CARRIER 1 INTERNATIONAL S.A.
OPTION AGREEMENT
This OPTION AGREEMENT, effective as of September 11, 2001, is by and among
Carrier 1 UK Limited (the "EMPLOYER"), Xxxxxx Xxxxxxx XxXxxxx (the "EXECUTIVE")
and Carrier 1 International S.A., a Luxembourg SOCIETE ANONYME (the "COMPANY").
W I T N E S S E T H:
WHEREAS, the Employer is a subsidiary of the Company; and
WHEREAS, the Executive has not previously been employed by the Company or
any of its affiliates; and
WHEREAS, as an inducement essential to the Executive's entering into the
Employment Agreement with the Employer, dated as of the date hereof (the
"EMPLOYMENT AGREEMENT"), the Employer and the Company have agreed to grant the
Options (as defined below) covering the Option Shares (as defined below),
pursuant to, and subject to, the terms and conditions set forth in this
Agreement; and
WHEREAS, pursuant to the Carrier 1 International S.A. Master Option
Agreement, the Company has agreed to make certain options available to the
Employer in order to enable the Employer to carry out its obligations under this
Agreement.
NOW THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
As used in this Agreement, the terms "APPOINTMENT," "BOARD," "CARRIER1 SA
BOARD," "CHANGE OF CONTROL," "COMMENCEMENT DATE," "DISABILITY," "EVENT OF
DEFAULT," "GROUP COMPANY," "PERSON" and "TERMINATION DATE," shall each have the
respective meanings assigned to such terms in the Employment Agreement.
2. GRANT OF OPTION.
Effective as of the date hereof, the Employer grants to Executive, subject
to the terms and conditions set forth herein, the right and option (the
"OPTIONS") to purchase from the Employer 1,200,000 of the ordinary shares of the
Company (the "OPTION SHARES" and each ordinary share of the Company, a "SHARE")
at a purchase price equal to US$1.10 per Share plus the amount of any capital
duty payable by the Company, the Employer or the Executive in respect of the
issuance of such Option Shares (not to exceed the amount of such capital duty
that would be payable upon a direct issuance by
the Company of the Option Shares to the Executive) (the "EXERCISE PRICE") . The
number of Option Shares and the Exercise Price are subject to adjustment
pursuant to Section 7.2.
3. VESTING AND EXERCISABILITY
3.1 IN GENERAL. Except as otherwise expressly provided in this Option
Agreement, and subject to the continuous employment of the Executive with
the Employer or one or more other Group Companies until the applicable
vesting date, the Options shall become vested and exercisable as to 25% of
the Option Shares on the twelve-month anniversary of the Commencement Date
and as to the remainder of the Option Shares in six equal installments on
each of the six next succeeding six-month anniversaries of the
Commencement Date. Except as provided in Clause 3.2 below, if the
Executive's employment with the Employer or one or more other Group
Companies terminates, any portion of the Options that have not vested on
or prior to the effective date of such termination shall be cancelled for
an aggregate payment for all such unvested portion of US$1.00 to the
Executive.
3.2 CERTAIN TERMINATIONS OF EMPLOYMENT. Notwithstanding anything in Clause 3.1
to the contrary:-
(a) if a Change of Control occurs and the Executive is not offered the
position of Chief Executive Officer of the surviving company (the
parent company if such parent company is publicly traded and owns
more than 50% of the surviving company) following such Change of
Control and the Executive has elected accelerated vesting of the
Options pursuant to Clause 4.4(c) of the Employment Agreement, then
effective immediately prior to the Change of Control, any Options
then held by the Executive and that have not vested previously in
accordance with Clause 3.1 shall vest in full, provided that the
Options shall not so vest if, after the announcement of or entering
into the transaction that would constitute the Change of Control but
prior to the consummation of the Change of Control, the Appointment
has terminated for any reason other than a termination by the
Company where no Event of Default has occurred or by the Executive
for Good Reason; and
(b) if the Appointment of the Executive is terminated by the Company
(other than as a result of an Event of Default or as a result of the
Executive's death or Disability) or by the Executive for Good Reason
(other than in the circumstance where the preceding Clause 3.2(a)
applies) and the Executive has elected accelerated vesting of the
Options pursuant to Clause 4.4(d) of the Employment Agreement,
effective as of the Termination Date, the Options shall immediately
vest and become exercisable as to that number of Option Shares that
would have become vested and exercisable pursuant to
2
Clause 3.1 within the twelve-month period following the Termination
Date (notwithstanding such termination of the employment).
3.3 BOARD DISCRETION. The Board in its sole discretion, with the consent of
the Carrier1 SA Board, may accelerate the vesting or exercisability of all
or any portion of the Options, at any time and from time to time.
4. EXERCISE
4.1 Once vested in accordance with the provisions of this Option Agreement,
the Options may be exercised at any time and from time to time prior to
the date such options terminate as provided for in Section 5 by giving
written notice to the Employer at its principal office address, or to such
transfer agent as the Employer shall designate. Such notice shall identify
the Option being exercised and specify the number of Shares as to which
this Option is being exercised, accompanied by full payment of the
purchase price therefor either (a) in United States dollars in cash or by
check, (b) through delivery of Shares that have been owned by the
Executive for at least six months and having a fair market value equal as
of the date of the exercise to the cash exercise price of the Option, (c)
by any combination of (a) and (b) above. Options may only be exercised
with respect to full ordinary shares. No fractional ordinary shares shall
be issued.
5. TERMINATION OF OPTIONS
5.1 NORMAL EXPIRATION DATE. The Options shall expire on the tenth (10th)
anniversary of the Commencement Date, subject to earlier termination as
provided in Clause 5.2 or 6 below.
5.2 EFFECT OF TERMINATION OF EMPLOYMENT.
(a) TERMINATION UPON DEATH OR DISABILITY. If the Executive ceases to be
employed by the Employer and all other Group Companies by reason of
his death or Disability, the Executive (or his personal
representative, estate or beneficiary, as applicable) shall have the
right to exercise the Options for that number of Option Shares that
have vested in accordance with Section 3 on or prior to the
Termination Date until the specified expiration date of the Options
provided for in Clause 5.1.
(b) TERMINATIONS BY THE EMPLOYER OTHER THAN WHERE EVENT OF DEFAULT HAS
OCCURRED. If the Employer (and any other Group Company then
employing the Executive) terminates the Executive's employment
(other than as a result of his death or Disability or where an Event
of Default has occurred), or the Executive terminates for Good
Reason, the Executive (or his personal representative, estate or
beneficiary, as applicable) shall have the right,
3
subject to Clause 5.2(e), to exercise the Options for the number of
Option Shares that have vested in accordance with Section 3 on or
prior to the Termination Date until the earlier of (i) the specified
expiration date of the Options provided for in Clause 5.1 or (ii) 24
months from the Termination Date.
(c) TERMINATIONS BY THE EXECUTIVE OTHER THAN FOR GOOD REASON. If the
Executive voluntarily terminates employment with the Employer (or
other Group Companies then employing the Executive) other than for
Good Reason, then Executive shall have the right to exercise the
Options for the number of Option Shares that have vested in
accordance with Section 3 until the earlier of (i) the specified
expiration date of the Options provided for in Clause 5.1 or (ii) 30
days from the Termination Date.
(d) EVENT OF DEFAULT. If an Event of Default has occurred, the Options,
whether or not vested, shall immediately be cancelled for an
aggregate payment for all such Options of US$1.00 to the Executive
and neither the Executive nor any person claiming through the
Executive shall have any further rights with respect thereto.
(e) VIOLATION OF POST-TERMINATION OBLIGATIONS. Notwithstanding anything
herein to the contrary, if the Executive breaches any of his
obligations under any of Clauses 6, 7 or 8 of his Employment
Agreement, any outstanding Options shall immediately be cancelled
for an aggregate payment of US$1.00 to the Executive and neither the
Executive nor any person claiming through the Executive shall have
any further rights with respect thereto.
6. CHANGE OF CONTROL
In the event of a Change of Control, the Employer, under the instruction
from the Carrier1 SA Board (as constituted immediately prior to the consummation
of the transaction constituting the Change of Control) shall either: (i) make
appropriate provision for the continuation of this Options by substituting on an
equitable basis for the Option Shares then subject to this Option either (a) the
consideration payable with respect to the outstanding Shares in connection with
the Change of Control or (b) equity securities of the surviving corporation in
such Change of Control (or a direct or indirect parent thereof); or (ii) upon
written notice to Executive, provide that the Options must be exercised, to the
extent exercisable, within a specified number of days of the date of such
notice, at the end of which period the Options shall terminate; or (iii)
terminate the Options in exchange for a cash payment equal to the excess of the
fair market value of the Option Shares subject to this Option (to the extent
then exercisable) over the Exercise Price thereof.
4
7. MISCELLANEOUS PROVISIONS
7.1 NON-TRANSFERABILITY OF OPTIONS. The Options may be exercised only by the
Executive or, following his death, by the Executive's estate. The Options
are not assignable or transferable, in whole or in part, and it may not,
directly or indirectly, be offered, transferred, sold, pledged, assigned,
alienated, hypothecated or otherwise disposed of or encumbered (including
without limitation by gift, operation of law or otherwise) other than by
will or by the laws of descent and distribution to the estate of the
Executive upon the Executive's death.
7.2 ADJUSTMENTS. The number, class and exercise price of any outstanding
Options (and the number of shares subject to outstanding Options), shall
be adjusted by the Board, upon the instruction of the Carrier1 Board, if
and to the extent necessary or appropriate to reflect any stock dividend,
stock split, reverse stock split or share combination of, or extraordinary
cash dividend on, the Shares or recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares or
other similar event on or after the date hereof.
7.3 NO RIGHTS AS STOCKHOLDER. The Executive shall not have the rights of a
shareholder with respect to the Option Shares until the date on which the
Options Shares are recorded in his or her name in the share registry of
the Company following exercise hereof and no adjustments shall be made for
distributions, dividends or similar rights for which the record date is
before the date such Share is issued.
7.4 NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in this Option Agreement shall
interfere with or limit in any way the right of the Employer or any Group
Company to terminate the Executive's employment at any time, or confer
upon the Executive any right to continued employment.
7.5 MODIFICATION OF OPTIONS. The Employer, under the instruction from the
Carrier1 SA Board, shall have the authority to effect, at any time and
from time to time, with the written consent of Executive, the modification
of the terms of this Option Agreement.
7.6 COMPLIANCE WITH LAW AND REGULATIONS. The Options and the obligation of the
Employer to sell and deliver Shares hereunder shall be subject to all
applicable laws, rules and regulations of any jurisdiction and to such
approvals by any government or regulatory agency as may be required. The
Employer shall not be required to issue or deliver any certificates for
Shares prior to (i) the listing of such Shares on any stock exchange on
which the Shares may then be listed, and (ii) the completion of any
registration or qualification of such Shares under any applicable law, or
any rule or regulation of any government body. No Shares
5
shall be issued upon exercise of any Options granted hereunder, if such
exercise would result in a violation of applicable law, including
applicable securities laws.
7.7 WITHHOLDING TAXES. Executive acknowledges and agrees that the Employer and
the other Group Companies have the right to require from the Executive or
to deduct from payments of any kind otherwise due to Executive any
foreign, federal, state or local taxes of any kind required by law to be
withheld with respect to the exercise of the Options hereunder. The
Employer in its discretion may condition the exercise of the Options on
the Executive's making satisfactory arrangements for such withholding. For
the avoidance of doubt, each of the Employer, on the one hand, and the
Executive, on the other, shall bear and pay their respective National
Insurance contributions imposed in connection with the Executive's
exercise of the Options.
7.8 ADS. Upon written request of the Executive, the Company will use its good
faith, commercially reasonable best efforts to facilitate deposit by the
Executive of the Option Shares in exchange for American Depository Shares
with respect to the Shares (the "ADS's"), if at the time of such request
such ADS's are then maintained and available. The Company shall pay all
expenses, fees and charges for receiving deposit of the Shares and issuing
ADS's.
7.9 ASSIGNMENT. The Employer may assign all or any part of its rights and
obligations under this Agreement to the Company or any other Group
Company.
7.10 NOTICES. Any notice hereunder shall be made as provided in the Employment
Agreement.
7.11 GOVERNING LAW; JURISDICTION.
(a) This Option Agreement shall be construed and administered in
accordance with and governed by the laws of Luxembourg. In the event
of any conflict or inconsistency between the provisions of this
Agreement, the terms of this Agreement shall govern.
(b) The courts of England have exclusive jurisdiction to hear and decide
any suit, action or proceedings, and to settle any disputes, which
may arise out of or in connection with this Option Agreement
(respectively, "PROCEEDINGS" and "DISPUTES") and for this purpose
each party irrevocably submits to the jurisdiction of the Courts of
England. Each party irrevocably waives any objection which it might
at any time have to the courts of England being nominated as the
forum to hear and decide any Proceedings and to settle any disputes
and agrees not to claim that the courts of England are not a
convenient or appropriate forum.
6
7.12 SIGNATURES. This Agreement is made in three copies, each of which shall be
considered as an original and each of the three parties acknowledges
having received a copy.
IN WITNESS WHEREOF, the Employer has caused this Option Agreement to be
executed by its duly authorized officer and the Executive has executed this
Option Agreement as of the date hereof.
EXECUTIVE
/s/ Xxxxxx Xxxxxxx XxXxxxx
---------------------------------------
CARRIER 1 UK LIMITED, acting by its
attorney, Carrier 1 International S.A.,
acting by its authorized officers
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Title:
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Title:
CARRIER 1 INTERNATIONAL S.A.
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Title:
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Title:
7
