<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1998
COMMISSION FILE NUMBER: 1-14234
Caribiner International, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3466655
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16 West 61st Street, New York, NY 10023
- ---------------------------------------- -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 541-5300
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes /X/ No / /
The registrant had 23,693,529 shares of Common Stock (par value $0.01 per
share) outstanding as of February 5, 1999.
<PAGE>
INDEX
<TABLE>
<CAPTION>
PART I. Financial Information
<S> <C>
Item 1. Financial Statements (Unaudited)
Review Report of Independent Accountants........................................... 2
Consolidated Balance Sheets as of
December 31, 1998 and September 30, 1998........................................... 3
Consolidated Statements of Operations for
the three months ended December 31, 1998 and 1997.................................. 4
Consolidated Statements of Cash Flows for
the three months ended December 31, 1998 and 1997.................................. 5
Consolidated Statement of Changes in Stockholders' Equity for the three months
ended December 31, 1998 and 1997................................................... 6
Notes to Consolidated Financial Statements......................................... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...................................... 9
PART II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders............................... 13
Item 6. Exhibits and Reports on Form 8-K.................................................. 15
SIGNATURES............................................................................................... 17
</TABLE>
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<PAGE>
Review Report of Independent Accountants
Stockholders and Board of Directors
Caribiner International, Inc.
We have reviewed the accompanying consolidated balance sheet of Caribiner
International, Inc. as of December 31, 1998, and the related consolidated
statements of operations for the three months ended December 31, 1998 and
1997, the consolidated statement of changes in stockholders' equity for the
three months ended December 31, 1998 and 1997 and the consolidated statements
of cash flows for the three months ended December 31, 1998 and 1997. These
financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which will
be performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements in order
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Caribiner International, Inc. as
of September 30, 1998, and the related consolidated statements of operations,
stockholders' equity, and cash flows for the year then ended, not presented
herein, and in our report dated December 18, 1998, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated balance sheet as of
September 30, 1998, is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.
/s/ Ernst & Young LLP
New York, New York
February 10, 1999
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<PAGE>
Caribiner International, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31, September 30,
ASSETS 1998 1998
(unaudited) (Note 1)
----------------- ------------------
(amounts in thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 12,538 $ 15,117
Trade accounts receivable - net of allowance for doubtful
accounts of $1,966 and $2,150 at December 31, 1998 and
September 30, 1998, respectively 114,770 124,936
Deferred charges 16,943 12,923
Prepaid expenses and other current assets 14,428 11,610
--------------- ----------------
Total Current Assets 158,679 164,586
Property and equipment - net 96,751 98,070
Goodwill - net 423,585 419,581
Taxes receivable 7,735 4,479
Deferred tax asset 653 362
Other assets 10,782 10,871
--------------- ----------------
TOTAL ASSETS $ 698,185 $ 697,949
=============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 913 $ 1,000
Trade accounts payable 18,526 23,739
Accrued expenses and other current liabilities 30,447 39,449
Accrued production costs 17,843 25,331
Deferred income 30,311 18,093
--------------- ----------------
Total Current Liabilities 98,040 107,612
Long-term debt 405,948 396,240
Deferred income 12,956 8,409
Other liabilities 14,237 9,913
--------------- ----------------
TOTAL LIABILITIES 531,181 522,174
Stockholders' Equity:
Preferred stock, $0.01 par value:
2,000 shares authorized, none issued and outstanding at
December 31, 1998 and September 30, 1998, respectively -- --
Common stock, $0.01 par value:
40,000 voting shares authorized, 23,693 and 23,689 shares
issued and outstanding at December 31, 1998 and September
30, 1998, respectively 236 236
Additional paid-in capital 167,652 167,608
Accumulated other comprehensive income (6,494) (3,714)
Retained earnings 5,610 11,645
--------------- ----------------
TOTAL STOCKHOLDERS' EQUITY 167,004 175,775
--------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 698,185 $ 697,949
=============== ================
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
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<PAGE>
Caribiner International, Inc.
Consolidated Statements of Operations
For the Three Months Ended
(unaudited)
<TABLE>
<CAPTION>
December 31,
1998 1997
------------------ -----------------
(amounts in thousands)
<S> <C> <C>
Service revenue $ 53,205 $ 56,178
Rental revenue 111,715 68,442
Intercompany eliminations (4,937) (2,171)
---------------- -----------------
Total revenue 159,983 122,449
Cost of service revenue 35,443 37,873
Cost of rental revenue 88,760 49,307
Intercompany eliminations (4,937) (2,171)
---------------- -----------------
Total cost of revenue 119,266 85,009
---------------- -----------------
Gross profit 40,717 37,440
Operating expenses:
Selling, general and administrative expenses 36,093 31,362
Depreciation and amortization 7,156 3,631
---------------- -----------------
Total operating expenses 43,249 34,993
---------------- -----------------
Equity in income of affiliated company -- 688
---------------- -----------------
Operating (loss) income (2,532) 3,135
Interest expense, net 7,527 2,922
---------------- -----------------
(Loss) income before taxes and extraordinary charge (10,059) 213
Provision for taxes (4,024) 85
---------------- -----------------
(Loss) income before extraordinary charge (6,035) 128
Extraordinary charge on early extinguishment of
debt (net of income taxes of $403) -- (605)
---------------- -----------------
Net loss $ (6,035) $ (477)
================ =================
Basic and diluted earnings (loss) per common share:
(Loss) income before extraordinary charge $ (0.25) $ 0.01
Extraordinary charge -- (0.03)
---------------- -----------------
Net loss per common share $ (0.25) $ (0.02)
================ =================
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
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<PAGE>
Caribiner International, Inc.
Consolidated Statements of Cash Flows
For the Three Months Ended
(unaudited)
<TABLE>
<CAPTION>
December 31,
1998 1997
------------------ ----------------
(amounts in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (6,035) $ (477)
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 10,781 5,985
Extraordinary charge (net of tax) for refinancing debt -- 605
Change in assets and liabilities, net of amounts acquired:
Decrease (increase) in trade accounts receivable 10,166 (7,463)
Increase in deferred charges (4,019) (600)
Increase in prepaid expenses and
other current assets (4,164) (4,985)
Decrease in other assets 1,020 837
Decrease in trade accounts payable (5,213) (20,872)
Increase in deferred income 16,765 3,486
(Decrease) increase in accrued expenses and
other liabilities (16,939) 14,394
Decrease in taxes payable (3,547) (3,990)
----------------- ----------------
Net cash used in operating activities (1,185) (13,080)
----------------- ----------------
Cash flow used in investing activities:
Purchase of property and equipment (6,537) (9,085)
Acquisition of intangibles and businesses, net of
cash acquired (3,455) (255,906)
----------------- ----------------
Net cash used in investing activities (9,992) (264,991)
----------------- ----------------
Cash flow provided by financing activities:
Repayments of long-term debt (29,929) (74,800)
Proceeds from long-term debt 39,550 358,019
Payment of debt issuance fees (931) (4,499)
----------------- ----------------
Net cash provided by financing activities 8,690 278,720
----------------- ----------------
Translation effect on cash and cash equivalents (92) (133)
Net (decrease) increase in cash (2,579) 516
Cash, beginning of period 15,117 10,253
----------------- ----------------
Cash, end of period 12,538 $ 10,769
================= ================
Supplemental disclosure of cash flow information:
Interest paid 8,149 $ 1,090
================== ================
Income taxes paid 179 $ 3,990
================== ================
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
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<PAGE>
Caribiner International, Inc.
Consolidated Statement of Changes in Stockholders' Equity
For the Three Months Ended December 31, 1998 and 1997
(unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
Accumulated
Common Stock Additional Other Total
---------------------- Paid-in Retained Comprehensive Stockholders'
Shares Amount Capital Earnings Income Equity
------ ------ ------- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
For the three months ended December 31, 1998:
Balance at September 30, 1998 23,689 $ 236 $ 167,608 $ 11,645 $ (3,714) $ 175,775
Net income (loss) - - - (6,035) - (6,035)
Foreign currency translation adjustment - - - - (2,780) (2,780)
------------
Other comprehensive income (loss) - - - - - (8,815)
------------
Issuance of common stock 4 * 44 - - 44
--------- -------- ----------- ----------- ----------- ------------
Balance at December 31, 1998 23,693 $ 236 $ 167,652 $ 5,610 $ (6,494) $ 167,004
========= ======== =========== =========== =========== ============
For the three months ended December 31, 1997:
Balance at September 30, 1997 23,417 $ 234 $ 159,874 $ 11,315 $ 11 $ 171,434
Net income (loss) - - - (477) - (477)
Foreign currency translation adjustment - - - - (132) (132)
------------
Other comprehensive income (loss) - - - - - (609)
------------
Issuance of common stock upon acquisitions 92 1 3,877 - - 3,878
Issuance of common stock upon exercise
of stock options 4 * 67 - - 67
--------- -------- ----------- ----------- ----------- ------------
Balance at December 31, 1997 23,513 $ 235 $ 163,818 $ 10,838 $ (121) $ 174,770
========= ======== =========== =========== =========== ============
</TABLE>
*Amount less than $1 thousand
See accompanying notes to the unaudited consolidated financial statements.
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<PAGE>
Caribiner International, Inc.
Notes To Consolidated Financial Statements
(Unaudited)
1. Interim Financial Information
The accompanying unaudited consolidated financial statements of Caribiner
International, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, the
consolidated financial statements contain all adjustments, consisting of
normal recurring adjustments, considered necessary to present fairly the
consolidated financial position, results of operations and cash flows of
the Company. The results of operations for the three months ended
December 31, 1998 are not necessarily indicative of the results of
operations that may be expected for any other interim periods or for the
fiscal year ending September 30, 1999.
The balance sheet at September 30, 1998 has been derived from the
Company's audited financial statements at that date, but does not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
As of October 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("Statement
130"). Statement 130 establishes new rules for the reporting and display of
comprehensive income and its components; however, the adoption of Statement
130 had no impact on the Company's net income or stockholders' equity.
Statement 130 requires foreign currency translation adjustments, which
prior to the adoption of the new accounting rule were reported separately
in stockholders' equity, to be included in other comprehensive income.
Prior year financial statements have been reclassified to conform to the
requirements of Statement 130.
Certain reclassifications have been made to the consolidated statement of
operations for the three months ending December 31, 1997 to conform to
the current period's presentation.
2. Business Dispositions
In December, 1998, the Company announced that it intends to dispose of
certain non-core assets. The Company expects the net proceeds from any
such sales to be approximately $70 million to $100 million, which it will
use to repay bank debt. The Company does not expect to incur any
significant gain or loss on such transactions.
3. Stock Option Re-Pricing
In December, 1998, the Company adopted a stock option re-pricing program
pursuant to which the Company offered all employees, excluding executive
management, the opportunity to re-price all outstanding options granted
prior thereto under the Company's 1996 Stock Option Plan, as amended. The
vesting schedule for all so re-priced stock options was restarted, with
all other terms and conditions of such stock options remaining the same.
The re-priced stock options have an exercise price equal to the average of
the high and low sales price of the common stock as of the re-pricing date.
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<PAGE>
4. Earnings Per Common Share
A reconciliation of the number of shares used for the calculation of
basic and diluted earnings per common share is as follows (in thousands):
<TABLE>
<CAPTION>
Three months Ended December 31,
1998 1997
------------ -------------
<S> <C> <C>
Weighted average number of common
shares outstanding 23,693 23,469
Effect of stock options 2 199
------------ -------------
Weighted average number of common
shares outstanding, including
effect of dilutive securities 23,695 23,668
====== ======
</TABLE>
-8-
<PAGE>
Caribiner International, Inc.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Three months Ended December 31, 1998 Compared to
Three months Ended December 31, 1997
Revenue. Revenue increased $37.6 million, or 30.7%, from $122.4 million in the
three months ended December 31, 1997 to $160.0 million in the three months
ended December 31, 1998. The increase in total revenue is attributable mainly
to the Company's audio visual services division, primarily as a result of the
acquisition of Visual Action Holdings plc ("Visual Action"), effective December
1, 1997, offset by a slight decrease in service revenue from the Company's
Communications division resulting from changes in the mix of business.
Gross profit. Total gross profit increased $3.3 million, or 8.8%, from $37.4
million in the three months ended December 31, 1997 to $40.7 million in the
comparable period of 1998. As a percentage of service revenue, the gross
profit margin increased from 32.6% in the three months ended December 31, 1997
to 33.4% in the three months ended December 31, 1998. The increased gross profit
margin is due to the specific production requirements of the contracts
completed during the period. Gross profit as a percentage of rental revenue
was 21% for the three months ended December 31, 1998 compared to 28% in the
prior year's comparable quarter. Profits from the audio visual businesses were
adversely impacted by the continuing higher cost structure of transitioning
operations, particularly in the hotel audio visual outsourcing operations.
Gross profit on rental revenue for the three months ended December 31, 1997
and 1998 was also impacted by $2.7 million and $4.0 million, respectively, of
depreciation expense related to rental equipment used in the audio visual
services businesses. Such depreciation expense is included in cost of rental
revenue.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased $4.7 million, or 15.1%, from $31.4 million
in the three months ended December 31, 1997 to $36.1 million in the three
months ended December 31, 1998. The increase was due primarily to the
Company's growth resulting from the acquisition of Visual Action, as well as
to normal inflationary increases and expenses relating to the restructuring of
the audio visual businesses. Selling, general and administrative expenses, as a
percentage of total revenue, decreased from 25.6% during the three months ended
December 31, 1997 to 22.6% in the three months ended December 31, 1998.
Depreciation and amortization. Depreciation and amortization expense for the
three months ended December 31, 1998 was $7.2 million, an increase of $3.5
million from the
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<PAGE>
corresponding period in the prior year. Property and equipment acquired
through acquisitions and the continued investment in information technology
resulted in increased depreciation expense of $2.1 million. Amortization
expense increased $1.4 million resulting primarily from increased goodwill.
Equity in Income of Affiliated Company. In November, 1997, the Company acquired
a minority interest in Visual Action through open market purchases resulting in
the equity in income reflected for the period. The Company began consolidating
the financial results of Visual Action as of December 1, 1997.
Interest expense, net. Interest expense, net increased by $4.6 million due to
higher average outstanding indebtedness previously incurred to finance
acquisitions as well as higher borrowing costs.
Provision for taxes. Taxes reflect an allocation based on the full year
anticipated effective tax rate. The provision for taxes as a percentage of
income before taxes was 40% for the three months ended December 31, 1997 and
1998.
Extraordinary Charge on Early Extinguishment of Debt. In connection with the
acquisition of Visual Action, the Company entered into a new credit facility
in October, 1997. As a result, during the three months ended December 31,
1997, the Company wrote off approximately $0.6 million (net of taxes of $0.4
million) of the remaining unamortized debt issuance costs related to its
former bank facilities.
Net loss. The Company realized a net loss of $6.0 million in the three months
ended December 31, 1998 compared to a net loss of $0.5 million in the three
months ended December 31, 1997. The loss per common share for the three months
ended December 31, 1998 was $0.25 as compared with a loss per common share of
$0.02 for the comparable period in fiscal 1997. Earnings per common share
before the extraordinary charge would have been $0.01 for the three months
ended December 31, 1997.
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<PAGE>
Liquidity and Capital Resources
On October 28, 1997, the Company entered into a loan agreement with a
syndicate of banks pursuant to which the Company increased its aggregate
available bank financing from $100 million to $550 million, consisting of a
$300 million six year revolving line of credit (the "Revolving Facility") to
be utilized in connection with future acquisitions and for working capital and
general corporate purposes and a $250 million six year term loan (the "Term
Facility" and together with the Revolving Facility, the "Credit Agreement") to
be utilized in connection with the acquisition of Visual Action. The Company
recognized an extraordinary loss of $0.6 million, net of taxes of $0.4
million, in the quarter ending December 31, 1997 resulting from the write-off
of the unamortized debt issuance fees relating to the Company's former bank
facilities. The Company incurred approximately $4.8 million of debt issuance
fees in connection with the Credit Agreement. Such fees are being amortized
over the term of the Credit Agreement, which is approximately six years.
In May, 1998, the Company repaid approximately $26 million under the Term
Facility thereby permanently reducing availability thereunder by such amount.
In December, 1998, the terms of the Revolving Facility were amended to reduce
the aggregate availability thereunder from $300 million to $250 million, to
amend certain financial covenants contained therein and to increase the
interest rate on amounts outstanding under the Credit Agreement. Fees of
approximately $1.2 million were incurred in connection with the amendments
made to the Credit Agreement in December, 1998. Such fees will be amortized
over the remaining term of the Credit Agreement. As of February 9, 1999, the
Company had approximately $413.0 million outstanding under the Credit Agreement.
Cash on hand as of such date was $13.0 million.
The maturity date of each of the Term Facility and the Revolving Facility is
September 30, 2003. Interest on outstanding amounts under the Credit Agreement
is payable quarterly in arrears and at the option of the Company accrues at
either (i) LIBOR plus an applicable margin or (ii) an alternate base rate
based upon the greatest of (a) the agent bank's prime rate, (b) the
three-month secondary certificate of deposit rate and (c) the federal funds
rate. The interest rate on the Credit Agreement is presently LIBOR plus 2.75%.
Principal on the Term Facility is payable in quarterly installments beginning
on December 31, 1998 with the final scheduled payment due on September 30,
2003. Subject to reductions in such quarterly installments for prepayments
made under the Term Facility, at present, the Company will be required to
repay an aggregate of: (i) $22.4 million in fiscal 1999, (ii) $33.6 million in
fiscal 2000, (iii) $44.8 million in fiscal 2001, (iv) $56 million in fiscal
2002 and (v) $67.8 million in fiscal 2003. The Company is permitted and
intends to draw on the Revolving Facility to make certain of the above
payments.
The Credit Agreement is secured by substantially all of the assets of the
Company and its subsidiaries, and the Company and its subsidiaries have
pledged the stock of their respective subsidiaries for the ratable benefit of
its lending banks. The Credit Agreement contains certain financial and other
covenants and restrictions, including without limitation restrictions on the
ability of the Company to pay dividends.
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<PAGE>
The following table sets forth certain information from the Company's
Consolidated Statement of Cash Flows for the three months ended December 31,
1998 and 1997:
<TABLE>
<CAPTION>
Three months Ended December 31,
1998 1997
----------- ------------
<S> <C> <C>
Net cash provided by (used in):
Operating activities $ (1,185) $ (13,080)
Investing activities (9,992) (264,991)
Financing activities 8,690 278,720
</TABLE>
For the three months ended December 31, 1998, $1.2 million was used in operating
activities. The net loss adjusted for depreciation and amortization provided
$4.7 million. The net change in working capital used $5.9 million, with
decreases in accrued expenses and other liabilities and accounts payable and an
increase in prepaid expenses, other current assets and deferred charges, offset
by decreases in accounts receivable and other assets and an increase in deferred
income. Cash used in investing activities was $10.0 million due to property and
equipment purchases and acquisition-related expenditures. Financing activities
provided $8.7 million, of which was $40.0 million was drawn under the Company's
Credit Agreement, offset by debt repayments of $30.0 million. In addition, debt
issuance fees of $0.9 million were paid in connection with the amendments made
to the Credit Agreement in December, 1998.
For the three months ended December 31, 1997, $13.1 million was used in
operating activities. The net loss adjusted for depreciation and amortization
and the extraordinary charge provided $6.1 million. The net change in working
capital used $19.2 million, with increases in accrued expenses, other
liabilities and deferred income and a decrease in other assets, which were
more than offset by decreases in accounts receivable, prepaid expenses and
other current assets and deferred charges. Investing activities required
$265.0 million due to acquisition-related expenditures and property and
equipment additions. Financing activities provided $278.7 million in the three
months ended December 31, 1997, of which $358.0 million was provided by
drawings under the Company's Credit Agreement, offset by repayments on former
bank facilities.
Capital expenditures were $9.1 million and $6.5 million during the three
months ended December 31, 1997 and 1998, respectively. During the three months
ended December 31, 1997, the purchase of additional personal computers and
expanded capabilities for the computer system accounted for the largest areas
of expenditure. During the three months ended December 31, 1998, the purchase
of audio visual equipment used in operations comprised the major portion of
capital expenditures.
YEAR 2000 COMPLIANCE
The Year 2000 Issue is the result of computer software and hardware, as well as
chips and processors embedded in various products ("Computer Applications"),
using two digits rather than four digits to define the applicable year.
Consequently, these Computer Applications may not be able to properly recognize
dates beginning with the year 2000 which could result in miscalculations or
system failures.
The Company's Computer Applications consist of both internal systems and systems
provided by third parties. The Company is in the process of examining and
testing its Computer Applications. Based on internal assessments completed to
date and upon third party representations, the Company believes that its
exposure to Year 2000 problems is not significant.
The Company has identified non-compliant systems in certain business units.
However, notwithstanding the Year 2000 Issue, the Company had planned to replace
those systems. The Company plans to achieve Year 2000 compliance across all
business lines by September 30, 1999 and is in the process of developing a
contingency plan in the event that it is not able to convert the non-compliant
systems in a timely manner. Such plan includes processing the affected
businesses temporarily on other existing Year 2000 compliant systems.
Although the Company believes that it will be able to resolve the Year 2000
Issue, there can be no assurance that the Company will identify all susceptible
systems or that systems provided by third parties will be Year 2000 compliant or
that any resulting Year 2000 Issues would not have an adverse effect on the
results of operations of the Company.
The Company has not incurred any significant costs to date that are specifically
attributable to resolving the Year 2000 issue and does not estimate the future
costs related to the resolution of this matter to be material.
-12-
<PAGE>
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
(a) Not Applicable
(b) Not Applicable
(c) The Company issued and sold the following unregistered securities during
the three months ended December 31, 1998:
1. In October, 1998, the Company granted to one employee options to
purchase an aggregate of 3,000 shares of Common Stock at an exercise
price per share of $8.1875 pursuant to a stock option agreement under
the Company's 1996 Stock Option Plan (the "1996 Option Plan"). Pursuant
to the terms of such stock option agreement, one-third of such options
vest and become exercisable in October, 1999; one-third of such options
vest and become exercisable in October, 2000; and one-third of such
options vest and become exercisable in October, 2001.
2. In November, 1998, the Company issued and sold an aggregate of 4,484
shares to Lois Jacobs, an employee of the Company, pursuant to the
terms of her employment compensation arrangement with the Company.
3. In connection with the re-pricing of stock options that had been
granted previously to non-executive employees of the Company, in
December, 1998, the Company granted to approximately 300 non-executive
employees options to purchase an aggregate of approximately 650,000
shares of Common Stock at an exercise price per share of $7.625
pursuant to stock option agreements under the Company's 1996 Option
Plan. Pursuant to the terms of the re-pricing program in respect of
such options, all employees choosing to participate in such program
were required to forfeit all stock options which had theretofore
been granted to them under the 1996 Option Plan. Pursuant to the terms
of the stock option agreements under which such stock options were
granted, one-third of such re-priced options vest and become
exercisable in December, 1999; one-third of such re-priced options
vest and become exercisable in December, 2000; and one-third of such
re-priced options vest and become exercisable in December, 2001.
4. In December, 1998, the Company granted to 25 employees options to
purchase an aggregate of 642,500 shares of Common Stock at an
exercise price per share of $7.625 pursuant to stock option
agreements under the Company's 1996 Option Plan. Pursuant to
the terms of such stock option agreements, one-third
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<PAGE>
of such options vest and become exercisable in December, 1999;
one-third of such options vest and become exercisable in December,
2000; and one-third of such options vest and become exercisable in
December, 2001.
5. In December, 1998, the Company granted to Christopher A. Sinclair, its
President and Chief Executive Officer, options to purchase an aggregate
of 600,000 shares of Common Stock. Of such options, 350,000 are
exercisable at a price per share of $8.5625 and 250,000 are exercisable
at a price per share of $15.00. Pursuant to the terms of the stock
option agreements under which such options were granted, one-third of
such options vest and become exercisable in December, 1999; one-third
of such options vest and become exercisable in December, 2000; and
one-third of such options vest and become exercisable in December,
2001.
There were no underwriters employed in connection with any of the transactions
set forth above.
The transactions described above were effected in reliance upon an exemption
from the registration requirements of the securities Act of 1933, as amended,
on the basis that such transactions did not involve any public offering. The
recipients of securities in each such transaction represented their intentions
to acquire the securities for investment only and not with a view to sell or
offer for sale the securities in connection with any distribution thereof and
appropriate legends were affixed to the securities issued in such
transactions.
(d) Not applicable.
-14-
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Required by Item 601 of Regulation S-K:
3.1 Restated Certificate of Incorporation of the Company, filed
March 15, 1996, with the Secretary of State of the State of
Delaware (filed as Exhibit 3.1 to the Company's Quarterly
Report on Form 10-Q for the three months ended March 31, 1996
and incorporated herein by reference).
3.2 Certificate of Amendment to the Restated Certificate of
Incorporation of the Company, filed March 30, 1998, with the
Secretary of State of the State of Delaware (filed as
Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1998 and
incorporated herein by reference).
3.3 Third Amended and Restated By-Laws of the Company.
10.1 Second Amendment and Waiver, dated as of December 18, 1998,
to the Credit Agreement, dated as of October 28, 1997, among
the Company, Caribiner, Inc., the several lenders named
therein, The Chase Manhattan Bank, as Administrative Agent,
and Merrill Lynch Capital Corporation, as Syndication Agent
(schedules and exhibits omitted--the Company agrees to furnish
a copy of any schedule or exhibit to the Commission upon
request) (filed as Exhibit 10.14 to the Company's Annual
Report on Form 10-K for the fiscal year ended September 30,
1998 and incorporated herein by reference).
10.2 (a) Option Agreement, dated as of December 21, 1998, by and
between the Company and Christopher A. Sinclair in
respect of the grant of options to purchase an aggregate
of 350,000 shares of common stock.
(b) Option Agreement, dated as of December 21, 1998, by
and between the Company and Christopher A. Sinclair in
respect of the grant of options to purchase an aggregate
of 250,000 shares of common stock.
-15-
<PAGE>
(b) Reports on Form 8-K:
None.
-16-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARIBINER INTERNATIONAL, INC.
(Registrant)
Date: February 12, 1999
By: /s/ Robert F. Burlinson
--------------------------------------
Robert F. Burlinson
Duly authorized officer of the
Registrant and Executive Vice
President and Chief Financial Officer
(Principal Financial and
Accounting Officer)
-17-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page Number
<S> <C> <C>
3.1 Restated Certificate of Incorporation of the Company, filed March 15,
1996, with the Secretary of State of the State of Delaware (filed as
Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the
three months ended March 31, 1996 and incorporated herein by
reference).
3.2 Certificate of Amendment to the Restated Certificate of Incorporation
of the Company, filed March 30, 1998, with the Secretary of State of
the State of Delaware (filed as Exhibit 3.2 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended March
31, 1998 and incorporated herein by reference).
3.3 Third Amended and Restated By-Laws of the Company.
10.1 Second Amendment and Waiver, dated as of December 18, 1998, to the
Credit Agreement, dated as of October 28, 1997, among the Company,
Caribiner, Inc., the several lenders named therein, The Chase
Manhattan Bank, as Administrative Agent, and Merrill Lynch Capital
Corporation, as Syndication Agent (schedules and exhibits
</TABLE>
-18-
<PAGE>
omitted--the Company agrees to furnish a copy of any schedule or
exhibit to the Commission upon request) (filed as Exhibit 10.14 to the
Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1998 and incorporated herein by reference).
10.2 (a) Option Agreement, dated as of December 21, 1998, by and between
the Company and Christopher A. Sinclair in respect of the grant of
options to purchase an aggregate of 350,000 shares of common stock.
(b) Option Agreement, dated as of December 21, 1998, by and between
the Company and Christopher A. Sinclair in respect of the grant of
options to purchase an aggregate of 250,000 shares of common stock.
27.1 Financial Data Schedule.
-19-
<PAGE>
EXHIBIT 3.3
THIRD AMENDED AND RESTATED BY-LAWS
OF
CARIBINER INTERNATIONAL, INC.
(as amended through December 18, 1998)
*************************
ARTICLE I
Offices
The registered office of Caribiner International, Inc. (the
"Corporation") shall be in the City of Dover, County of Kent, State of
Delaware. The Corporation also may have offices at such other places, within
or without the State of Delaware, as the Board (the "Board") determines from
time to time or the business of the Corporation requires. Until such time as
the Board otherwise determines, the Corporation shall also have an office in
the City, County and State of New York.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meetings. Except as otherwise provided
in these By-Laws, all meetings of the stockholders shall be held on such dates
and at such times and places, within or without the State of Delaware, as
shall be determined by the Board and as shall be stated in the notice of the
meeting or in waivers of notice thereof. If the place of any meeting is not so
fixed, it shall be held at the registered office of the Corporation in the
State of Delaware.
Section 2. Annual Meeting. The annual meeting of
stockholders for the election of directors and the transaction of such other
proper business as may be brought before the meeting shall be held on such
date after the close of the Corporation's fiscal year, and at such time, as
the Board may from time to time determine.
Section 3. Special Meetings. Special meetings of the
stockholders, for any purpose or purposes, may be called by the Chairman of
the Board, and shall be called by the Chairman of the Board upon the written
request of not less than three directors. The request shall state the date,
time, place and purpose or purposes of the proposed meeting.
Section 4. Notice of Meetings. Except as otherwise required
by law, whenever the stockholders are required or permitted to take any action
at a meeting, written notice thereof shall be given, stating the place, date
and time of the meeting and, unless it is the annual meeting, by or at whose
direction it is being issued. The notice also shall
<PAGE>
designate the place where the stockholders' list is available for examination,
unless the list is kept at the place where the meeting is to be held. Notice of
a special meeting also shall state the purpose or purposes for which the meeting
is called. A copy of the notice of any meeting shall be delivered personally or
shall be mailed, not less than ten (10) nor more than sixty (60) days before the
date of the meeting, to each stockholder of record entitled to vote at the
meeting. If mailed, the notice shall be given when deposited in the United
States mail, postage prepaid, and shall be directed to each stockholder at his
or her address as it appears on the record of stockholders of the Corporation,
or to such other address which such stockholder may have filed by written
request with the secretary of the Corporation. Notice of any meeting of
stockholders shall be deemed waived by any stockholder who attends the meeting,
except when the stockholder attends the meeting for the express purpose of
objecting at the beginning thereof to the transaction of any business because
the meeting is not lawfully called or convened, or by any stockholder who
submits, either before or after the meeting, a signed waiver of notice. Unless
the Board, after the adjournment of a meeting, shall fix a new record date for
the adjourned meeting or unless the adjournment is for more than thirty (30)
days, notice of an adjourned meeting need not be given if the place, date and
time to which the meeting shall be adjourned are announced at the meeting at
which the adjournment is taken.
Section 5. Quorum. Except as otherwise provided by law or,
by the Certificate of Incorporation of the Corporation, at all meetings of
stockholders, the holders of a majority of the outstanding shares of the
Corporation entitled to vote at the meeting shall be present in person or
represented by proxy in order to constitute a quorum for the transaction of
business.
Section 6. Voting. Except as otherwise provided by law or by
the Certificate of Incorporation of the Corporation, at any meeting of the
stockholders every stockholder of record having the right to vote thereat
shall be entitled to one vote for every share of stock standing in his or her
name as of the record date and entitling him or her to so vote. A stockholder
may vote in person or by proxy. Except as otherwise provided by law or by the
Certificate of Incorporation of the Corporation, any corporate action to be
taken by a vote of the stockholders, other than the election of directors,
shall be authorized by not less than a majority of the votes cast at a meeting
by the stockholders present in person or by proxy and entitled to vote
thereon. Directors shall be elected as provided in Section 3 of Article III of
these By-Laws. Written ballots shall not be required for voting on any matter
unless ordered by the Secretary of the meeting.
Section 7. Proxies. Every proxy shall be executed in writing
by the stockholder or by his or her attorney-in-fact, or otherwise as provided
in the General Corporation Law of the State of Delaware (the "General
Corporation Law").
<PAGE>
Section 8. List of Stockholders. At least ten (10) days
before every meeting of stockholders, a list of the stockholders (including
their addresses) entitled to vote at the meeting and their record holdings as
of the record date shall be open for examination by any stockholder, for any
purpose germane to the meeting, during ordinary business hours, at a place
within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list also shall be kept at and throughout
the meeting, and may be inspected by any stockholder who is present.
Section 9. Conduct of Meetings. At each meeting of the
stockholders, the Chairman of the Board or, in his or her absence, a director
chosen by a majority of the directors then in office shall act as chairman of
the meeting. The Secretary or, in his or her absence, any person appointed by
the chairman of the meeting shall act as secretary of the meeting and shall
keep the minutes thereof. Except as otherwise provided by law, at any annual
or special meeting of stockholders, only such business shall be conducted as
shall have been properly brought before the meeting. Such business must have
either been: (A) brought before the meeting at the direction of the chairman
of the meeting; or (B) specified in a written notice given by or on behalf of
a stockholder of record on the record date for such meeting entitled to vote
thereat or a duly authorized proxy for such stockholder; provided, that the
following actions, as described below, are taken. A notice must be delivered
personally to, or mailed to and received at, the principal executive office of
the Corporation, addressed to the attention of the Secretary, not less than 60
days nor more than 90 days prior to the meeting; provided, however, that in
the event that less than 70 days' notice or prior public disclosure of the
date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the tenth day following the day on which such notice of the date
of the annual or special meeting was mailed or such public disclosure was
made, whichever first occurs. Such notice shall set forth: (i) a description
of each such item of business proposed to be brought before the meeting and
the reasons for conducting such business at such meeting; (ii) the name and
address of the person proposing to bring such business before the meeting;
(iii) the class and number of shares held of record, held beneficially and
represented by proxy by such person as of the record date for the meeting (if
such date has then been made publicly available) and as of the date of such
notice; and (iv) any material interest of the stockholder in such item of
business. No business shall be brought before any meeting of stockholders of
the Corporation otherwise than as provided in this Section 9. The chairman of
the meeting may, if the facts warrant, determine that a stockholder proposal
was not made in accordance with the foregoing procedure, and if he or she
should so determine, he or she shall so declare to the meeting and the
defective proposal shall be disregarded.
<PAGE>
ARTICLE III
Board
Section 1. Number of Board Members. The business, property
and affairs of the Corporation shall be managed under the direction of the
Board, which shall consist of six directors. Directors need not be
stockholders of the Corporation. The number of directors may be reduced or
increased from time to time by action of a majority of the entire Board, but
no decrease may shorten the term of an incumbent director. When used in these
By-Laws, the phrase "entire Board" means the total number of directors which
the Corporation would have if there were no vacancies.
Section 2. Nomination. Only persons who are nominated in
accordance with the procedures set forth in these By-Laws shall be eligible to
serve as directors of the Corporation. Nominations of persons for election to
the Board of the Corporation may be made at a meeting of stockholders (a) by
or at the direction of the Board or (b) by any stockholder of the Corporation
who is a stockholder of record at the time of giving of notice provided for in
this Section 2, who shall be entitled to vote for the election of directors at
the meeting and who complies with the notice procedures set forth in this
Section 2. Such nominations, other than those made by or at the direction of
the Board, shall be made pursuant to timely notice in writing to the secretary
of the Corporation. To be timely, a stockholder's notice shall be delivered to
or mailed and received at the principal executive offices of the Corporation
not less than sixty (60) days nor more than ninety (90) days prior to the
meeting; provided, however, that in the event that less than seventy (70)
days' notice or prior public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must be so
received not later than the close of business on the tenth (10th) day
following the day on which such notice of the date of meeting or such public
disclosure was made. Such stockholder's notice shall set forth (x) as to each
person whom the stockholder proposes to nominate for election or reelection as
a director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); and (y) as
to the stockholder giving the notice (A) the name and address, as they appear
on the Corporation's books, of such stockholder and (B) the class and number
of shares of the Corporation which are beneficially owned by such stockholder.
At the request of the Board, any person nominated by the Board for election as
a director shall furnish to the secretary of the Corporation that information
required to be set forth in a stockholder's notice of nomination which
pertains to the nominee. The Chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that a nomination was not made
in accordance with the procedures prescribed by the By-Laws, and if he or she
should so determine, he or she shall so declare to the meeting and the
defective nomination shall be disregarded. Notwithstanding the foregoing
provisions of this Section 2, a stockholder shall also comply with all
applicable requirements of Exchange Act and
<PAGE>
the rules and regulations thereunder with respect to the matters set forth in
this Section.
Section 3. Election and Term. Except as otherwise provided
by law, by the Certificate of Incorporation of the Corporation or by these
By-Laws, the directors shall be elected at the annual meeting of the
stockholders and the persons receiving a plurality of the votes cast shall be
so elected. Subject to a director's earlier death, resignation or removal as
provided in Sections 4 and 5 of this Article III, each director shall hold
office until his or her successor shall have been duly elected and shall have
qualified.
Section 4. Removal. A director may be removed at any time,
with or without cause, by the holders of a majority of the outstanding shares
of the Corporation entitled to vote at an election of directors.
Section 5. Resignations. Any director may resign at any time
by giving written notice of his or her resignation to the Corporation. A
resignation shall take effect at the time specified therein or, if the time
when it shall become effective shall not be specified therein, immediately
upon its receipt, and, unless otherwise specified therein, the acceptance of a
resignation shall not be necessary to make it effective.
Section 6. Vacancies. Except as otherwise provided by the
Certificate of Incorporation of the Corporation, any vacancy in the Board
arising from an increase in the number of directors or otherwise shall be
filled by the vote of a majority of the directors then in office. Subject to
his or her earlier death, removal or resignation as provided in Sections 4 and
5 of this Article III, each director so elected shall hold office until his
successor shall have been duly elected and shall have qualified.
Section 7. Place of Meetings. Except as otherwise provided
in these By-Laws, all meetings of the Board shall be held at such places,
within or without the State of Delaware, as the Board determines from time to
time.
Section 8. Annual Meeting. The annual meeting of the Board
shall be held either (a) without notice immediately after the annual meeting
of stockholders and in the same place, or (b) as soon as practicable after the
annual meeting of stockholders on such date and at such time and place as the
Board determines.
Section 9. Regular Meetings. Regular meetings of the Board
shall be held on such dates and at such places and times as the Board
determines. Notice of regular meetings need not be given, except as otherwise
required by law.
Section 10. Special Meetings. Special meetings of the Board
may be called by the Chairman of the Board and shall be called by the Chairman
of the Board or the Secretary upon the written request of not less than two
directors. The request shall state the date, time, place and purpose or
purposes of the proposed meeting.
<PAGE>
Section 11. Notice of Meetings. Notice of each special
meeting of the Board (and of each annual meeting held pursuant to subdivision
(b) of Section 8 of this Article III) shall be given, not later than 24 hours
before the meeting is scheduled to commence, by the Chairman of the Board or
the secretary and shall state the place, date and time of the meeting. Notice
of each meeting may be delivered to a director by hand or given to a director
orally (whether by telephone or in person) or mailed or telecopied to a
director at his or her residence or usual place of business, provided,
however, that if notice of less than 72 hours is given it may not be mailed.
If mailed, the notice shall be deemed to have been given when deposited in the
United States mail, postage prepaid, and if telecopied, the notice shall be
deemed to have been given when oral confirmation of receipt is given. Notice
of any meeting need not be given to any director who shall submit, either
before or after the meeting, a signed waiver of notice or who shall attend the
meeting, except if such director shall attend for the express purpose of
objecting at the beginning thereof to the transaction of any business because
the meeting is not lawfully called or convened. Notice of any adjourned
meeting, including the place, date and time of the new meeting, shall be given
to all directors not present at the time of the adjournment, as well as to the
other directors unless the place, date and time of the new meeting is
announced at the adjourned meeting.
Section 12. Quorum. Except as otherwise provided by law or
these By-Laws, at all meetings of the Board a majority of the entire Board
shall constitute a quorum for the transaction of business, and the vote of a
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board. A majority of the directors present, whether or
not a quorum is present, may adjourn any meeting to another place, date and
time.
Section 13. Conduct of Meetings. At each meeting of the
Board, the secretary of the Board or, in his or her absence, a director chosen
by a majority of the directors present shall act as secretary of the meeting.
The secretary or, in his or her absence, any person appointed by the secretary
of the meeting shall act as secretary of the meeting and keep the minutes
thereof. The order of business at all meetings of the Board shall be as
determined by the secretary of the meeting.
Section 14. Committees of the Board. The Board, by
resolution adopted by a majority of the entire Board, may designate an audit
committee, compensation committee, executive committee and other committees,
each consisting of one (1) or more directors. Each committee (including the
members thereof) shall serve at the pleasure of the Board and shall keep
minutes of its meetings and report the same to the Board. The Board may
designate one or more directors as alternate members of any committee.
Alternate members may replace any absent or disqualified member or members at
any meeting of a committee. Except as limited by law, each committee, to the
extent provided in the resolution establishing it, shall have and may exercise
all the powers and authority of the Board with respect to all matters.
<PAGE>
Section 15. Operation of Committees. A majority of all of
the members of a committee shall constitute a quorum for the transaction of
business, and the vote of a majority of all the members of a committee present
at a meeting at which a quorum is present shall be the act of the committee.
Each committee shall adopt whatever other rules of procedure it determines for
the conduct of its activities.
Section 16. Written Consent to Action in Lieu of a Meeting.
Any action required or permitted to be taken at any meeting of the Board or of
any committee may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
Section 17. Meetings Held Other Than in Person. Members of
the Board or any committee may participate in a meeting of the Board or
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear and speak with each other, and such participation shall
constitute presence in person at the meeting.
ARTICLE IV
Officers
Section 1. Executive Officers, Etc. The executive officers
of the Corporation shall be a President, a Secretary and a Treasurer. The Board
also may elect or appoint a Chairman of the Board, one or more Vice Presidents
(any of whom may be designated as Executive Vice Presidents, Senior Vice
Presidents or otherwise), and any other officers (including one or more
Assistant Treasurers and one or more Assistant Secretaries) it deems necessary
or desirable for the conduct of the business of the Corporation, each of whom
shall have such powers and duties as the Board determines. Any two or more
offices may be held by the same person, and no officer except the Chairman of
the Board need be a director. Any officer may devote less than one hundred
percent (100%) of his working time to his activities as such if the Board so
approves.
Section 2. Duties.
(a) The Chairman of the Board. The Chairman of
the Board shall be a member of the Board, an officer of the Corporation and,
if present, shall preside at all meetings of the stockholders and the Board. The
Chairman of the Board shall advise and counsel the President, and in his or her
absence, other executives of the Corporation, and shall perform such other
duties as may from time to time be assigned to him or her by the Board.
(b) The President. The President shall be the
chief executive officer of the Corporation. The President shall, in the absence
of the Chairman of the Board, preside at all meetings of the stockholders and
the Board. The President shall have general management of the business and
affairs of the Corporation, subject to the control of the Board, and shall have
such other powers and duties as the Board assigns to him or her.
(c) The Vice President. The Vice President or,
if there shall be more than one, the Vice Presidents, if any, in the order of
their seniority or in any other order determined by the Board, shall perform,
in the absence or disability of the President, the duties and exercise the
powers of the President and shall have such other powers and duties as the Board
or the President assigns to him or to her or to them.
<PAGE>
(d) The Secretary. Except as otherwise provided
in these By-Laws or as directed by the Board, the Secretary shall attend all
meetings of the stockholders and the Board; shall record the minutes of all
proceedings in books to be kept for that purpose; shall give notice of all
meetings of the stockholders and special meetings of the Board; and shall keep
in safe custody the seal of the Corporation and, when authorized by the Board,
shall affix the same to any corporate instrument. The Secretary shall have
such other powers and duties as the Board or the President assigns to him or
her.
(e) The Treasurer. Subject to the control of
the Board, the Treasurer shall have the care and custody of the corporate
funds and the books relating thereto; shall perform all other duties incident
to the office of treasurer; and shall have such other powers and duties as the
Board or the President assigns to him or her.
Section 3. Election; Removal. Subject to his or her earlier
death, resignation or removal , as hereinafter provided, each officer shall
hold his or her office until his or her successor shall have been duly elected
and shall have qualified. Any officer may be removed at any time, with or
without cause, by the Board.
Section 4. Resignations. Any officer may resign at any time
by giving written notice of his resignation to the Corporation. A resignation
shall take effect at the time specified therein or, if the time when it shall
become effective shall not be specified therein, immediately upon its receipt,
and, unless otherwise specified therein, the acceptance of a resignation shall
not be necessary to make it effective.
Section 5. Vacancies. If an office becomes vacant for any
reason, the Board or the stockholders may fill the vacancy, and each officer
so elected shall serve for the remainder of his or her predecessor's term and
until his successor shall have been elected or appointed and shall have
qualified.
ARTICLE V
Provisions Relating to Stock Certificates and Stockholders
Section 1. Certificates. Certificates for the Corporation's
capital stock shall be in such form as required by law and as approved by the
Board. Each certificate shall be signed in the name of the Corporation by the
Secretary, or the Chairman of the Board or any Vice President and by the
Secretary, the Treasurer or any Assistant Secretary or any Assistant Treasurer
and shall bear the seal of the Corporation or a facsimile thereof. If any
certificate is countersigned by a transfer agent or registered by a registrar,
other than the Corporation or its employees, the signature of any officer of
the Corporation may be a facsimile signature. In case any officer, transfer
agent or registrar who shall have signed or whose facsimile signature as
placed on any certificate shall have ceased to be such officer, transfer agent
or registrar before the certificate shall be issued, it may nevertheless be
issued by the Corporation with the same effect as if he or she were such
officer, transfer agent or registrar at the date of the issue.
<PAGE>
Section 2. Lost Certificates, etc. The Corporation may issue
a new certificate for shares in place of any certificate theretofore issued by
it, alleged to have been lost, mutilated, stolen or destroyed, and the Board
may require the owner of the lost, mutilated, stolen or destroyed certificate,
or his or her legal representatives, to make an affidavit of that fact and to
give the Corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the Corporation on account of the alleged
loss, mutilation, theft or destruction of the certificate or the issuance of a
new certificate.
Section 3. Transfers of Shares. Transfers of shares shall be
registered on the books of the Corporation maintained for that purpose after
due presentation of the stock certificates therefor appropriately endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer.
Section 4. Record Date. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or for the purpose of determining stockholders
entitled to receive payment of any dividend or other distribution or the
allotment of any rights, or for the purpose of any other action, the Board may
fix a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board, and which record
date shall not be more than 60 nor less than 10 days before the date of any
such meeting and shall not be more than 60 days prior to any other action.
ARTICLE VI
Indemnification
Section 1. Indemnification. The Corporation shall, to the
fullest extent permitted by the General Corporation Law (including, without
limitation, Section 145 thereof) or other provisions of the laws of Delaware
relating to indemnification of directors, officers, employees and agents, as
the same may be amended and supplemented from time to time, indemnify any and
all such persons whom it shall have power to indemnify under the General
Corporation Law or such other provisions of law.
Section 2. Statutory Indemnification. Without limiting the
generality of Section 1 of this Article VI, to the fullest extent permitted,
and subject to the conditions imposed, by law, and pursuant to Section 145 of
the General Corporation Law unless otherwise determined by the Board of
Directors:
(i) the Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding whether civil, criminal,
administrative or investigative (other
<PAGE>
than an action by or in the right of the Corporation) by reason of the fact that
such person is or was a director, officer, employee or agent of the of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against reasonable expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
such person acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful; and
(ii) the Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that such person is or
was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against reasonable expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, except as otherwise provided by law.
Section 3. Indemnification by Resolution of Stockholders or
Directors or Agreement. To the fullest extent permitted by law,
indemnification may be granted, and expenses may be advanced, to the persons
described in Section 145 of the General Corporation Law or other provisions of
the laws of Delaware relating to indemnification and advancement of expenses,
as from time to time may be in effect, by (i) a resolution of stockholders,
(ii) a resolution of the Board, or (iii) an agreement providing for such
indemnification and advancement of expenses; provided that no indemnification
may be made to or on behalf of any person if a judgment or other final
adjudication adverse to the person establishes that such person's acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or that such person
personally gained in fact a financial profit or other advantage to which such
person was not legally entitled.
Section 4. General. It is the intent of this Article VI to
require the Corporation to indemnify the persons referred to herein for
judgments, fines, penalties, amounts paid in settlement and expenses
(including attorneys' fees), and to advance expenses to such persons, in each
and every circumstance in which such indemnification and such advancement of
expenses could lawfully be permitted by express provision of By-Laws, and the
indemnification and expense advancement provided by this Article VI shall not
be limited by the absence of an express recital of such circumstances. The
indemnification and advancement of expenses provided by, or granted pursuant
to, these By-Laws shall not be deemed exclusive of any other
<PAGE>
rights to which a person seeking indemnification or advancement of expenses may
be entitled, whether as a matter of law, under any provision of the Certificate
of Incorporation of the Corporation or these By-Laws, by agreement, by vote of
stockholders or disinterested directors of the Corporation or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office.
Section 5. Indemnification Benefits. Indemnification pursuant
to these By-Laws shall inure to the benefit of the heirs, executors,
administrators and personal representatives of those entitled to
indemnification.
ARTICLE VII
General Provisions
Section 1. Dividends, Etc. To the extent permitted by law,
the Board shall have full power and discretion, subject to the provisions of
the Certificate of Incorporation of the Corporation and the terms of any other
corporate document or instrument binding upon the Corporation, to determine
what, if any, dividends or distributions shall be declared and paid or made.
Section 2. Seal. The Corporation's seal shall be in such form
as is required by law and as shall be approved by the Board.
Section 3. Fiscal Year. The fiscal year of the Corporation
shall be determined by the Board.
Section 4. Voting Shares in Other Corporations. Unless
otherwise directed by the Board, shares in other corporations which are held
by the Corporation shall be represented and voted only by the Chairman of the
Board or by a proxy or proxies appointed by him or her.
ARTICLE VIII
Amendment
By-Laws may be made, altered or repealed by the Board,
subject to the right of stockholders to alter or repeal any By-Laws made by
the Board.
<PAGE>
EXHIBIT 10.2(a)
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is made as of the 21st day of December, 1998,
between Caribiner International, Inc., a Delaware corporation (hereinafter
called the "Corporation"), and Christopher A. Sinclair, the Corporation's
President and Chief Executive Officer (hereinafter called the "Participant").
WHEREAS, the Corporation desires to give the Participant an opportunity to
participate in the long-term growth of the Corporation by granting to the
Participant options to purchase the Corporation's common stock, par value $0.01
per share (the "Common Stock"), pursuant to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Grant of Option. Subject to the ratification and approval by the
stockholders of the Corporation, the Corporation hereby grants to the
Participant the right and option (hereinafter called the "Option") to
purchase an aggregate of up to Three Hundred Fifty Thousand (350,000)
shares (the "Shares") of Common Stock (such number being subject to
adjustment as provided in paragraph 7 hereof) on the terms and subject to
the conditions herein set forth. Such Option shall vest and become
exercisable as follows: (i) thirty-three and one-third percent (33 1/3%) of
the Option herein granted (for up to One Hundred Sixteen Thousand Six
Hundred Sixty-seven (116,667) shares) shall vest and may be exercised at
any time on or after the first anniversary of this Agreement (unless
terminated earlier pursuant to paragraph 6 hereof), (ii) thirty-three and
one-third percent (33 1/3%) of the Option herein granted (for up to One
Hundred Sixteen Thousand Six Hundred Sixty-seven (116,667) shares) shall
vest and may be exercised on or after the second anniversary of this
Agreement (unless terminated earlier pursuant to paragraph 6 hereof) and
(iii) the remaining thirty-three and one-third percent (33 1/3%) of the
Option herein granted (for up to One Hundred Sixteen Thousand Six Hundred
Sixty-six (116,666) shares) shall vest and may be exercised on or after the
third anniversary of this Agreement (unless terminated earlier pursuant to
paragraph 6 hereof). The Option granted hereby is not intended to be an
"incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and the Agreement shall be
construed and interpreted in accordance with such intention.
2. Exercise Price. The exercise price of the Shares covered by the
Option shall be the average of the high and low reported consolidated
trading sales price of the Company's Common Stock as reported on the New
York Stock Exchange on the date first set forth above, which is Eight
Dollars and Fifty-six and One Quarter Cents ($8.5625) per Share.
3. Term of Option. Subject to paragraph 8 hereof, the Option granted
hereby shall be exercisable in accordance with paragraph 1. The
Participant's right to exercise the aforementioned Option shall expire ten
(10) years from the date hereof (the "Expiration Date"). Unless terminated
earlier pursuant to paragraph 6 hereof, the Option may not be exercised
after the Expiration Date.
4. Nontransferability. The Option granted hereby shall not be
transferable otherwise than by will or the laws of descent and
distribution. More particularly (except as provided in the preceding
sentence), the Option may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of in any way, shall not be assignable
by operation of law, and shall not be subject to execution, attachment or
similar process. Any attempted sale, assignment, transfer, pledge,
hypothecation or other disposition of the Option contrary to the provisions
hereof, and the levy of any execution, attachment or similar process upon
the Option, shall be null and void and without effect. The Option may be
exercised by the Participant only during his lifetime or following his
death pursuant to paragraph 6 hereof.
<PAGE>
5. Disclosure and Risk.
(a) The Participant represents and warrants to the Corporation as
follows:
(i) The Participant acknowledges that (A) neither the Option nor
the Shares have been registered for resale under the Securities Act of
1933, as amended (the "Securities Act"), and (B) the Corporation is
under no obligation to effect the registration under the Securities Act
of the Option and/or the Shares.
(ii) The Shares will be acquired by the Participant for the
Participant's own account, for investment and not with a view to, or for
resale in connection with, any distribution or public offering thereof
within the meaning of the Securities Act.
(iii) The Corporation has made available to the Participant the
opportunity to ask questions of the officers and management of the
Corporation and to acquire information about the business and financial
condition of the Corporation and has, and at the time of exercise of the
Option will have, all information necessary for him to make an informed
investment decision.
(iv) He has received a copy of the Plan.
(b) Each certificate representing the Shares will be endorsed with the
following or a substantially similar legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT COVERING SUCH SECURITIES, OR (ii) THE CORPORATION
RECEIVES A WRITTEN OPINION FROM COUNSEL FOR THE HOLDER OF THESE
SECURITIES, REASONABLY SATISFACTORY TO THE CORPORATION, STATING THAT
SUCH SALE, TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION MAY BE MADE PURSUANT TO RULE 144 PROMULGATED UNDER THE
SECURITIES ACT OR IS OTHERWISE EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS."
The Corporation need not allow a transfer of any of the Shares unless
one of the conditions specified in the foregoing legend is satisfied. The
Corporation may also instruct its transfer agent not to allow the transfer
of any of the Shares unless one of the conditions specified in the
foregoing legend is satisfied.
Any legend endorsed on a certificate pursuant to the foregoing
language and the stop transfer instructions with respect to such Shares
shall be removed, and the Corporation shall promptly issue a certificate
without such legend to the holder thereof if (i) the Shares are registered
under the Securities Act and a prospectus meeting the requirements of
Section 10 of the Securities Act is available and has been delivered or
(ii) the holder provides the Corporation with a written opinion from
counsel for such holder of the Shares, reasonably satisfactory to the
Corporation, to the effect that a sale, transfer, assignment, pledge,
hypothecation or other disposition of such Shares may be made without
registration.
6. Termination of Employment; Disability; Retirement; Death.
(a) In the event that the Participant shall cease to be an employee of
the Corporation for any reason other than death, Disability, Retirement,
termination with or without Cause, or resignation for Good Reason (each as
defined below), the Option may be exercised by the Participant (to the
extent that the Participant shall have been entitled to do so as of the
date of the termination of his employment with the Corporation) at any time
prior to the Expiration Date of the Option or within 30 days after
Participant shall so cease to be an employee of the Corporation, whichever
is earlier. So long as the Participant shall continue to be an employee of
the Corporation, the Option shall not be affected by any change of duties
or position. The provisions of this Section 6(a) shall be subject to the
provisions of Section 6(e) below.
<PAGE>
(b) In the event of the Disability or Retirement of the Participant,
the unexercised portion of the Option that is held by the Participant on
the date of such Disability or Retirement, whether or not otherwise
exercisable on such date, shall be exercisable one (1) year from the date
of Disability or Retirement. "Disability" shall mean any termination of
employment with the Corporation or a subsidiary because of a long-term or
total disability, as determined by the Compensation Committee (the
"Committee") of the Board of Directors (the "Board") of the Corporation in
its sole discretion. "Retirement" shall mean a termination of employment
with the Corporation or a subsidiary either (i) on a voluntary basis by a
recipient who is at least 65 years of age or (ii) otherwise with the
written consent of the Committee in its sole discretion.
(c) During the lifetime of the Participant, the Option shall be
exercisable only by him (or by his legal guardian or representative). In
the event of the death of the Participant while he is an employee of the
Corporation or any subsidiary, the Option (or unexercised portion thereof)
which is held by the Participant at the date of death, whether or not
exercisable on the date of death, shall be exercisable in accordance with
the terms of this Agreement by the beneficiary designated by the
Participant for such purpose (the "Designated Beneficiary") or if no
Designated Beneficiary shall have been appointed or if the Designated
Beneficiary shall predecease the Participant, by the Participant's personal
representatives, heirs or legatees at any time for a period of one
(1) year after the date of the Participant's death and any portion of the
Option which is not exercised during such one (1) year period shall be
forfeited.
In the event of the death of the Participant following a termination
of employment due to Retirement or Disability, if such death occurs before
the Option (or any portion thereof) is exercised, the Option (or portion
thereof) that is held by the Participant on the date of termination of
employment, whether or not exercisable on such date, shall be exercisable
by such Participant's Designated Beneficiary or if no Designated
Beneficiary shall have been appointed or if the Designated Beneficiary
shall predecease the Participant, by the Participant's personal
representatives, heirs or legatees at any time for a period of one
(1) year after the date of the Participant's death and any portion of the
Option which is not exercised during such one (1) year period shall be
forfeited.
(d) In the event the Participant is terminated for Cause, the Option
shall be exercisable by the Participant (to the extent that the Participant
shall have been entitled to do so as of the date of the termination of his
employment with the Corporation for Cause) at any time prior to the
Expiration Date or within sixty (60) days after Participant's termination
for Cause, whichever is earlier. "Cause" shall have the meaning set forth
in Section 9(a) of that certain Employment Agreement by and between the
Corporation and the Participant, dated as of December 21, 1998.
(e) In the event the Participant is terminated without Cause or if
Participant resigns for Good Reason, automatically upon any such
termination or resignation, any unexercised portion of the Option shall
immediately vest and become fully exercisable (without regard to the
vesting provisions set forth in Paragraph 1 above), and the entire
unexercised portion of the Option shall thereafter be exercisable (in whole
or in part) at any time after such termination or resignation (as the case
may be) prior to the Expiration Date, or for a period of two years after
such termination or resignation (as the case may be), whichever is earlier.
As used herein, the term "Good Reason" shall have the meaning set forth in
Section 9(d) of that certain Employment Agreement by and between the
Corporation and the Participant, dated as of December 21, 1998.
7. Changes in Capital Structure. If all or any portion of the Option
shall be exercised subsequent to any stock dividend, stock split,
recapitalization, merger, consolidation, combination or exchange of shares,
separation, spin-off, reorganization, liquidation or the like occurring
after the date hereof, as a result of which shares of any class shall be
issued in respect of outstanding Common Stock or shares of Common Stock
shall be changed into the same or a different number of shares of the same
or another class or classes, the person or persons exercising the Option
shall receive, for the aggregate price paid upon such exercise,
the aggregate number and class of shares which, if the Shares (as
authorized at the date hereof) had been purchased at the date hereof for
the same aggregate price (on the basis of the price per share set forth in
<PAGE>
paragraph 2 hereof) and had not been disposed of, such person or persons
would be holding at the time of such exercise as a result of such purchase
and all such share dividends, stock splits, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, separations,
spin-offs, reorganizations, liquidations or the like; provided, however,
that no fractional shares shall be issued upon any such exercise, and the
aggregate price paid shall be appropriately reduced on account of any
fractional share not issued. In no event shall any adjustments be made to
the Option as a result of the issuance or redemption of securities of the
Corporation for cash or other consideration, or upon the exercise of any
conversion rights of any securities of the Corporation.
8. Method of Exercising Option. Subject to the terms and conditions
of this Agreement, the Option may be exercised in whole or in part by
giving written notice to the Secretary of the Corporation, at the address
set forth below the Corporation's signature to this Agreement or such other
location as may be designated by the Secretary of the Corporation. Such
notice shall state the Participant's election to exercise the Option and
the number of Shares in respect of which it is being exercised, and shall
be signed by the person or persons so exercising the Option. Payment for
the Shares may be made (i) in cash or (ii) at the option of the Committee,
or, in absence of the Committee, the Board, by delivery of Common Stock
already owned by the Participant and having an aggregate Market Price (as
defined in the Plan) on the date of such delivery equal to the aggregate
exercise price of the shares so purchased or (iii) at the option of the
Committee, or, in absence of the Committee, the Board, by delivery of a
combination of cash and Common Stock having an aggregate Market Price on
the date of such delivery equal to the aggregate exercise price of the
shares so purchased. The Corporation shall deliver a certificate or
certificates representing the shares of Common Stock so purchased as soon
as practicable after the notice of election has been received. In the event
the Option shall be exercised by any person or persons other than the
Participant, the notice of election shall be accompanied by appropriate
proof of the right of such person or persons to exercise the Option. All
shares of Common Stock that shall be purchased upon the exercise of the
Option as provided herein shall be fully paid and nonassessable.
9. Change of Control.
(a) As long as Participant is an employee of the Corporation, a
"Change of Control" of the Corporation shall cause the Option (or the
unexercised portion thereof), whether or not currently exercisable, to
become immediately exercisable, in whole or in part, as of the effective
date of such Change of Control without regard to any vesting provisions or
condition precedent which may be contained in paragraph 1 of this
Agreement. For purposes of this paragraph, a "Change of Control" shall be
deemed to have occurred if (i) any person or "group" (other than Warburg,
Pincus Investors, L.P. or any affiliate thereof) acquires, in a single
transaction or series of related transactions, 50% or more of the
outstanding Common Stock; (ii) during any period of two consecutive years,
individuals that at the beginning of such period constitute the Board cease
for any reason to constitute a majority thereof, unless the election, or
the nomination for election by the stockholders, of each such new director
was approved by a vote of at least two-thirds of the directors then still
in office which were directors at the beginning of the period; or
(iii) the sale of all or substantially all of the assets of the Corporation
(other than to a wholly-owned subsidiary of the Corporation).
(b) Notwithstanding the provisions of paragraph 9(a), in the case that
the Corporation is merged or consolidated with another corporation, or the
assets or stock of the Corporation is acquired by another corporation, or a
separation, reorganization or liquidation of the Corporation occurs, the
Board, or the Board of Directors of any corporation assuming the
obligations of the Corporation hereunder, shall make appropriate provisions
for the protection of the Option by substitution on an equitable basis of
appropriate stock of the Corporation, or appropriate stock of the merged,
consolidated or otherwise reorganized corporation, provided that only the
excess of the aggregate Market Price of the shares subject to the Option
immediately after such substitution over the aggregate exercise price
thereof is not less than the excess of the aggregate Market Price of the
shares subject to the Option immediately before such substitution over the
aggregate exercise price thereof.
<PAGE>
10. Optionee Not a Stockholder. The Participant shall not have any
rights as a stockholder with respect to any shares of Common Stock subject
to the Option prior to the date on which he is recorded as the holder of
such shares on the records of the Corporation.
11. Taxes. The Corporation may make such provisions and take such
steps as it may deem necessary or appropriate for the withholding of all
federal, state, local and other taxes required by law to be withheld with
respect to the Option including, but not limited to (i) reducing the number
of shares of Common Stock otherwise deliverable, based upon their fair
market value on the date of exercise, to permit deduction of the amount of
any such withholding taxes from the amount otherwise payable under this
Agreement; (ii) deducting the amount of any such withholding taxes from any
other amount then or thereafter payable to the Participant; or
(iii) requiring the Participant, Designated Beneficiary or legal
representative to pay to the Corporation the amount required or desirable
to enable it to satisfy its withholding obligations as a condition of
releasing the Common Stock.
12. General Provisions.
(a) The Corporation shall at all times during the term of the Option
reserve and keep available such number of Shares as will be sufficient to
satisfy the requirements of this Option Agreement, shall pay all fees and
expenses necessarily incurred by the Corporation in connection therewith,
and shall use its best efforts to comply with all laws and regulations
which, in the reasonable opinion of counsel to the Corporation, are
applicable thereto.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to principles of
conflicts of laws.
(c) Any notice to be given hereunder by either party to the other
shall be in writing and shall be given either by personal delivery,
facsimile or by mail, registered or certified, postage prepaid, return
receipt requested, or by overnight delivery addressed to the other party at
the respective addresses or facsimile numbers set forth below their
signatures to this Agreement, or at any other address or facsimile number
as such party may hereafter specify in writing.
(d) No amendments or modifications to this Agreement shall be binding
unless made in writing and signed by the parties hereto.
(e) The waiver by either party of a breach of any term or provision of
this Agreement shall not operate or be construed as a waiver of a
subsequent breach of the same provision or of the breach of any other term
or provision of this Agreement.
(f) As used herein, the masculine gender shall include the feminine
and the neuter genders, the neuter shall include the masculine and the
feminine genders, the singular shall include the plural, and the plural
shall include the singular.
(g) The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or
interpretation of this Agreement.
(h) The invalidity or enforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
(i) NEITHER THE PLAN NOR THIS AGREEMENT SHALL BE (1) CONSTRUED AS
GIVING THE PARTICIPANT THE RIGHT TO BE RETAINED IN THE EMPLOY OF THE
CORPORATION OR ANY SUBSIDIARY THEREOF OR TO BE ENTITLED TO ANY REMUNERATION
OR BENEFITS NOT SET FORTH IN THE PLAN OR THIS AGREEMENT OR (2) INTERFERE
WITH OR LIMIT THE RIGHT OF THE CORPORATION OR ANY SUBSIDIARY THEREOF TO
MODIFY THE TERMS OF OR TERMINATE THE PARTICIPANT'S EMPLOYMENT AT ANY TIME
WITH OR WITHOUT CAUSE.
13. Incorporation by Reference. Reference is hereby made to the
Corporation's 1996 Stock Option Plan, as amended as of February 27, 1998
(the "Plan"). Although it is expressly understood and agreed that
<PAGE>
the Options granted herein are not subject to the Plan, the following
provisions of the Plan are hereby incorporated herein by reference and
shall be deemed to be a part hereof as is set forth fully herein:
Article 3 (Administration) of the Plan; Section 5.6 (Exercise and Payment)
of the Plan; Section 5.8 (Rights as a Stockholder) of the Plan;
Section 5.9 (General Restrictions) of the Plan; Article 6
(Nontransferability of Options) of the Plan; Section 7.6 (Leave of Absence)
of the Plan; Article 8 (Adjustment Upon Changes in Capitalization) of the
Plan and Article 11 (Miscellaneous Provisions) of the Plan. In the event
the Plan is terminated for any reason whatsoever, notwithstanding such
termination, the foregoing provisions shall remain applicable to the terms
and conditions of the Options herein granted as if such Plan had not been
terminated.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
PARTICIPANT
/s/ CHRISTOPHER A. SINCLAIR
--------------------------------------
Name: Christopher A. Sinclair
Address:
Facsimile:
CARIBINER INTERNATIONAL, INC.
By: /s/ ERROL M. COOK
----------------------------------
Address: 16 West 61st Street
New York, New York 10023
Facsimile: (212) 541-5384
<PAGE>
EXHIBIT 10.2(b)
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is made as of the 21st day of December, 1998,
between Caribiner International, Inc., a Delaware corporation (hereinafter
called the "Corporation"), and Christopher A. Sinclair, the Corporation's
President and Chief Executive Officer (hereinafter called the "Participant").
WHEREAS, the Corporation desires to give the Participant an opportunity to
participate in the long-term growth of the Corporation by granting to the
Participant options to purchase the Corporation's common stock, par value $0.01
per share (the "Common Stock"), pursuant to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Grant of Option. Subject to the ratification and approval by the
stockholders of the Corporation, the Corporation hereby grants to the
Participant the right and option (hereinafter called the "Option") to purchase
an aggregate of up to Two Hundred Fifty Thousand (250,000) shares (the "Shares")
of Common Stock (such number being subject to adjustment as provided in
paragraph 7 hereof) on the terms and subject to the conditions herein set forth.
Such Option shall vest and become exercisable as follows: (i) thirty-three and
one-third percent (33 1/3%) of the Option herein granted (for up to Eighty Three
Thousand Three Hundred Thirty-four (83,334) shares) shall vest and may be
exercised at any time on or after the first anniversary of this Agreement
(unless terminated earlier pursuant to paragraph 6 hereof), (ii) thirty-three
and one-third percent (33 1/3%) of the Option herein granted (for up to Eighty
Three Thousand Three Hundred Thirty-three (83,333) shares) shall vest and may be
exercised on or after the second anniversary of this Agreement (unless
terminated earlier pursuant to paragraph 6 hereof) and (iii) the remaining
thirty-three and one-third percent (33 1/3%) of the Option herein granted (for
up to Eighty Three Thousand Three Hundred Thirty-three (83,333) shares) shall
vest and may be exercised on or after the third anniversary of this Agreement
(unless terminated earlier pursuant to paragraph 6 hereof). The Option granted
hereby is not intended to be an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
the Agreement shall be construed and interpreted in accordance with such
intention.
2. Exercise Price. The exercise price of the Shares covered by the Option
shall be Fifteen Dollars and No Cents ($15.00) per Share.
3. Term of Option. Subject to paragraph 8 hereof, the Option granted
hereby shall be exercisable in accordance with paragraph 1. The Participant's
right to exercise the aforementioned Option shall expire ten (10) years from the
date hereof (the "Expiration Date"). Unless terminated earlier pursuant to
paragraph 6 hereof, the Option may not be exercised after the Expiration Date.
4. Nontransferability. The Option granted hereby shall not be transferable
otherwise than by will or the laws of descent and distribution. More
particularly (except as provided in the preceding sentence), the Option may not
be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of
in any way, shall not be assignable by operation of law, and shall not be
subject to execution, attachment or similar process. Any attempted sale,
assignment, transfer, pledge, hypothecation or other disposition of the Option
contrary to the provisions hereof, and the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect. The
Option may be exercised by the Participant only during his lifetime or following
his death pursuant to paragraph 6 hereof.
5. Disclosure and Risk
(a) The Participant represents and warrants to the Corporation as follows:
(i) The Participant acknowledges that (A) neither the Option nor the
Shares have been registered for resale under the Securities Act of 1933, as
amended (the "Securities Act"), and (B) the Corporation is under no
obligation to effect the registration under the Securities Act of the
Option and/or the Shares.
<PAGE>
(ii) The Shares will be acquired by the Participant for the
Participant's own account, for investment and not with a view to, or for
resale in connection with, any distribution or public offering thereof
within the meaning of the Securities Act.
(iii) The Corporation has made available to the Participant the
opportunity to ask questions of the officers and management of the
Corporation and to acquire information about the business and financial
condition of the Corporation and has, and at the time of exercise of the
Option will have, all information necessary for him to make an informed
investment decision.
(iv) He has received a copy of the Plan.
(b) Each certificate representing the Shares will be endorsed with the
following or a substantially similar legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT COVERING SUCH SECURITIES, OR (ii) THE CORPORATION RECEIVES A
WRITTEN OPINION FROM COUNSEL FOR THE HOLDER OF THESE SECURITIES, REASONABLY
SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION MAY BE MADE PURSUANT
TO RULE 144 PROMULGATED UNDER THE SECURITIES ACT OR IS OTHERWISE EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS."
The Corporation need not allow a transfer of any of the Shares unless one
of the conditions specified in the foregoing legend is satisfied. The
Corporation may also instruct its transfer agent not to allow the transfer of
any of the Shares unless one of the conditions specified in the foregoing legend
is satisfied.
Any legend endorsed on a certificate pursuant to the foregoing language and
the stop transfer instructions with respect to such Shares shall be removed, and
the Corporation shall promptly issue a certificate without such legend to the
holder thereof if (i) the Shares are registered under the Securities Act and a
prospectus meeting the requirements of Section 10 of the Securities Act is
available and has been delivered or (ii) the holder provides the Corporation
with a written opinion from counsel for such holder of the Shares, reasonably
satisfactory to the Corporation, to the effect that a sale, transfer,
assignment, pledge, hypothecation or other disposition of such Shares may be
made without registration.
6. Termination of Employment; Disability; Retirement; Death.
(a) In the event that the Participant shall cease to be an employee of the
Corporation for any reason other than death, Disability, Retirement, termination
with or without Cause, or resignation for Good Reason (each as defined below),
the Option may be exercised by the Participant (to the extent that the
Participant shall have been entitled to do so as of the date of the termination
of his employment with the Corporation) at any time prior to the Expiration Date
of the Option or within 30 days after Participant shall so cease to be an
employee of the Corporation, whichever is earlier. So long as the Participant
shall continue to be an employee of the Corporation, the Option shall not be
affected by any change of duties or position. The provisions of this
Section 6(a) shall be subject to the provisions of Section 6(e) below.
(b) In the event of the Disability or Retirement of the Participant, the
unexercised portion of the Option that is held by the Participant on the date of
such Disability or Retirement, whether or not otherwise exercisable on such
date, shall be exercisable one (1) year from the date of Disability or
Retirement. "Disability" shall mean any termination of employment with the
Corporation or a subsidiary because of a long-term or total disability, as
determined by the Compensation Committee (the "Committee") of the Board of
Directors (the "Board") of the Corporation in its sole discretion. "Retirement"
shall mean a termination of employment with the Corporation or
<PAGE>
a subsidiary either (i) on a voluntary basis by a recipient who is at least 65
years of age or (ii) otherwise with the written consent of the Committee in its
sole discretion.
(c) During the lifetime of the Participant, the Option shall be exercisable
only by him (or by his legal guardian or representative). In the event of the
death of the Participant while he is an employee of the Corporation or any
subsidiary, the Option (or unexercised portion thereof) which is held by the
Participant at the date of death, whether or not exercisable on the date of
death, shall be exercisable in accordance with the terms of this Agreement by
the beneficiary designated by the Participant for such purpose (the "Designated
Beneficiary") or if no Designated Beneficiary shall have been appointed or if
the Designated Beneficiary shall predecease the Participant, by the
Participant's personal representatives, heirs or legatees at any time for a
period of one (1) year after the date of the Participant's death and any portion
of the Option which is not exercised during such one (1) year period shall be
forfeited.
In the event of the death of the Participant following a termination of
employment due to Retirement or Disability, if such death occurs before the
Option (or any portion thereof) is exercised, the Option (or portion thereof)
that is held by the Participant on the date of termination of employment,
whether or not exercisable on such date, shall be exercisable by such
Participant's Designated Beneficiary or if no Designated Beneficiary shall have
been appointed or if the Designated Beneficiary shall predecease the
Participant, by the Participant's personal representatives, heirs or legatees at
any time for a period of one (1) year after the date of the Participant's death
and any portion of the Option which is not exercised during such one (1) year
period shall be forfeited.
(d) In the event the Participant is terminated for Cause, the Option shall
be exercisable by the Participant (to the extent that the Participant shall have
been entitled to do so as of the date of the termination of his employment with
the Corporation for Cause) at any time prior to the Expiration Date or within
sixty (60) days after Participant's termination for Cause, whichever is earlier.
"Cause" shall have the meaning set forth in Section 9(a) of that certain
Employment Agreement by and between the Corporation and the Participant, dated
as of December 21, 1998.
(e) In the event the Participant is terminated without Cause or if
Participant resigns for Good Reason, automatically upon any such termination or
resignation, any unexercised portion of the Option shall immediately vest and
become fully exercisable (without regard to the vesting provisions set forth in
Paragraph 1 above), and the entire unexercised portion of the Option shall
thereafter be exercisable (in whole or in part) at any time after such
termination or resignation (as the case may be) prior to the Expiration Date, or
for a period of two years after such termination or resignation (as the case may
be), whichever is earlier. As used herein, the term "Good Reason" shall have the
meaning set forth in Section 9(d) of that certain Employment Agreement by and
between the Corporation and the Participant, dated as of December 21, 1998.
7. Changes in Capital Structure. If all or any portion of the Option shall
be exercised subsequent to any stock dividend, stock split, recapitalization,
merger, consolidation, combination or exchange of shares, separation, spin-off,
reorganization, liquidation or the like occurring after the date hereof, as a
result of which shares of any class shall be issued in respect of outstanding
Common Stock or shares of Common Stock shall be changed into the same or a
different number of shares of the same or another class or classes, the person
or persons exercising the Option shall receive, for the aggregate price paid
upon such exercise, the aggregate number and class of shares which, if the
Shares (as authorized at the date hereof) had been purchased at the date hereof
for the same aggregate price (on the basis of the price per share set forth in
paragraph 2 hereof) and had not been disposed of, such person or persons would
be holding at the time of such exercise as a result of such purchase and all
such share dividends, stock splits, recapitalizations, mergers, consolidations,
combinations or exchanges of shares, separations, spin-offs, reorganizations,
liquidations or the like; provided, however, that no fractional shares shall be
issued upon any such exercise, and the aggregate price paid shall be
appropriately reduced on account of any fractional share not issued. In no event
shall any adjustments be made to the Option as a result of the issuance or
redemption of securities of the Corporation for cash or other consideration, or
upon the exercise of any conversion rights of any securities of the Corporation.
<PAGE>
8. Method of Exercising Option. Subject to the terms and conditions of
this Agreement, the Option may be exercised in whole or in part by giving
written notice to the Secretary of the Corporation, at the address set forth
below the Corporation's signature to this Agreement or such other location as
may be designated by the Secretary of the Corporation. Such notice shall state
the Participant's election to exercise the Option and the number of Shares in
respect of which it is being exercised, and shall be signed by the person or
persons so exercising the Option. Payment for the Shares may be made (i) in cash
or (ii) at the option of the Committee, or, in absence of the Committee, the
Board, by delivery of Common Stock already owned by the Participant and having
an aggregate Market Price (as defined in the Plan) on the date of such delivery
equal to the aggregate exercise price of the shares so purchased or (iii) at the
option of the Committee, or, in absence of the Committee, the Board, by delivery
of a combination of cash and Common Stock having an aggregate Market Price on
the date of such delivery equal to the aggregate exercise price of the shares so
purchased. The Corporation shall deliver a certificate or certificates
representing the shares of Common Stock so purchased as soon as practicable
after the notice of election has been received. In the event the Option shall be
exercised by any person or persons other than the Participant, the notice of
election shall be accompanied by appropriate proof of the right of such person
or persons to exercise the Option. All shares of Common Stock that shall be
purchased upon the exercise of the Option as provided herein shall be fully paid
and nonassessable.
9. Change of Control.
(a) As long as Participant is an employee of the Corporation, a "Change of
Control" of the Corporation shall cause the Option (or the unexercised portion
thereof), whether or not currently exercisable, to become immediately
exercisable, in whole or in part, as of the effective date of such Change of
Control without regard to any vesting provisions or condition precedent which
may be contained in paragraph 1 of this Agreement. For purposes of this
paragraph, a "Change of Control" shall be deemed to have occurred if (i) any
person or "group" (other than Warburg, Pincus Investors, L.P. or any affiliate
thereof) acquires, in a single transaction or series of related transactions,
50% or more of the outstanding Common Stock; (ii) during any period of two
consecutive years, individuals that at the beginning of such period constitute
the Board cease for any reason to constitute a majority thereof, unless the
election, or the nomination for election by the stockholders, of each such new
director was approved by a vote of at least two-thirds of the directors then
still in office which were directors at the beginning of the period; or
(iii) the sale of all or substantially all of the assets of the Corporation
(other than to a wholly-owned subsidiary of the Corporation).
(b) Notwithstanding the provisions of paragraph 9(a), in the case that the
Corporation is merged or consolidated with another corporation, or the assets or
stock of the Corporation is acquired by another corporation, or a separation,
reorganization or liquidation of the Corporation occurs, the Board, or the Board
of Directors of any corporation assuming the obligations of the Corporation
hereunder, shall make appropriate provisions for the protection of the Option by
substitution on an equitable basis of appropriate stock of the Corporation, or
appropriate stock of the merged, consolidated or otherwise reorganized
corporation, provided that only the excess of the aggregate Market Price of the
shares subject to the Option immediately after such substitution over the
aggregate exercise price thereof is not less than the excess of the aggregate
Market Price of the shares subject to the Option immediately before such
substitution over the aggregate exercise price thereof.
10. Optionee Not a Stockholder. The Participant shall not have any rights
as a stockholder with respect to any shares of Common Stock subject to the
Option prior to the date on which he is recorded as the holder of such shares on
the records of the Corporation.
11. Taxes. The Corporation may make such provisions and take such steps as
it may deem necessary or appropriate for the withholding of all federal, state,
local and other taxes required by law to be withheld with respect to the Option
including, but not limited to (i) reducing the number of shares of Common Stock
otherwise deliverable, based upon their fair market value on the date of
exercise, to permit deduction of the amount of any such withholding taxes from
the amount otherwise payable under this Agreement; (ii) deducting the amount of
any such withholding taxes from any other amount then or thereafter payable to
the Participant; or (iii) requiring the Participant, Designated Beneficiary or
legal representative to pay to the Corporation the amount required or desirable
to enable it to satisfy its withholding obligations as a condition of releasing
the Common Stock.
<PAGE>
12. General Provisions.
(a) The Corporation shall at all times during the term of the Option
reserve and keep available such number of Shares as will be sufficient to
satisfy the requirements of this Option Agreement, shall pay all fees and
expenses necessarily incurred by the Corporation in connection therewith, and
shall use its best efforts to comply with all laws and regulations which, in the
reasonable opinion of counsel to the Corporation, are applicable thereto.
(b) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflicts of
laws.
(c) Any notice to be given hereunder by either party to the other shall be
in writing and shall be given either by personal delivery, facsimile or by mail,
registered or certified, postage prepaid, return receipt requested, or by
overnight delivery addressed to the other party at the respective addresses or
facsimile numbers set forth below their signatures to this Agreement, or at any
other address or facsimile number as such party may hereafter specify in
writing.
(d) No amendments or modifications to this Agreement shall be binding
unless made in writing and signed by the parties hereto.
(e) The waiver by either party of a breach of any term or provision of this
Agreement shall not operate or be construed as a waiver of a subsequent breach
of the same provision or of the breach of any other term or provision of this
Agreement.
(f) As used herein, the masculine gender shall include the feminine and the
neuter genders, the neuter shall include the masculine and the feminine genders,
the singular shall include the plural, and the plural shall include the
singular.
(g) The headings in this Agreement are solely for convenience of reference
and shall be given no effect in the construction or interpretation of this
Agreement.
(h) The invalidity or enforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
(i) NEITHER THE PLAN NOR THIS AGREEMENT SHALL BE (1) CONSTRUED AS GIVING
THE PARTICIPANT THE RIGHT TO BE RETAINED IN THE EMPLOY OF THE CORPORATION OR ANY
SUBSIDIARY THEREOF OR TO BE ENTITLED TO ANY REMUNERATION OR BENEFITS NOT SET
FORTH IN THE PLAN OR THIS AGREEMENT OR (2) INTERFERE WITH OR LIMIT THE RIGHT OF
THE CORPORATION OR ANY SUBSIDIARY THEREOF TO MODIFY THE TERMS OF OR TERMINATE
THE PARTICIPANT'S EMPLOYMENT AT ANY TIME WITH OR WITHOUT CAUSE.
13. Incorporation by Reference. Reference is hereby made to the
Corporation's 1996 Stock Option Plan, as amended as of February 27, 1998 (the
"Plan"). Although it is expressly understood and agreed that the Options granted
herein are not subject to the Plan, the following provisions of the Plan are
hereby incorporated herein by reference and shall be deemed to be a part hereof
as is set forth fully herein: Article 3 (Administration) of the Plan;
Section 5.6 (Exercise and Payment) of the Plan; Section 5.8 (Rights as a
Stockholder) of the Plan; Section 5.9 (General Restrictions) of the Plan;
Article 6 (Nontransferability of Options) of the Plan; Section 7.6 (Leave of
Absence) of the Plan; Article 8 (Adjustment Upon Changes in Capitalization) of
the Plan and Article 11 (Miscellaneous Provisions) of the Plan. In the event the
Plan is terminated for any reason whatsoever, notwithstanding such termination,
the foregoing provisions shall remain applicable to the terms and conditions of
the Options herein granted as if such Plan had not been terminated.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
PARTICIPANT
/s/ CHRISTOPHER A. SINCLAIR
--------------------------------------
Name: Christopher A. Sinclair
Address:
Facsimile:
CARIBINER INTERNATIONAL, INC.
By: /s/ ERROL M. COOK
----------------------------------
Address: 16 West 61st Street
New York, New York 10023
Facsimile: (212) 541-5384
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1998 AND THE
CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED DECEMBER 31, 1998
OF CARIBINER INTERNATIONAL, INC. AS SET FOURTH IN THIS FORUM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 15,117
<SECURITIES> 0
<RECEIVABLES> 116,736
<ALLOWANCES> 1,966
<INVENTORY> 0
<CURRENT-ASSETS> 158,679
<PP&E> 186,961
<DEPRECIATION> (90,210)
<TOTAL-ASSETS> 698,185
<CURRENT-LIABILITIES> 98,040
<BONDS> 0
0
0
<COMMON> 236
<OTHER-SE> 166,768
<TOTAL-LIABILITY-AND-EQUITY> 698,185
<SALES> 159,983
<TOTAL-REVENUES> 159,983
<CGS> 119,266
<TOTAL-COSTS> 119,266
<OTHER-EXPENSES> 36,093
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,527
<INCOME-PRETAX> (10,059)
<INCOME-TAX> (4,024)
<INCOME-CONTINUING> (10,059)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,035)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> (0.25)
</TABLE>
