victor A. Pelson
options to purchase a total of 40,000 shares of Carrier1 (20,000 shares for
each), at $2.00 per share.
20
<PAGE>
1999 SHARE OPTION PLAN
The Board of Carrier1 has adopted the 1999 share option plan, dated as
of December 30, 1998, under which we and related companies of the consolidated
Carrier1 group may grant to any employee or director options for shares of
Carrier1 or other equity securities issued by Carrier1 International. The option
plan is administered by the Board or a committee appointed by the Board, and
authorizes the Board or such committee to issue options in such forms and on
such terms as determined by the Board or such committee. The Board or such
committee may determine the number of options to grant. During 1999, the Board
raised the maximum number of shares issuable pursuant to the option plan from
2,222,222 to 2,747,222 shares. The per share exercise price for the options may
not be less than $2.00. If options are to be granted to an employee of a
subsidiary, such subsidiary will grant such options instead of Carrier1.
Carrier1 will grant the subsidiary options to acquire shares to meet its option
obligations at a per share exercise price based upon an agreed fair market value
(or, failing agreement, a fair market value determined by the Board). Options
granted under the option plan will vest in five equal annual installments
beginning on the first anniversary of the date of commencement of employment.
Options will expire if not exercised within 10 years of the grant, or on an
earlier date as specified by the Board or the committee. If the employment of a
participant is terminated for any reason, all unvested options will immediately
expire and vested options must be exercised within a particular number of days,
which number will vary depending on the reasons for termination. Subject to
certain exceptions, options will be nontransferable during the life of an
optionee except pursuant to a valid domestic relations order. Upon an optionee's
death, disability or termination of employment, the subsidiary which employs the
optionee, or its designee, will have the right to repurchase all shares held by
the optionee, whether or not such shares were acquired pursuant to the exercise
of options. Under Luxembourg law, Carrier1 and certain subsidiaries may be
precluded from exercising such right directly.
As of December 31, 1999, we have granted options pursuant to the option
plan to acquire 2,478,468 shares at exercise prices ranging from $2.00 to $40.34
per share plus applicable capital duty (currently 1% of the subscription price
payable to Carrier1 International by the subsidiary granting the applicable
option).
The Board has approved and we are in the process of implementing the
2000 share option plan, which is substantially similar in terms to the 1999
share option plan. We are completing the process of granting an additional
97,000 options to new employees and we intend to grant additional options to
employees in the future.
SECURITIES PURCHASE AGREEMENT
Carrier1, Carrier One, LLC and employee investors have entered into the
securities purchase agreement (effective as of March 1, 1999) under which
Carrier One,
21
<PAGE>
LLC and each employee investor has purchased, or committed to purchase, a
specified number of shares at prices ranging from $2.00 to $40.34 per share, for
an aggregate purchase price of approximately $6.0 million. As part of the
restructuring of the management equity arrangements described above, each of
Messrs. Johansson, Bauer, Rizzo, van Ophem, Craven, Nordahl, Gross, and Poulter,
in effect, exchanged 68,260 Class A Units (at $1.00 per unit) of Carrier One,
LLC to acquire, pursuant to the securities purchase agreement, 34,130 shares (at
$2.00 per share). Carrier1 intends in the future to issue additional shares to
employees that are or become party to the securities purchase agreement. The
securities purchase agreement also contains provisions relating to the
completion of the equity investment in Carrier1 by Carrier One, LLC in which
Providence, Primus and Messrs. Wynne and Pelson have membership interests. The
$60 million equity investment by Providence and Primus was completed in February
1999. Carrier One, LLC has paid in an additional $800,000 to the capital of
Carrier1 and received 400,000 shares. The securities purchase agreement provides
that Carrier1 will indemnify Carrier One, LLC and employee investors for, among
other things, losses related to any transaction financed or to be financed with
proceeds from the sale of securities purchased pursuant to the securities
purchase agreement or any related agreement and environmental losses. The
securities purchase agreement contains customary conditions, representations and
warranties.
REGISTRATION RIGHTS AGREEMENT
Carrier1, Carrier One, LLC, and Messrs. Johansson, Bauer, Rizzo, van
Ophem, Craven, Nordahl, Gross, Poulter, Wynne and Pelson, as the original
investors, have entered into a registration rights agreement, effective as of
March 1, 1999. The registration rights agreement provides that Carrier One, LLC
may at any time request registration under the Securities Act of its shares and
certain other equity securities. In addition, the registration rights agreement
gives certain piggyback registration rights to Carrier One, LLC and the original
investors and, at the request of certain original investors, possibly additional
employees party to the securityholders' agreement described below. The
registration rights agreement contains provisions governing the registration
statement filing process. Among other things, it provides that Carrier1 will
bear all registration expenses and expenses for each piggyback registration in
which Carrier One, LLC or any of the original investors participate, other than
underwriting discounts and commissions, in connection with its obligations under
the registration rights agreement.
SECURITYHOLDERS' AGREEMENT
In connection with the securities purchase agreement, Carrier1 has
entered into a securityholders' agreement, effective as of March 1, 1999, with
Messrs. Wynne and Pelson, the employee investors and Carrier One, LLC. This
agreement places restrictions on employee investors' ability to transfer their
securities without the prior written consent
22
<PAGE>
of the Board except under special circumstances. Transfers of securities are
subject to the right of first refusal by Carrier One, LLC or its transferee.
Carrier One, LLC will also benefit from preemptive rights in certain other
circumstances. This agreement also provides that the employee investors will (i)
consent to and raise no objections to a sale of Carrier1 approved by the Board
and (ii) comply with a Board request to pledge their securities to secure
financing to be provided to Carrier1 International. Employee investors have
tag-along rights in the event of sales by Carrier One, LLC or its members of
securities if a change of control is involved. Finally, under this agreement,
the employee investors agree not to disclose confidential information of,
compete with, or solicit employees or customers from Carrier One, LLC or
Carrier1.
EPOCH PEERING ARRANGEMENT
We have entered into a peering arrangement with Epoch Networks. The
contract with Epoch Networks provides for the free exchange of Internet traffic
between us and Epoch Networks. A fund managed by Providence that holds a
majority of the Class A Units of Carrier One, LLC and another fund managed by
Providence that also holds an interest in Class A Units of Carrier One, LLC own
a combined 19% of the outstanding equity of Epoch Networks. Glenn Creamer, one
of our directors, is also a director of Epoch.
DATA CENTER FACILITIES JOINT VENTURE
We are developing our network of data centers in major European markets
through our Digiplex joint venture, formerly named the Hubco joint venture.
Digiplex intends to build up to 20 to 25 facilities, generally ranging in size
from 100,000 to 350,000 square feet in major markets in Europe during 2000 and
2001. We expect to have a minimum of between 10,000 and 25,000 square feet for
our use and the use of our customers in each facility. We expect to connect each
facility to our fiber optic network. As a strategic anchor tenant in these
facilities, we will have favorable rents and rights to additional space. We can
opt not to be a strategic anchor tenant in some planned locations and, if we
wish to build data centers in additional locations, we have given Digiplex the
right of first refusal to construct them.
We expect to compete with Digiplex and another of our joint venture
partners in providing data center capabilities. The joint venture agreement
permits us to do so, with some exceptions. Moreover, we will be entitled to
retain the benefits of our strategic anchor tenant status unless we default or
we cease to be a Digiplex shareholder or we acquire or are acquired by a company
that competes with Digiplex.
Our partners in Digiplex include an investment vehicle for funds
managed by Providence and Primus. Glenn Creamer, one of our directors, is a
director of Digiplex.
23
<PAGE>
WORLDWIDE FIBER BACKHAUL AGREEMENT
In December 1999, we entered into an agreement with Worldwide Fiber
Networks (UK) Limited, a wholesale managed bandwidth services provider with
substantial North American and transatlantic assets, under which we will provide
bandwidth from the point of termination of its transatlantic capacity in London,
to destinations across Europe. We expect to commence transmission pursuant to
this agreement in March 2001 and, as one of their major providers of European
backhaul capacity, expect to deliver a substantial amount of bandwidth over the
15 year term of the agreement. Under the agreement, Worldwide Fiber has the
option to swap excess transatlantic capacity for four strands of fiber on our
German network or a combination of two strands of fiber and a 10 Gbps wavelength
once it has purchased a total of 100 STM-1s. A fund managed by Providence owns
approximately 4.5% of the outstanding common stock of Worldwide Fiber Inc. Glenn
Creamer, one of our directors, is also a director of Worldwide Fiber Inc.
OTHER TRANSACTIONS
Carrier One, LLC advanced a loan of $68,260, bearing interest at 12%,
to Mr. van Ophem, evidenced by a promissory note dated June 30, 1998, to finance
his original equity investment in Carrier One, LLC. Mr. van Ophem is required to
repay principal and interest on the loan in five equal annual installments of
$18,936 commencing July 1, 2001. Effective as of March 1, 1999, Carrier1
International GmbH became the creditor with respect to the loan. As of December
31, 1999, Mr. van Ophem owed $68,260 to Carrier1.
During the year ended December 31, 1999 and during the period ended
December 31, 1998, we reimbursed Providence and Primus for expenses incurred in
connection with our formation and the negotiation of certain agreements we
entered into. Such reimbursements totaled $96,000 and $339,000, respectively,
and were expensed as selling, general and administrative expenses.
BENEFICIAL OWNERSHIP
BENEFICIAL OWNERSHIP OF CARRIER1
The following table sets forth information regarding the beneficial
ownership of the shares of Carrier1, as of March 22, 2000 by:
(1) each person known to Carrier1 to own beneficially more
than 5% of Carrier1's outstanding shares,
(2) each director of Carrier1,
24
<PAGE>
(3) each executive officer of Carrier1 listed in the Summary
Compensation Table under "Executive Compensation" above, and
(4) all executive officers and directors of Carrier1 as a
group.
All information with respect to beneficial ownership has been furnished
to us by the respective shareholders of Carrier1.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER(1) SHARES OF SHARES
- --------------------------------------- ------ ---------
<S> <C> <C>
Carrier One, LLC........................................................ 28,272,087 69.8%
c/o Providence Equity Partners Inc.
901 Fleet Center
50 Kennedy Plaza
Providence, RI 02903
Providence Equity Partners L.P.(2)...................................... 28,272,088 69.8
901 Fleet Center
50 Kennedy Plaza
Providence, RI 02903
Jonathan M. Nelson(2)................................................... 28,272,088 69.8
Paul J. Salem(2)........................................................ 28,272,088 69.8
NAME OF EXECUTIVE OFFICER OR DIRECTOR
Stig Johansson(3)....................................................... 176,352 *
Eugene A. Rizzo(3)...................................................... 176,352 *
Terje Nordahl(3)........................................................ 105,240 *
Joachim Bauer(3)........................................................ 176,352 *
Kees van Ophem(3)....................................................... 176,352 *
Glenn M. Creamer(2)..................................................... 28,272,088 69.8
Jonathan E. Dick........................................................ -- --
Mark A. Pelson.......................................................... -- --
Victor A. Pelson(4)..................................................... 8,000 *
Thomas J. Wynne(4)...................................................... 8,000 *
All directors and executive officers as a group (12 persons)............ 29,275,088 70.2
</TABLE>
- ----------
* Less than one percent.
(1) "Beneficial owner" refers to a person who has or shares the power to vote
or direct the voting of a security or the power to dispose or direct the
disposition of the security or who has the right to acquire beneficial
ownership of a security within 60 days. More than one person may be
deemed to be a beneficial owner of the same securities. In computing the
number of shares beneficially owned by a person and the percentage
ownership of that person, shares subject to options and warrants held
25
<PAGE>
by that person that are currently exercisable or exercisable within
60 days of March 22, 2000 are deemed outstanding. Such shares, however,
are not deemed outstanding for the purpose of computing the percentage
ownership of any other person.
(2) Carrier One, LLC is the direct beneficial owner of 30,399,999 shares and
Providence Equity Partners L.P. ("Providence L.P.") is the direct
beneficial owner of 1 share. Providence L.P. is the majority Class A Unit
holder of Carrier One, LLC, and by virtue of such status may be deemed to
be the beneficial owner of the shares in which Carrier One, LLC has
direct beneficial ownership. Providence Equity Partners L.L.C. ("PEP
LLC") is the general partner of Providence L.P., and by virtue of such
status may be deemed to be the beneficial owner of the shares in which
Providence L.P. has direct or indirect beneficial ownership. Jonathan M.
Nelson, Glenn M. Creamer and Paul J. Salem may be deemed to share voting
and investment power with respect to the shares in which PEP LLC has
direct or indirect beneficial ownership. Each of Jonathan M. Nelson,
Glenn M. Creamer, Paul J. Salem, PEP LLC and Providence L.P. disclaims
such deemed beneficial ownership. The address of Messrs. Nelson and Salem
is c/o Providence Equity Partners Inc., 901 Fleet Center, 50 Kennedy
Plaza, Providence, RI 02903.
(3) Includes 34,130 shares and an additional 142,222 shares (71,110, in the
case of Mr. Nordahl) issuable to each such person upon exercise of
options which are exercisable within 60 days.
(4) Consists of options exercisable within 60 days that Carrier1
International has issued to each of Thomas J. Wynne and Victor A. Pelson
out of a total of 40,000 shares (20,000 shares each).
BENEFICIAL OWNERSHIP OF CARRIER ONE, LLC, THE MAJORITY SHAREHOLDER OF CARRIER1
The following table sets forth certain information regarding the
beneficial ownership of Class A Units (the "Class A Units") of Carrier One, LLC,
the majority shareholder of Carrier1, as of December 31, 1999 by:
(1) each director of Carrier1,
(2) each executive officer of Carrier1 International listed in
the Summary Compensation Table under "Executive Compensation" above,
(3) all directors and executive officers of Carrier1 as a
group as of December 31, 1999, and
(4) each person known to Carrier1 to own beneficially more
than 5% of Carrier One, LLC's Class A Units.
26
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF DIRECTOR/EXECUTIVE OFFICER(1) NUMBER OF UNITS UNITS(1)
<S> <C> <C>
Stig Johansson................................................ -- --
Eugene A. Rizzo............................................... -- --
Terje Nordahl................................................. -- --
Joachim Bauer................................................. -- --
Kees van Ophem................................................ -- --
Glenn M. Creamer (2).......................................... 50,000,000 82.24%
Jonathan E. Dick.............................................. -- --
Mark A. Pelson................................................ -- --
Victor A. Pelson.............................................. 100,000 *
Thomas J. Wynne (3)........................................... 400,000 *
All directors and executive officers as a group (12 persons).. 50,500,000 83.55%
NAME AND ADDRESS OF BENEFICIAL OWNER
Providence Equity Partners, L.P. (2) 49,312,400 81.11%
901 Fleet Center
50 Kennedy Plaza
Providence, RI 02903
Jonathan M. Nelson (2) 50,000,000 82.24%
Paul J. Salem (2) 50,000,000 82.24%
Primus Capital Fund IV Limited Partnership (4) 9,600,000 15.79%
5900 Landerbrook Drive,
Suite 200
Cleveland, OH 44124-4020
</TABLE>
- ----------
* Less than one percent.
(1) Based upon 60.8 million Class A Units outstanding.
(2) Providence L.P. holds 49,312,400 Class A Units, and another fund managed
by Providence holds 687,600 Class A Units. PEP LLC is the general partner
of Providence L.P. and the other fund, and by virtue of such status may
be deemed to be the beneficial owner of the Class A Units in which
Providence L.P. and the other fund have direct or indirect beneficial
ownership. Jonathan M. Nelson, Glenn M. Creamer and Paul J. Salem may be
deemed to share voting and investment power with respect to the Class A
Units in which PEP LLC has direct or indirect beneficial ownership. Each
of Jonathan M. Nelson, Glenn M. Creamer, Paul J. Salem and PEP LLC
disclaims such deemed beneficial ownership.
(3) Thomas J. Wynne holds (directly or through trusts organized for the
benefit of family members) 400,000 Class A Units. These Class A Units do
not include
27
<PAGE>
additional options that Carrier1 has issued to Mr. Wynne for a total of
40,000 shares. Mr. Wynne disclaims beneficial ownership in any Class A
Units held in any such trusts.
(4) Primus Capital Fund IV Limited Partnership ("Primus Capital LP") holds
9,600,000 Class A Units and another fund managed by Primus holds 400,000
Class A Units. Primus Venture Partners IV Limited Partnership ("Primus
Venture LP") is the general partner of Primus Capital LP and the other
fund, and Primus Venture Partners IV, Inc. ("Primus Venture Inc.") is the
General Partner of Primus Venture LP. By virtue of such status, either of
Primus Venture LP or Primus Venture Inc. may be deemed to be the
beneficial owner of the Class A Units in which Primus Capital LP and the
other fund have beneficial ownership. Each of Primus Venture LP and
Primus Venture Inc. disclaims such deemed beneficial ownership.
OTHER MATTERS
The proxy holders are authorized to vote, in their discretion, upon
matters incidental to matters listed on the agenda or emergency decisions as may
come before the annual meeting, the special meeting and any adjournment of the
meetings. Among the procedural matters presented to each meeting, shareholders
or their proxies will appoint a "bureau" under Luxembourg practice. The "bureau"
consists of a president to preside at the meeting, a secretary in charge of
drawing up the minutes, and a scrutineer to verify the capacity of the persons
present. Bureau members are chosen from the persons in attendance. The bureau
members will establish a presence list to be signed by the participants at the
meetings. The bureau members will also sign the minutes of the meetings, as will
those shareholders who so request. Other than the proposals described above and
procedural matters for the conduct of the meetings, the Board knows of no other
matters which will be presented for action by the shareholders.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Without prejudice to the statutory rights granted under Luxembourg
law to shareholders who alone or in aggregation with other shareholders
control 20% of the shares of the Company, proposals of shareholders intended
to be presented at the 2001 annual meeting of shareholders must, in addition
to satisfying the other requirements of the Securities and Exchange
Commission's rules and regulations, be received by the Company at its
principal executive offices no later than [January [ ], 2001] in order to be
considered for inclusion in the Company's 2001 Proxy Statement.
MATERIAL INCORPORATED BY REFERENCE
Our Annual Report to Shareholders for the fiscal year ended December
31, 1999, including audited financial statements, accompanies this Proxy
Statement in the form of
28
<PAGE>
copies of the Company's Form 10-K filed with the U.S. Securities and Exchange
Commission, together with supplementary material. The accompanying Annual Report
does not include exhibits to the Form 10-K, however. Upon request by an eligible
shareholder, we will provide copies of these exhibits for a reasonable fee.
Requests for a copy of the exhibits should be mailed to: Carrier1 International
S.A., Attn: Investor Relations, c/o Carrier1 International GmbH, Militarstrasse
36, CH-8004, Zurich, Switzerland. Alternatively, a copy of our Form 10-K and the
exhibits can be obtained by searching the U.S. Securities and Exchange
Commission's EDGAR database on the U.S. Securities and Exchange Commission's
website at "www.sec.gov."
BY ORDER OF THE BOARD OF DIRECTORS
Stig Johansson
Director, President and
Chief Executive Officer
Luxembourg
May [ ], 2000
29
<PAGE>
DETACH HERE
PROXY
CARRIER1 INTERNATIONAL S.A.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CARRIER1
INTERNATIONAL S.A. FOR THE ANNUAL MEETING TO BE HELD ON JUNE 13, 2000
The undersigned hereby appoints Stig Johansson, Joachim Bauer, and Kees van
Ophem, and each of them, proxies, with full power of substitution, to vote all
common shares of capital of Carrier1 International S.A. that the undersigned is
entitled to vote at the Annual Meeting of Shareholders to be held at [________]
on Tuesday, June 13, 2000 at 11:00 a.m., local time, and at any adjournment,
postponement or continuation thereof. The proxies have the authority to vote as
directed on the reverse side of this card with the same effect as though the
undersigned were present in person and voting. The proxies are further
authorized in their discretion to vote upon such other business as may properly
come before the Annual Meeting and any adjournment, postponement, or
continuation thereof. The undersigned revokes all proxies previously given to
vote at the Annual Meeting.
MANAGEMENT RECOMMENDS THE ADOPTION OF PROPOSALS 1 THROUGH 5.
SEE REVERSE SIDE TO BE SIGNED ON SEE REVERSE SIDE
REVERSE SIDE
<PAGE>
Reverse Side
[LOGO]
[X] Please mark votes as in this example
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS YOU DIRECT. IF YOU GIVE NO
DIRECTION, WE WILL VOTE YOUR SHARES OF THE COMPANY'S CAPITAL "FOR" ALL
PROPOSALS. WE CANNOT VOTE YOUR SHARES UNLESS YOU SIGN, DATE AND RETURN THIS
CARD.
THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE "FOR" ALL PROPOSALS.
1. Approve the Company's statutory accounts for the year ended December
31, 1999, and the reports of the Company's statutory auditors and the
Board of Directors on the statutory accounts, dated ________, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Determine to carry forward the loss reported by the Company for the
year ended December 31, 1999 to the year commencing January 1, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approve the discharge of the Board of Directors of the Company --
pursuant to Article 74 of Luxembourg's Company Law -- from the
execution of their mandate as directors for the year ended December 31,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Approve the discharge of the statutory auditors of the Company --
pursuant to Article 74 of Luxembourg's Company Law -- from the
execution of their mandate as statutory auditors for the year ended
December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting thereof and at
any adjournment.
Please mark, sign, date, and return this Proxy in the accompanying
prepaid envelope. Please sign exactly as your name appears on this Proxy. When
signing as an attorney, executor, administrator, trustee or guardian, please
give full title as such. If shares are held jointly, both owners should sign.
Signature:______________________________ Date:_______________
Signature:______________________________ Date:_______________
<PAGE>
DETACH HERE
PROXY
CARRIER1 INTERNATIONAL S.A.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CARRIER1
INTERNATIONAL S.A. FOR THE SPECIAL MEETING TO BE HELD ON JUNE 13, 2000
The undersigned hereby appoints Stig Johansson, Joachim Bauer, and Kees van
Ophem, and each of them, proxies, with full power of substitution, to vote all
common shares of capital of Carrier1 International S.A. that the undersigned is
entitled to vote at the Special Meeting of Shareholders to be held immediately
following the Annual Meeting of Shareholders to be held at [________] on
Tuesday, June 13, 2000 at 11:00 a.m., local time, and at any adjournment,
postponement or continuation thereof. The proxies have the authority to vote as
directed on the reverse side of this card with the same effect as though the
undersigned were present in person and voting. The proxies are further
authorized in their discretion to vote upon such other business as may properly
come before the Special Meeting and any adjournment, postponement, or
continuation thereof. The undersigned revokes all proxies previously given to
vote at the Special Meeting.
MANAGEMENT RECOMMENDS THE ADOPTION OF PROPOSALS 6 THROUGH 9.
SEE REVERSE SIDE TO BE SIGNED ON SEE REVERSE SIDE
REVERSE SIDE
<PAGE>
Reverse Side
[LOGO]
[X] Please mark votes as in this example
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS YOU DIRECT. IF YOU GIVE NO
DIRECTION, WE WILL VOTE YOUR SHARES OF THE COMPANY'S CAPITAL "FOR" ALL
PROPOSALS. WE CANNOT VOTE YOUR SHARES UNLESS YOU SIGN, DATE AND RETURN THIS
CARD.
THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE "FOR" ALL PROPOSALS.
6. Approve the amendment to the Company's Articles of Incorporation to
increase the number of shares that the Board of Directors is authorized
to issue from 55,000,000 to 100,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. Approve the amendment to the Company's Articles of Incorporation to
authorize the Board of Directors to fix record dates for shareholders'
meetings, dividend entitlement and other specified purposes.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
8. Approve the amendment to the Company's Articles of Incorporation to
eliminate the shareholder's option for shares to be issued in bearer
form.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
9. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Special Meeting thereof and at
any adjournment.
Please mark, sign, date, and return this Proxy in the accompanying prepaid
envelope. Please sign exactly as your name appears on this Proxy. When signing
as an attorney, executor, administrator, trustee or guardian, please give full
title as such. If shares are held jointly, both owners should sign.
Signature:______________________________ Date:_______________
Signature:______________________________ Date:_______________
