<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
<TABLE>
<S> <C>
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Confidential, For Use of the Commission Only (as
/ / Preliminary Proxy Statement permitted by Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
</TABLE>
Caribiner International, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
[ LOGO ]
January 27, 1999
Dear Stockholder:
The directors and officers of Caribiner International, Inc. cordially
invite you to attend the Annual Meeting of Stockholders of the Company to be
held at The Radisson Empire Hotel, 44 West 63rd Street, New York, New York on
Tuesday, March 16, 1999 at 12:00 noon, local time. Notice of the Annual Meeting,
the Proxy Statement and a proxy card are enclosed.
At this year's meeting you will be asked to (i) elect directors,
(ii) approve certain amendments to the Company's 1996 Stock Option Plan, as
amended, including an increase in the number of shares available for grant under
such plan from 1,928,000 shares of Common Stock to 2,500,000 shares of Common
Stock, (iii) ratify and approve the grant to Christopher A. Sinclair, President
and Chief Executive Officer of the Company, of options to purchase an aggregate
of 600,000 shares of Common Stock and (iv) ratify and approve the appointment of
Ernst & Young LLP as the Company's independent auditors.
You are urged to mark, sign, date and mail the enclosed proxy immediately.
By mailing your proxy now you will not be precluded from attending the Annual
Meeting. Your proxy is revocable, and in the event you find it convenient to
attend the Annual Meeting, you may, if you wish, withdraw your proxy and vote in
person.
For your information, we have also enclosed a copy of Caribiner's Annual
Report on Form 10-K for the fiscal year ended September 30, 1998, and a copy of
my letter to stockholders which provides an overview of the Company's activity
during fiscal 1998. We look forward to seeing you at the Annual Meeting.
Very truly yours,
/s/ Raymond S. Ingleby
Raymond S. Ingleby
Chairman of the Board
<PAGE>
CARIBINER INTERNATIONAL, INC.
16 WEST 61ST STREET
NEW YORK, NEW YORK 10023
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 16, 1999
------------------
The Annual Meeting of Stockholders of Caribiner International, Inc., a
Delaware corporation (the "Company"), will be held at The Radisson Empire Hotel,
44 West 63rd Street, New York, New York, on Tuesday, March 16, 1999, at
12:00 noon, local time, for the following purposes:
1. To elect Errol M. Cook, Raymond S. Ingleby, Bryan D. Langton,
Sidney Lapidus, David E. Libowitz, Christopher A. Sinclair and C. Anthony
Wainwright as directors of the Company, to serve until the next annual
meeting of stockholders of the Company or until their successors have been
duly elected and qualified;
2. To consider and act upon a proposal to (i) increase the number of
shares of common stock, par value $0.01 per share (the "Common Stock"),
available for grant under the Company's 1996 Stock Option Plan, as amended
(the "1996 Option Plan"), from 1,928,000 shares of Common Stock to
2,500,000 shares of Common Stock and (ii) increase the number of options
that an employee may receive under the 1996 Option Plan in any fiscal year
from an aggregate of 200,000 to an aggregate of 750,000;
3. To consider and act upon a proposal to ratify and approve the grant
to Christopher A. Sinclair, President and Chief Executive Officer of the
Company, of options to purchase an aggregate of 600,000 shares of Common
Stock;
4. To consider and act upon a proposal to approve and ratify the
appointment of Ernst & Young LLP as the Company's independent auditors for
the fiscal year ending September 30, 1999; and
5. To transact such other business as may properly come before the
Annual Meeting or any postponements or adjournments thereof.
Only stockholders of record of the Company's Common Stock at the close of
business on January 19, 1999, shall be entitled to notice of, and to vote at,
the Annual Meeting or any and all postponements or adjournments thereof.
By Order of the Board of Directors
/s/ Harold E. Schwartz
Harold E. Schwartz
Secretary
January 27, 1999
New York, New York
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ACCOMPANYING
ENVELOPE.
<PAGE>
CARIBINER INTERNATIONAL, INC.
16 WEST 61ST STREET
NEW YORK, NEW YORK 10023
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
MARCH 16, 1999
------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
Caribiner International, Inc., a Delaware corporation (the "Company"), of
proxies to be voted at the Annual Meeting of Stockholders (the "Annual Meeting")
to be held at The Radisson Empire Hotel, 44 West 63rd Street, New York, New
York, on March 16, 1999, at 12:00 noon, local time, or any and all postponements
or adjournments thereof, for the purposes set forth in the accompanying Notice
of Annual Meeting. This Proxy Statement, the Notice of Annual Meeting and the
accompanying proxy card are being mailed to stockholders on or about
January 28, 1999.
Holders of record of common stock, par value $0.01 per share (the "Common
Stock"), of the Company at the close of business on January 19, 1999 (the
"Record Date"), will be entitled to notice of and to vote at the Annual Meeting
or any and all postponements or adjournments thereof. As of the Record Date,
23,693,524 shares of Common Stock were issued and outstanding. Each stockholder
is entitled to one vote for each share of Common Stock held by such stockholder.
The presence, in person or by proxy, of a majority of the shares entitled
to vote at the Annual Meeting will constitute a quorum for the Annual Meeting.
If the accompanying proxy card is properly signed and returned to the
Company and not revoked, it will be voted in accordance with the instructions
contained therein. Unless contrary instructions are given, the persons
designated as proxy holders in the accompanying proxy card will vote (i) to
elect the seven nominees for the Board of Directors to serve until the next
Annual Meeting or until their successors have been duly elected and qualified,
(ii) to approve (x) an increase in the number of shares available for grant
under the Company's 1996 Stock Option Plan, as amended (the "1996 Option Plan"),
from 1,928,000 shares of Common Stock to 2,500,000 shares of Common Stock and
(y) an increase in the number of options that an employee may receive under the
1996 Option Plan in any fiscal year from an aggregate of 200,000 to an aggregate
of 750,000 (together, the "1996 Option Plan Amendments"), (iii) to ratify and
approve the grant to Christopher A. Sinclair, President and Chief Executive
Officer of the Company, of options to purchase an aggregate of 600,000 shares of
Common Stock, (iv) to ratify and approve the appointment of Ernst & Young LLP
("Ernst & Young") as the Company's independent auditors for the fiscal year
ending September 30, 1999, and (v) to transact such other business as may
properly come before the Annual Meeting or any and all postponements or
adjournments thereof. Management is not aware of any other matters to be
presented for action at the Annual Meeting.
Each proxy granted may be revoked by the stockholder giving such proxy at
any time before it is exercised by filing with the Secretary of the Company, at
the address set forth above, a revoking instrument or a duly executed proxy
bearing a later date. The powers of any proxy holder will be suspended if the
person who executed the proxy held by such proxy holder attends the Annual
Meeting in person and so requests. Attendance at the Annual Meeting will not in
itself constitute revocation of the proxy.
Assuming the presence of a quorum at the Annual Meeting, the seven nominees
receiving a plurality of the votes cast at the Annual Meeting for the election
of directors will be elected as directors. In addition, assuming the presence of
a quorum, the affirmative vote of a majority of the shares of Common Stock
represented at the Annual Meeting in person or by proxy and entitled to vote
thereat is required to:
1. Approve the 1996 Option Plan Amendments;
<PAGE>
2. Ratify and approve the grant to Christopher A. Sinclair of options
to purchase an aggregate of 600,000 shares of Common Stock;
3. Ratify and approve the appointment of Ernst & Young as the
Company's independent auditors for the fiscal year ending September 30,
1999; and
4. Transact such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof.
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will have no effect on the outcome of such
election. With regard to (i) the approval of the 1996 Option Plan Amendments,
(ii) the ratification and approval of the grant to Christopher A. Sinclair of
options to purchase an aggregate of 600,000 shares of Common Stock and (iii) the
ratification and approval of the appointment of Ernst & Young, votes may be cast
for or against, or abstentions may be specified. Since the proposals to approve
the 1996 Option Plan Amendments, to ratify and approve the grant of stock
options to Christopher A. Sinclair, and to ratify and approve the appointment of
Ernst & Young require the approval of a majority of the shares of Common Stock
present in person or by proxy and entitled to vote at the Annual Meeting,
abstentions will have the same effect as a vote against such proposals. Broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum, but will have no effect on the outcome of the election of directors or
the proposals to approve the 1996 Option Plan Amendments, to ratify and approve
the grant of stock options to Christopher A. Sinclair, and to ratify and approve
the appointment of Ernst & Young. A broker "non-vote" occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power with respect to
that item and has not received instructions from the beneficial owner.
The Board of Directors knows of no other business to come before the
meeting, but if other matters properly come before the meeting, the persons
named in the proxy intend to vote thereon in accordance with their best
judgment.
The cost of soliciting proxies in the enclosed form will be borne by the
Company. In addition to solicitation by mail, directors, officers and employees
of the Company may solicit proxies by telephone or otherwise. The Company will,
upon request, reimburse brokerage firms and others for their reasonable expenses
in forwarding solicitation material to the beneficial owners of Common Stock.
The principal executive offices of the Company are located at 16 West 61st
Street, New York, New York 10023 (telephone - (212) 541-5300).
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Board has nominated for election as the directors entitled to be
elected by the holders of Common Stock the seven nominees listed below. As
previously noted, proxies will be voted, unless authority is withheld, for the
election as directors of the nominees listed below to serve until the next
annual meeting of stockholders or until their respective successors shall be
elected and qualified. The Board of Directors has no reason to believe that any
of the listed nominees will not serve if elected, but if any of them should
become unavailable to serve as a director or be withdrawn from nomination, and
if the Board of Directors shall designate a substitute nominee, the persons
named as proxy holders will vote for the substitute nominee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED BELOW.
NOMINEES FOR ELECTION
The following table sets forth certain information with respect to the
nominees:
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
---- --- ------------------------------------------
<S> <C> <C>
Raymond S. Ingleby 35 Mr. Ingleby has been a director of the Company since its formation in 1989,
and Chairman since June, 1993. From 1989 through December, 1998, Mr. Ingleby
served as Chief Executive Officer of the Company. From 1988 through 1993,
Mr. Ingleby served as Chairman and Chief Executive Officer of Ingleby
Communications Corporation, which he founded in 1988. In 1985, Mr. Ingleby, a
British citizen, founded his own advertising company that was engaged in the
installation of advertising displays in hotels, which he sold in 1988.
Christopher A. Sinclair 48 Mr. Sinclair has been President, Chief Executive Officer and a director of
the Company since December, 1998. Prior to his joining the Company, he served
as President and Chief Executive Officer of Cutter Capital LLC, a venture
capital and commercial real estate investment firm, from March, 1998 to
December, 1998. From September, 1996 to March, 1998 he served as President
and Chief Executive Officer of Quality Food, Inc., a multi-regional
supermarket chain. Prior thereto, he served in various senior management
positions with PepsiCo, Inc., including Chairman and Chief Executive Officer
of the Pepsi-Cola Company from April, 1996 to July, 1996, President and Chief
Executive Officer of PepsiCo Foods & Beverages International from 1993 to
1996 and President and Chief Executive Officer of Pepsi-Cola International
from 1989 to 1993. Mr. Sinclair serves on the Board of Directors of Mattel,
Inc. and Venator Group, Inc.
Errol M. Cook 59 Mr. Cook has been a director of the Company since June, 1992. Mr. Cook
presently serves as a Senior Adviser to E.M. Warburg, Pincus & Co., LLC ("EMW
LLC"). Mr. Cook served as a Managing Director of EMW LLC or its predecessor
from March, 1991 through his retirement therefrom in December, 1998.
Mr. Cook serves on the board of directors of certain privately held
companies.
Bryan D. Langton 62 Mr. Langton has been a director of the Company since April, 1996.
Mr. Langton served as Chairman and Chief Executive Officer of Holiday Inn
Worldwide and Holiday Inn, Inc. from February, 1990 to December, 1996.
Mr. Langton serves on the board of directors of Fairfield Communities, Inc.
Sidney Lapidus 61 Mr. Lapidus has been a director of the Company since June, 1992. Mr. Lapidus
is a Managing Director of EMW LLC. Mr. Lapidus has been associated with EMW
LLC or its predecessor since 1967. Mr. Lapidus serves on the board of
directors of Lennar Corporation, Knoll, Inc., Grubb & Ellis Company,
Information Holdings, Inc. and Journal Register Company, as well as several
privately held companies.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
David E. Libowitz 35 Mr. Libowitz has been a director of the Company since June, 1992.
Mr. Libowitz is a Managing Director of EMW LLC and has been associated with
EMW LLC or its predecessor since July, 1991. Mr. Libowitz serves on the board
of directors of Information Holdings, Inc., as well as certain privately held
companies.
C. Anthony Wainwright 65 Mr. Wainwright has been a director of the Company since March, 1997.
Mr. Wainwright has served as Vice Chairman of McKinney & Silver, a
privately-held advertising agency, since April, 1997. Mr. Wainwright was
Chairman of Harris, Drury, Cohen, Inc., an advertising agency, from 1995 to
February, 1997. Prior thereto Mr. Wainwright was Chairman of Compton
Partners, Saatchi & Saatchi, a national advertising agency, from 1994 to 1995
and was Vice Chairman of that Company from 1989 to 1994. Mr. Wainwright
serves on the Board of Directors of Marketing Services Group, Inc., American
Woodmark Corporation, Del Webb Corp., Gibson Greetings, Inc. and Advanced
Polymer Systems.
</TABLE>
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors has an audit committee and a compensation committee.
The Board of Directors does not presently have a nominating committee or other
committee performing a similar function.
At present, the Board of Directors of the Company is composed of seven
directors. Pursuant to the terms of a stockholders agreement, dated as of March
15, 1996 (the "Stockholders Agreement"), subject to certain conditions, Warburg,
Pincus Investors, L.P. ("Warburg") currently has the right to designate up to
two persons for nomination to the Board. See "Certain Relationships and
Transactions with Related Persons--Stockholders Agreement." The designees of
Warburg are Messrs. Lapidus and Libowitz. In addition, Mr. Cook, a director of
the Company since 1992, is a Senior Adviser to EMW LLC and a former Managing
Director of EMW LLC. The Board of Directors held seven meetings during fiscal
1998.
The Compensation Committee of the Board of Directors of the Company
determines the salaries and bonuses of the Company's executive officers and
administers the Company's 1996 Option Plan. During the Company's last completed
fiscal year Errol M. Cook served as Chairman of the Compensation Committee, and
each of Bryan D. Langton, David E. Libowitz and C. Anthony Wainwright served as
members of the Compensation Committee. The Compensation Committee held two
meetings during fiscal 1998.
The Audit Committee of the Board of Directors recommends the appointment of
auditors and oversees the accounting and audit functions of the Company. During
the Company's last completed fiscal year Bryan D. Langton served as Chairman of
the Audit Committee, and C. Anthony Wainwright served as a member of the Audit
Committee. The Audit Committee held four meetings during fiscal 1998.
None of the members of the Board of Directors (other than C. Anthony
Wainwright) failed during fiscal 1998 to attend at least 75 percent of the
aggregate of: (1) the total number of meetings of the Board of Directors held
during the period for which he was a director; and (2) the total number of
meetings held by all committees of the Board of Directors on which he served
during the periods that he served.
COMPENSATION OF DIRECTORS
Directors who are not employees or officers of the Company receive cash
compensation of $12,500 per annum payable quarterly in arrears. In addition,
non-employee directors receive $1,000 for each meeting of the Board or meeting
of a committee of the Board that they attend in person and $750 for each meeting
of the Board or meeting of a committee of the Board that they attend
telephonically. Also, the Chairman of each committee of the Board receives
$1,500 per annum for his service in such capacity. Directors affiliated with
Warburg have waived their right to receive any compensation. Directors are also
reimbursed for certain expenses in connection with attendance at Board and
committee meetings. Other than with respect to reimbursement of expenses,
directors who are employees or officers of the Company do not receive additional
compensation for services as a director.
4
<PAGE>
Effective March 11, 1996, the Company adopted the Non-Employee Directors'
Stock Plan, pursuant to which the Company awards directors (other than directors
affiliated with Warburg, who have waived their right to receive any
compensation, or directors who are employees of the Company) upon their becoming
a director and on each anniversary thereof shares of Common Stock having a
market value of $12,500. The Non-Employee Directors' Stock Plan provides that
the maximum number of shares of Common Stock available for issue under the plan
is 30,000 shares (of which 2,802 shares have been issued), subject to adjustment
to prevent dilution or expansion of rights.
In January, 1997, in view of the acquisition and growth of the Company's
audiovisual services division, the Board asked Mr. Langton to act in a
non-executive oversight capacity to such division. The Board approved the
payment to Mr. Langton of $35,000 per annum (payable quarterly in arrears) for
his services in such capacity, until it determines that such oversight function
is no longer necessary.
EXECUTIVE OFFICERS
Set forth below is the name and business experience of each of the
executive officers of the Company as of the Record Date, to the extent not
provided above.
Robert F. Burlinson
Age: 59
Mr. Burlinson has been Executive Vice President and Chief Financial Officer
of the Company since July, 1998. Prior to his joining the Company,
Mr. Burlinson served as Vice President and Treasurer of Handy & Harman from
September, 1996 to July, 1998. Prior thereto, Mr. Burlinson served as Senior
Vice President and Chief Financial Officer of The National Guardian Group from
October, 1986 to December, 1995.
Mark M. Cohen
Age: 52
Mr. Cohen has been Executive Vice President of the Company and Chief
Operating Officer of Caribiner Communications since October, 1998. Prior
thereto, Mr. Cohen served as Executive Vice President-Strategic Planning and
Development of the Company from July, 1997 to October, 1998. Prior thereto, Mr.
Cohen served as Executive Vice President of the Company and President of
Caribiner Communications from November, 1995 to June, 1997. Mr. Cohen joined
Caribiner in November, 1994 as Executive Vice President of Caribiner, Inc. and
General Manager of its New York office.
Martin Kwitschau
Age: 37
Mr. Kwitschau has been Executive Vice President of the Company and Chief
Executive Officer of the Hospitality Resources division of the Company's
audiovisual services operations since October, 1998. Mr. Kwitschau joined the
Company in December, 1997, in connection with the Company's acquisition of
Visual Action Holdings Limited ("VAH"), where he had served as President and
Chief Executive Officer of Hospitality Resources Incorporated, a hotel
audiovisual outsourcing company acquired by VAH in July, 1997, since 1991.
Brian Shepherd
Age: 41
Mr. Shepherd has been Executive Vice President of the Company and Chief
Executive Officer of the Company's Communications division since July, 1997.
From November, 1995 until July, 1997, Mr. Shepherd served as Executive Vice
President of Strategic Planning and International Operations of the Company.
Mr. Shepherd joined the Company as Vice President of Caribiner, Inc. and General
Manager of its Atlanta office in July, 1995. Prior thereto, Mr. Shepherd was
President and Chief Executive Officer of Imagination (USA) Inc., a subsidiary of
Imagination, UK, a European-based business communications company, from
December, 1992 to July, 1995.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation paid or accrued by the Company for services rendered to the Company
and its subsidiaries in all capacities for the fiscal years ended September 30,
1996, 1997 and 1998, by its Chief Executive Officer and each of the Company's
other executive officers whose total salary and bonus exceeded $100,000 during
such fiscal year (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ------------
COMPENSATION SECURITIES
------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS(#) COMPENSATION
- --------------------------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Raymond S. Ingleby(1)
Chairman of the Board of Caribiner International, Inc.
1998........................................................ $409,112 -0- -0- $ 7,500(2)
1997........................................................ 399,712 -0- -0- 6,040(2)
1996........................................................ 384,027 $187,500 -0- 2,200(2)
Robert F. Burlinson(3)
Executive Vice President and Chief Financial Officer of Caribiner
International, Inc............................................ 63,204 -0- 50,000 25,000(4)
Mark M. Cohen
Executive Vice President of Caribiner International, Inc. and
Chief Operating Officer of Caribiner Communications
1998........................................................ 251,100 30,000 8,000 -0-
1997........................................................ 249,164 -0- -0- -0-
1996........................................................ 227,728 41,783 6,000 -0-
Lawrence P. Golen(5)
Executive Vice President of Caribiner International, Inc.
1998........................................................ 221,542 27,000 -0- -0-
1997........................................................ 197,887 -0- 56,000 14,572(6)
Brian Shepherd
Executive Vice President of Caribiner International, Inc. and
Chief Executive Officer of Caribiner Communications
1998........................................................ 254,713 65,900(7) 13,000 -0-
1997........................................................ 228,827 -0- -0- -0-
1996........................................................ 220,001 48,600 6,000 -0-
Arthur F. Dignam
Former Executive Vice President and Chief Administrative Officer
of Caribiner International, Inc.
1998........................................................ 246,908 -0- -0- -0-
1997........................................................ 228,827 -0- -0- -0-
1996........................................................ 215,851 52,000 6,000 -0-
Richard H. Vent(8)
Former President and Chief Operating Officer of Caribiner
International, Inc.
1998........................................................ 325,197 -0- -0- -0-
1997........................................................ 6,250 -0- 60,000 -0-
</TABLE>
- ------------------
(1) Mr. Ingleby also served as Chief Executive Officer of the Company until
December 21, 1998.
(2) All Other Compensation consists of life insurance premiums paid by the
Company.
(3) Mr. Burlinson's employment with the Company commenced on July 15, 1998.
(4) All Other Compensation consists of payments made to Mr. Burlinson upon his
commencement of employment with the Company.
(5) Mr. Golen's employment with the Company commenced on October 14, 1996.
(Footnotes continued on next page)
6
<PAGE>
(Footnotes continued from previous page)
(6) All Other Compensation consists of payments made to Mr. Golen upon his
commencement of employment with the Company.
(7) Includes $35,330 in bonus payments earned for services in respect of fiscal
1997, but paid during fiscal 1998.
(8) Mr. Vent's employment with the Company commenced on September 22, 1997, and
he ceased being a Named Executive Officer of the Company in June, 1998.
Option Grants
The following table sets forth the grants of options with respect to Common
Stock during the year ended September 30, 1998, to the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- ------------------------------------------------------------------------------------------ VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS PRICE APPRECIATION FOR
GRANTED TO EXERCISE OR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR PER SHARE DATE 5% 10%
- ---- ------- ------------ ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Raymond S. Ingleby................. -- -- -- -- -- --
Robert F. Burlinson................ 50,000(a) 8.6% $14.53125 8/5/08 $457,008 $1,158,141
Mark M. Cohen...................... 8,000(b) 1.4 20.625 5/8/08 103,785 263,010
Lawrence P. Golen.................. -- -- -- -- -- --
Brian Shepherd..................... 13,000(b) 2.2 20.625 5/8/08 168,651 427,391
Arthur F. Dignam................... -- -- -- -- -- --
Richard H. Vent.................... -- -- -- -- -- --
</TABLE>
- ------------------
(a) Such options will vest one-third on August 5, 1999, one-third on August 5,
2000 and one-third on August 5, 2001.
(b) Such options will vest one-third on May 8, 1999, one-third on May 8, 2000
and one-third on May 8, 2001.
7
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. Ingleby,
Sinclair, Burlinson and Shepherd. Mr. Ingleby's employment agreement expires on
October 1, 2001. Mr. Sinclair's employment agreement expires on January 31,
2002. Mr. Burlinson's employment agreement expires on July 15, 2000.
Mr. Shepherd's employment agreement has been extended by the Company until
January 25, 2000 (or until such earlier date as Mr. Shepherd and the Company
enter into a new employment agreement). The Company is required to give
Mr. Ingleby at least 12 months' notice if it does not intend to renew or extend
his contract, and otherwise must pay him all compensation under the agreement
for 12 months from delivery of such notice. The employment agreements for
Messrs. Sinclair and Burlinson provide for an option to renew for an additional
two years at the discretion of the Company.
The annual base salary of Messrs. Ingleby, Sinclair, Burlinson and Shepherd
currently is $500,000, $500,000, $225,000 and $325,000, respectively. Each
executive is also entitled to fringe benefits, and to an annual bonus based on
Company performance against targets and the fulfillment of certain management
objectives established by the Board each year. Pursuant to the terms of their
respective employment agreements, the Company is required to pay to
Mr. Sinclair and Mr. Burlinson a minimum bonus of $250,000 and $50,000,
respectively, for the fiscal year ending September 30, 1999. Under each
agreement the Board is to review the employee's salary at least annually and the
salary amounts may be increased in the Board's discretion. Each executive may be
terminated for "cause" (as defined in the agreements), with all compensation
ceasing. Under the employment agreement for each of Messrs. Ingleby and Sinclair
if the executive is terminated without cause or, if the executive resigns from
his employment for "good reason" (as defined), the executive is entitled to full
compensation and benefits for the remaining term of the agreement (or, in the
case of Mr. Ingleby, for 12 months if such period shall be longer). "Good
reason" includes, in the case of each of Messrs. Ingleby and Sinclair, a change
in control (as defined) of the Company. Each employment agreement includes a two
year non-competition and non-solicitation of clients and employees provision.
Mr. Ingleby's employment agreement provides that in the event of the employee's
death the employee's beneficiary will receive a payment equal to six months'
base salary. Mr. Sinclair's employment agreement provides for a payment equal to
four months' base salary in the event of his death. Each of Messrs. Burlinson's
and Shepherd's employment agreement provides for a payment equal to one month's
base salary in the event of death.
INCENTIVE PLANS
Description of the 1996 Stock Option Plan
The 1996 Option Plan was authorized and adopted by the stockholders and the
directors of the Company effective January 1, 1996. The purpose of the Option
Plan is to encourage and enable employees of the Company and its subsidiaries to
acquire a proprietary interest in the Company through the ownership of the
Company's Common Stock. The 1996 Option Plan is designed to provide employees
with a more direct stake in the Company's future welfare and an incentive to
remain with the Company. It is also expected that the 1996 Option Plan will
encourage qualified persons to seek employment with the Company.
The 1996 Option Plan provides for grants of "Incentive Stock Options,"
meeting the requirements of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") and "Non-qualified Stock Options." The 1996 Option Plan
currently provides that options for an aggregate of 1,928,000 shares of Common
Stock shall be available for award, subject to adjustment by the Compensation
Committee (as hereinafter defined) to prevent dilution or expansion of rights.
(As of the date hereof, options to purchase 1,675,353 shares of Common Stock had
been granted (net of forfeitures and cancellations) to the Company's employees
pursuant to the 1996 Option Plan.) Options may be granted to employees of the
Company or any of its subsidiaries, provided that no employee may receive
options for more than 200,000 shares of Common Stock in the aggregate in any
fiscal year. In connection with this Proxy Statement the Company is submitting
for consideration by its stockholders amendments to the 1996 Option Plan to
(i) increase the number of options available for grant under the 1996 Option
Plan from 1,928,000 to 2,500,000 and (ii) increase the number of options that an
employee of
8
<PAGE>
the Company or any of its subsidiaries may receive in any fiscal year from an
aggregate of 200,000 to an aggregate of 750,000. (See Proposal 2--Approval of
Amendments to the 1996 Option Plan.)
The 1996 Option Plan is administered by the Compensation Committee of the
Board of Directors (the "Compensation Committee"), which committee is comprised
of not less than two non-employee directors within the meaning of Rule 16b-3 of
the Exchange Act. The 1996 Option Plan permits the Compensation Committee to
determine which employees shall receive options and the times when options are
to be granted. The Compensation Committee also determines the purchase price of
Common Stock covered by each option, the term of each option, the number of
shares of Common Stock to be covered by each option and any performance
objectives or vesting standards applicable to each option. The Compensation
Committee also designates whether the options shall be Incentive Stock Options
or Non-qualified Stock Options.
The purchase price per share under each Incentive Stock Option or
Non-qualified Stock Option is the "Market Price" (i.e., the average of the high
and low reported consolidated trading sales price for such day) of the Common
Stock on the date the option is granted, except that the exercise price for an
Incentive Stock Option granted to a 10% stockholder may not be less than 110% of
the Market Price of the Common Stock on the date of the grant. The aggregate
Market Price of the Common Stock exercisable under Incentive Stock Options held
by any optionee during any calendar year may not exceed $100,000. Incentive
Stock Options granted to employees under the 1996 Option Plan have a maximum
term of ten years. Incentive Stock Options granted to 10% stockholders have a
maximum term of five years. Options are not transferable except by will or
pursuant to the applicable laws of descent and distribution. Notwithstanding the
general restriction on transferability, in the sole discretion of the
Compensation Committee, Non-qualified Stock Options may be made transferable
subject to the requirements of Rule 16b-3.
In the event that an employee is terminated for any reason other than
death, Disability, Retirement or Cause (as such terms are defined in the 1996
Option Plan), to the extent that the employee had the right to exercise an
option, such option will be exercisable until the earlier of the expiration date
of the option, or within 30 days of the date of such termination. Options held
on the date of Disability or Retirement, whether or not exercisable on such
date, are exercisable within one year of the date of Disability or Retirement.
Options held by an employee at the date of death, whether or not exercisable on
the date of death, are exercisable by the beneficiary of the employee within one
year from the date of death. The Compensation Committee may, in its sole
discretion, cause any option to be forfeited upon an employee's termination for
Cause (as defined in the 1996 Option Plan). In the event of a Change of Control
(as such term is defined in the Plan) of the Company, all outstanding options
will vest and appropriate provisions shall be made for the protection of options
by substitution on an equitable basis of appropriate stock of the Company or
appropriate stock of the merged, consolidated or otherwise reorganized
corporation, as the case may be.
The Board is permitted to suspend, terminate, modify or amend the 1996
Option Plan, provided that any amendment that would (i) materially increase the
aggregate number of shares, (ii) materially increase benefits accruing to
employees, or (iii) materially modify the eligibility requirements for
participation shall be subject to stockholder approval, provided, however, that
stockholder approval is not required for adjustments to the 1996 Option Plan or
to the number of shares available thereunder which are deemed appropriate by the
Compensation Committee to prevent dilution or expansion of rights.
Federal Income Tax Consequences
To Optionees
For federal income tax purposes, an optionee is not subject to tax upon the
grant of an option. If the option is a Non-Qualified Stock Option, the optionee
will generally recognize ordinary income at the time of exercise of the option
in an amount equal to the difference between the fair market value of the shares
received and the exercise price. Such optionee's basis in any shares acquired
upon such exercise will equal their fair market value on the exercise date. A
subsequent sale of shares will result in a capital gain or loss equal to the
difference between the amount realized and such basis. If the option is an
Incentive Stock Option, the optionee will
9
<PAGE>
generally not recognize income until the sale of the shares. If the shares are
held for the requisite holding periods, all gain on the sale will be treated as
long-term capital gain. If the requisite holding periods are not satisfied (a
"disqualifying disposition"), then the portion of the gain equal to the
difference between the market value of the shares at the time of exercise and
the exercise price will generally be treated as ordinary income.
To the Company
The Company will generally be entitled to a deduction for federal income
tax purposes at the same time and in the same amount as an optionee is required
to recognize ordinary income as described above. To the extent an optionee
realizes capital gain as described above, the Company will not be entitled to
any tax deduction for federal income tax purposes. Therefore, the Company will
not be entitled to any tax deduction in connection with Incentive Stock Options
with respect to which there is no disqualifying disposition.
The Company believes that compensation attributable to options granted
under the 1996 Option Plan at a price at least equal to the fair market value of
the underlying option shares at the date of grant should be treated as
performance-based compensation and will not be subject to the limitations
contained in Section 162(m) of the Code on the deductibility of non-performance
related compensation paid to certain corporate executives in excess of
$1 million in any taxable year. The 1996 Option Plan is not qualified under
Section 401(a) of the Code.
1998 Stock Option Plan
On January 7, 1998, the Board authorized and adopted the 1998 Stock Option
Plan (the "1998 Option Plan"), which had substantially identical terms as the
1996 Option Plan. The 1998 Option Plan provided that options for an aggregate of
500,000 shares of Common Stock would be available for award to all employees of
the Company with the exception of senior management of the Company who would not
be eligible to receive options under the 1998 Option Plan (but who remained
eligible to receive options under the 1996 Option Plan). The Company terminated
the 1998 Option Plan as of December 31, 1998. No options had been granted under
the 1998 Option Plan prior to its termination.
REPORT OF THE
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee of the Board of Directors is composed entirely
of non-management or outside directors. During fiscal 1998, Errol M. Cook, Bryan
D. Langton, David E. Libowitz and C. Anthony Wainwright served as members of the
Compensation Committee. The Compensation Committee also administers and approves
grants of stock options under the 1996 Option Plan, which was approved by
stockholders prior to the Company's initial public offering in March, 1996.
COMPENSATION PHILOSOPHY
The overall policy of the Compensation Committee is to provide the
Company's executive officers and other key employees with competitive
compensation opportunities based upon their contribution to the financial
success of the Company and their personal performance. It is the Compensation
Committee's objective to have a portion of each officer's and key employees
compensation contingent upon the Company's performance as well as upon the
officer's own level of performance. Accordingly, the compensation package for
each executive officer and key employee is comprised of three primary elements:
(i) base salary which reflects individual performance and is designed primarily
to be competitive with salary levels in effect at companies within and outside
the industry with which the Company competes for executive talent, (ii) annual
variable performance awards payable in cash and tied to the Company's
achievement of financial performance targets and (iii) stock-based incentive
awards which strengthen the mutuality of interests between the executive
officers and the Company's stockholders.
10
<PAGE>
COMPONENTS OF COMPENSATION
The principal components of executive officer compensation are generally as
follows:
o BASE SALARY. With respect to each of the Named Executive Officers
their base salary is fixed in accordance with the terms of their
respective employment agreements. Salaries for each executive
officer are based on job responsibilities, level of experience,
overall performance, contribution to the business and the salaries
being paid for similar positions in the industry based upon the
Company's knowledge of competitive salaries in the marketplace. See
"Employment Agreements."
o ANNUAL PERFORMANCE BONUS. Annual cash bonuses are payable to the
Company's executive officers under the Company's performance bonus
plan based on the Company's achievement of certain pre-set corporate
financial performance targets established for the fiscal year and
the individual's level of performance.
o LONG-TERM INCENTIVE COMPENSATION. Long-term incentives are provided
through stock option grants under the 1996 Option Plan. See
"Incentive Plans--Description of the 1996 Stock Option Plan." Awards
under the 1996 Option Plan are designed to further align the
interests of each executive officer with those of the stockholders
and provide each officer with a significant incentive to manage the
Company from the perspective of an owner with an equity stake in the
Company's business. For details regarding option grants in fiscal
1998, see the compensation and option tables in "Executive
Compensation."
o BENEFIT PLANS. The Company provides health care benefits and profit
sharing for executive officers on terms generally available to all
Company employees. Except as may be noted elsewhere in this proxy
statement, the value of perquisites, as determined in accordance
with the rules of the Securities and Exchange Commission relating to
executive compensation, did not exceed $50,000 or 10% of the total
salary and bonus of any executive officer during fiscal 1998.
SECTION 162(M) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Code generally disallows a tax deduction to public
corporations for compensation over $1,000,000 paid for any fiscal year to the
corporation's chief executive officer and four other most highly compensated
executive officers as of the end of any fiscal year. However, the statute
exempts qualifying performance-based compensation from the deduction limit if
certain requirements are met. It is the Company's goal to have compensation paid
to its five most highly compensated executive officers qualify, to the extent
necessary, as performance-based compensation deductible for federal income tax
purposes under Section 162(m) of the Code.
Notwithstanding the foregoing, the Board and the Compensation Committee
reserve the authority to award non-deductible compensation in other
circumstances as they deem appropriate. Further, because of ambiguities and
uncertainties as to the application and interpretation of Section 162(m) and the
regulations issued thereunder, no assurance can be given, notwithstanding the
Company's efforts, that compensation intended by the Company to satisfy the
requirements for deductibility under Section 162(m) does in fact do so.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Ingleby was paid a base salary of approximately $409,000 in fiscal
1998. Mr. Ingleby did not receive any bonus for fiscal 1998. Mr. Ingleby did not
receive a grant of stock options in fiscal 1998 under the 1996 Option Plan. Such
compensation was determined pursuant to Mr. Ingleby's employment agreement (see
"Employment Agreements") and the performance objectives established by the Board
pursuant to the Company's performance bonus plan for fiscal 1998.
11
<PAGE>
COMPENSATION OF OTHER EXECUTIVE OFFICERS
The Company has also entered into employment agreements with the other
executive officers. Each agreement provides for a fixed salary which is subject
to an annual increase in the discretion of the Board. Each agreement also
provides that such executive officers are entitled to bonus compensation
determined by the achievement of certain performance objectives established by
the Board of Directors.
In addition, Robert F. Burlinson, Mark M. Cohen and Brian Shepherd were the
only executive officers granted stock options during fiscal 1998. The
Compensation Committee believes that stock ownership, through grants of stock
options, and perhaps other forms of equity-based incentive compensation, are a
major incentive in aligning the interests of employees, including senior
management, and stockholders.
Errol M. Cook
Bryan D. Langton
David E. Libowitz
C. Anthony Wainwright
The Compensation Committee Report will not be deemed to be incorporated by
reference into any filing by the Company under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates the same by reference therein.
12
<PAGE>
PERFORMANCE COMPARISON
STOCK PRICE PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for the
Company, the Standard & Poor's 500 Composite Index and the Russell 2000 Index,
during the period commencing on March 12, 1996, the date on which the Common
Stock began trading on the New York Stock Exchange, and ending on September 30,
1998. The comparison assumes $100 was invested on March 12, 1996 in the Common
Stock, and $100 was invested on February 29, 1996 in each of the Standard &
Poor's 500 Composite Index and the Russell 2000 Index and assumes the
reinvestment of all dividends, if any. At this time, the Company does not
believe it can reasonably identify an industry peer group, and therefore the
Company has instead selected the Russell 2000 Index, which includes companies
with similar market capitalizations to that of the Company, as a comparative
index for purposes of complying with certain requirements of the Securities and
Exchange Commission.
COMPARISON OF 30 MONTH CUMULATIVE TOTAL RETURN*
AMONG CARIBINER INTERNATIONAL, INC., THE S & P 500 INDEX
AND THE RUSSELL 2000 INDEX
[GRAPH]
*$100 INVESTED ON 3/12/96 IN STOCK OR ON 2/29/96 IN INDEX-INCLUDING REINVESTMENT
OF DIVIDENDS. FISCAL YEAR ENDING SEPTEMBER 30.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
----------------------------------------------------------------------------------------
3/12/96 3/96 4/96 5/96 6/96 7/96 8/96 9/96 10/96 11/96 12/96 01/97
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CARIBINER INTERNATIONAL, INC. CWC 100 116 128 143 144 129 155 190 204 198 226 208
S & P 500 1500 100 101 102 105 105 101 103 109 112 120 118 125
RUSSELL 2000 IR20 100 102 108 112 107 98 103 108 106 110 113 115
<CAPTION>
CUMULATIVE TOTAL RETURN
----------------------------------------------------------------------------------------
06/97 07/97 08/97 09/97 10/97 11/97 12/97 01/98 02/98 03/98 04/98 05/98
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CARIBINER INTERNATIONAL, INC. CWC 293 327 380 366 401 382 400 283 302 346 180 199
S & P 500 1500 142 153 145 153 148 154 157 159 170 179 181 178
RUSSELL 2000 IR20 125 131 134 143 137 136 138 136 146 152 153 148
<CAPTION>
02/97 03/97 04/97 05/97
<S> <C> <C> <C> <C>
CARIBINER INTERNATIONAL, INC. 213 210 238 291
S & P 500 126 121 128 136
RUSSELL 2000 113 107 108 120
06/98 07/98 08/98 09/98
<S> <C> <C> <C> <C>
CARIBINER INTERNATIONAL, INC. 157 131 87 76
S & P 500 185 183 157 167
RUSSELL 2000 148 136 110 118
</TABLE>
13
<PAGE>
The Performance Comparison will not be deemed to be incorporated by
reference into any filing by the Company under the Securities Act of 1933, as
amended, or the Securities Act of 1934, as amended, except to the extent that
the Company specifically incorporates the same by reference therein.
CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH RELATED PERSONS
STOCKHOLDERS AGREEMENT
Upon completion of the initial public offering of the Company's Common
Stock in March, 1996, the Company entered into the Stockholders Agreement with
Warburg and Raymond S. Ingleby. The Stockholders Agreement contains, among other
things, various terms regarding nominations for the Company's Board of Directors
and certain registration rights granted by the Company. Pursuant to the terms of
the Stockholders Agreement, for so long as Warburg beneficially owns at least
20% or 10% of the outstanding shares of Common Stock, it will have the right to
designate two nominees or one nominee, respectively, for director. The
Stockholders Agreement also provides that for so long as Mr. Ingleby shall hold
office as the Chairman and Chief Executive Officer of the Company, he will have
the right to be designated as a nominee for director. In December, 1998, Mr.
Ingleby resigned from the position of Chief Executive Officer of the Company.
Accordingly, notwithstanding his nomination as a director, he no longer has the
automatic right to such nomination.
Additionally, the Stockholders Agreement provides that Warburg is entitled
to three "demand" registrations, which may be exercised at any time. The
Stockholders Agreement also provides that Raymond S. Ingleby will be entitled to
one "demand" registration with respect to not less than 50% of the number of
shares of Common Stock that he beneficially owned immediately prior to the
completion of the Initial Public Offering (i.e., 1,396,356 shares), provided
that Mr. Ingleby may not exercise such "demand" until the earliest of (i) six
months after the effective date of a registration statement filed by the Company
in respect of shares of Common Stock owned by Warburg, (ii) the distribution by
Warburg of shares of Common Stock to its partners and (iii) March 15, 2001. In
July, 1997, Warburg made a distribution of shares of Common Stock to its
partners, thereby triggering Mr. Ingleby's right to exercise such "demand." In
addition, in the event Mr. Ingleby is terminated from his employment by the
Company and he has not exercised his demand registration, he will be entitled to
one "demand" registration six months after the date of his termination to the
extent he would be required by law to effect such registration in order to sell
his shares. Mr. Ingleby is also entitled to "piggyback" registration rights in
the event that Warburg exercises a "demand" registration. In addition, the
Stockholders Agreement grants to Mr. Ingleby certain co-sale rights in the event
that Warburg sells, transfers or otherwise disposes of any shares of its Common
Stock.
LOANS TO BRIAN SHEPHERD
During fiscal 1998 the Company made loans aggregating approximately
$255,000 to Brian Shepherd, Executive Vice President of the Company and Chief
Executive Officer of the Company's Communications division. The loans were made
in part in connection with the relocation of Mr. Shepherd and for other personal
purposes. The loans bear an interest rate of 8% per annum and mature in
approximately equal annual installments over a period of three years, beginning
in August, 1999.
14
<PAGE>
SECURITIES BENEFICIALLY OWNED BY
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of the Record Date with respect to (i) each
person known by the Company to be the beneficial owner of more than 5% of the
Common Stock, (ii) each director of the Company, (iii) each of the executive
officers of the Company and (iv) all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
---------------------------------
NUMBER OF
SHARES OF PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK
- ----------------------------------------------------------------------------- ---------------- -------------
<S> <C> <C>
5% HOLDERS
Warburg, Pincus Investors, L.P.(2) .......................................... 6,664,236(3) 28.1%
466 Lexington Avenue
10th Floor
New York, New York 10017
Fir Tree, Inc. .............................................................. 2,852,900(4) 12.0
1211 Avenue of the Americas
29th Floor
New York, New York 10036
DIRECTORS AND EXECUTIVE OFFICERS
Raymond S. Ingleby .......................................................... 1,657,882(3)(5) 7.0
c/o Caribiner International, Inc.
16 West 61st Street
New York, New York 10023
Christopher A. Sinclair...................................................... 5,500 *
Robert F. Burlinson.......................................................... -0- *
Martin Kwitschau............................................................. 1,800 *
Brian Shepherd............................................................... 41,222(6) *
Errol M. Cook(2)............................................................. 1,625 *
Bryan D. Langton............................................................. 27,506(7) *
Sidney Lapidus(2)............................................................ 6,677,236(3)(8) 28.2
David E. Libowitz(2)......................................................... 6,664,236(3) 28.1
C. Anthony Wainwright........................................................ 570 *
All executive officers and directors as a group (10 persons)................. 8,413,341 35.5
</TABLE>
- ------------
* Less than 1%
(1) Except where otherwise indicated, the Company believes that all parties
listed in the table, based on information provided by such persons, have
sole voting and dispositive power over the securities beneficially owned by
them, subject to community property laws, where applicable. For purposes of
this table, a person or group of persons is deemed to be the "beneficial
owner" of any shares that such person or group of persons has the right to
acquire within 60 days. For purposes of computing the percentage of
outstanding shares held by each person or group of persons named above on a
given date, any security that such person or group of persons has the right
to acquire within 60 days is deemed to be outstanding, but is not deemed to
be outstanding for the purpose of computing the percentage ownership of any
other person.
(2) The sole general partner of Warburg is Warburg Pincus & Co., a New York
general partnership ("WP"). EMW LLC manages Warburg. The members of EMW LLC
are substantially the same as the partners of WP. Lionel I. Pincus is the
managing partner of WP and the managing member of EMW LLC and may be deemed
to control each of WP and EMW LLC. WP, as the sole general partner of
Warburg, has a 20% interest in the profits of Warburg. Messrs. Sidney
Lapidus and David E. Libowitz, each a director of the Company, are Managing
Directors and members of EMW LLC, and general partners of WP. As such,
Messrs. Lapidus and Libowitz may be deemed to have an indirect pecuniary
interest (within the meaning of Rule 16a-1 under the Exchange Act) in an
indeterminate portion of the shares of Common Stock beneficially owned by
Warburg. Mr. Errol M. Cook, a director of the Company, is a Senior Adviser
to EMW LLC. Each of Messrs. Cook, Lapidus and Libowitz disclaims "beneficial
ownership" of the Common Stock owned by Warburg within the meaning of Rule
13d-3 under the Exchange Act.
(3) Includes 400,000 shares of Common Stock pledged to Warburg by Raymond S.
Ingleby in connection with loan made by Warburg to Mr. Ingleby. Mr. Ingleby
has sole voting power in respect of such pledged shares.
(4) According to Amendment No. 2 to Schedule 13D, dated August 20, 1998, and
Form 4's, dated September 9 and October 9, 1998.
(5) Includes 85,000 shares held of record by the Raymond and Leigh Ingleby
Foundation, Inc.
(6) Includes presently exercisable options to purchase 4,000 shares of Common
Stock at $14.4375 per share, which expire in July, 2006.
(7) Includes presently exercisable options to purchase 18,000 shares of Common
Stock at $21.3125 per share, which expire in November, 2006.
(8) Includes 13,000 shares owned directly by Mr. Lapidus.
15
<PAGE>
PROPOSAL 2
APPROVAL OF AMENDMENTS TO THE 1996 OPTION PLAN
At the Annual Meeting a vote will be taken on a proposal to approve certain
amendments to the 1996 Option Plan to (i) increase the number of shares of
Common Stock available for grant thereunder from the existing 1,928,000 shares
of Common Stock to 2,500,000 shares of Common Stock and (ii) to increase the
number of options that an employee may receive thereunder in any fiscal year
from an aggregate of 200,000 to an aggregate of 750,000. As of the date hereof,
stock options to purchase 1,675,353 shares of Common Stock had been granted (net
of forfeitures and cancellations) to the Company's employees pursuant to the
1996 Option Plan. The proposed amendment to increase the number of shares of
Common Stock available for grant under the 1996 Option Plan is being made in
large part to offset the elimination of shares that were available for grant
under the 1998 Option Plan, which was terminated in December, 1998. See
"Incentive Plans--Description of 1998 Stock Option Plan." The Board of Directors
recommends the adoption of the proposed amendments to the 1996 Option Plan to
ensure that the Company can continue to grant stock options to employees at
levels determined appropriate by the Board of Directors and the Compensation
Committee.
For a description of the material provisions of the 1996 Option Plan
reference is made to "Incentive Plans--Description of the 1996 Stock Option
Plan" and "--Federal Income Tax Consequences."
Reference is made to Annex A-1 to this Proxy Statement, which is
incorporated by reference herein and sets forth the full text of the 1996 Option
Plan as of the date hereof together with the proposed amendments thereto.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENT TO THE INCREASE IN THE NUMBER OF SHARES AVAILABLE UNDER THE 1996
OPTION PLAN.
PROPOSAL 3
RATIFICATION AND APPROVAL OF GRANT OF AN AGGREGATE OF 600,000
STOCK OPTIONS TO CHRISTOPHER A. SINCLAIR
In connection with the Employment Agreement, dated as of December 21, 1998,
between Christopher A. Sinclair and the Company, the Board of Directors approved
the grant to Mr. Sinclair of options to purchase an aggregate of 600,000 shares
of Common Stock (the "Sinclair Options"), subject to the approval of the
stockholders of the Company. Of the Sinclair Options, (i) 350,000 options have
an exercise price per share of $8.5625, which was the average of the high and
the low reported sale prices of the Common Stock on December 21, 1998 ("Option
Grant A"), and (ii) 250,000 options have an exercise price per share of $15.00
("Option Grant B").
The Board of Directors granted the Sinclair Options to Mr. Sinclair to
induce him to join the Company as its President and Chief Executive Officer and
to provide additional motivation and incentive for Mr. Sinclair in the
performance of his duties on behalf of the Company beyond the cash compensation
paid pursuant to the terms of his employment agreement with the Company. (See
"Employment Agreements" for a description of the terms of Mr. Sinclair's
employment agreement with the Company.)
Except for their respective exercise prices, the terms and conditions of
Option Grant A and Option Grant B, which are summarized below, are identical in
all respects. In addition, although the Sinclair Options were not granted under
the 1996 Option Plan, except for certain terms relating to the vesting and
exercise of options upon resignation or termination from employment, the terms
and conditions of the stock options granted under the 1996 Option Plan have been
substantially incorporated into the terms and conditions of the Sinclair
Options.
The terms of the stock option agreements (the "Sinclair Option Agreements")
entered into in respect of the Sinclair Options provide that the Sinclair
Options are administered by the Compensation Committee, which is comprised of
not less than two non-employee directors within the meaning of Rule 16b-3 of
the Exchange Act. The
16
<PAGE>
terms of the Sinclair Option Agreements also provide that the Sinclair Options
are non-qualified stock options ("NQSOs") that become exercisable ratably over a
period of three years, with the first installment exercisable beginning on
December 21, 1999. Similar to stock options granted under the 1996 Option Plan,
the number of Sinclair Options is subject to adjustment to prevent dilution or
expansion of rights. The Sinclair Options are not transferable except by will or
pursuant to the applicable laws of descent and distribution.
Subject to the provisions summarized below, the Sinclair Options will
expire on December 21, 2008. In the event that Mr. Sinclair is terminated for
any reason other than death, Disability, Retirement, termination with or without
Cause, or resignation for Good Reason (each as defined in the Sinclair Option
Agreements), to the extent that he had the right to exercise any portion of the
Sinclair Options, such options will be exercisable until the earlier of the
expiration date of the Sinclair Options or within 30 days of the date of
Mr. Sinclair's termination. Options held by Mr. Sinclair on the date of
Disability or Retirement, whether or not exercisable on such date, are
exercisable within one year of the date of Disability or Retirement. Options
held by Mr. Sinclair at the date of death, whether or not exercisable on the
date of death, are exercisable by Mr. Sinclair's beneficiary within one year
from the date of death. In the event Mr. Sinclair is terminated for Cause, that
portion of the Sinclair Options that are exercisable as of the date of such
termination may be exercised until the earlier of the expiration date of the
Sinclair Options or the date that is 60 days after such termination. In the
event Mr. Sinclair is terminated without Cause or he resigns for Good Reason,
any unexercised portion of the Sinclair Options will become fully exercisable
until the earlier of the expiration date of the Sinclair Options or the second
anniversary of such termination or resignation, as the case may be.
In the event of a Change of Control (as such term is defined in the
Sinclair Option Agreements) of the Company, all outstanding Sinclair Options
will vest and appropriate provisions will be made for the protection of the
Sinclair Options by substitution on an equitable basis of appropriate stock of
the Company or appropriate stock of the merged, consolidated, or otherwise
reorganized corporation, as the case may be.
Federal Income Tax Consequences
To Mr. Sinclair
For federal income tax purposes, Mr. Sinclair was not subject to tax upon
the grant of the Sinclair Options. Because the Sinclair Options are NQSOs, he
will generally recognize ordinary income at the time of exercise of the option
in an amount equal to the difference between the fair market value of the share
received and the exercise price. Mr. Sinclair's basis in any shares acquired
upon exercise will equal their fair market value on the exercise date. A
subsequent sale of shares will result in a capital gain or loss equal to the
difference between the amount realized and such basis.
To the Company
The Company believes that in the event that the Sinclair Options are
ratified and approved by stockholders at the Annual Meeting the compensation
attributable to the Sinclair Options should be treated as performance-based
compensation and will not be subject to the deduction limitations contained in
Section 162(m) of the Code. The Sinclair Options are not qualified under
Section 401(a) of the Code. Accordingly, if the Sinclair Options are ratified
and approved by stockholders, the Company should be entitled to a full deduction
in respect of Mr. Sinclair's compensation in the year of such options' exercise
(including compensation earned by Mr. Sinclair as a result of the exercise of
all or part of the Sinclair Options). To the extent that Mr. Sinclair realizes
captial gain as described above, the Company will not be entitled to any tax
deduction for federal income tax purposes.
As stated above, stockholder approval is required to satisfy one of the
requirements of Section 162(m) of the Code and thereby permit the Company to
deduct payments in excess of $1,000,000 to an executive officer in any fiscal
year. In the event the Sinclair Options are not approved by the Company's
stockholders, then the Sinclair Options shall be null and void. Any compensation
earned by Mr. Sinclair in any fiscal year would not be deductible under
Section 162(m) to extent that (when combined with other non-exempt compensation)
it exceeds the limit set forth in that statute (which is presently $1,000,000).
17
<PAGE>
Because the terms of the 1996 Option Plan presently restrict the number of
options that may be granted to an employee of the Company thereunder in any
fiscal year to 200,000, the Board was not able to grant the Sinclair Options to
Mr. Sinclair under the 1996 Option Plan. (As discussed in Proposal 2 of this
Proxy Statement, a vote will be taken at the Annual Meeting to approve certain
amendments to the 1996 Option Plan, including an amendment to increase such
limitation from to 200,000 to 750,000.) In addition, because the Sinclair Option
Agreements contain certain terms and conditions relating to vesting and exercise
upon resignation or termination from employment with the Company that are
different from their analogous provisions contained in the 1996 Option Plan, it
would not have been possible to grant the Sinclair Options under the 1996 Option
Plan without having to propose further amendments to the 1996 Option Plan.
Reference is made to Annex B-1 and Annex B-2, which are incorporated by
reference herein and set forth the full text of each of the stock option
agreements entered into in respect of the Sinclair Options.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION AND APPROVAL OF
THE GRANT OF THE SINCLAIR OPTIONS.
PROPOSAL 4
RATIFICATION AND APPROVAL OF INDEPENDENT AUDITORS
The Board of Directors of the Company has selected Ernst & Young as the
Company's independent auditors for the fiscal year ending September 30, 1999.
Ernst & Young has audited the Company's financial statements since 1992.
Representatives of Ernst & Young are expected to be present at the meeting and
will be afforded the opportunity to make a statement if they desire to do so,
and such representatives are expected to be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION AND APPROVAL OF
THE APPOINTMENT OF ERNST & YOUNG AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING SEPTEMBER 30, 1999.
OTHER BUSINESS
As of the date of this Proxy Statement, the Company knows of no business
that will be presented for consideration at the Annual Meeting other than that
which has been referred to above. As to other business, if any, that may come
before the Annual Meeting, it is intended that proxies in the enclosed form will
be voted in accordance with the judgment of the proxy holder.
STOCKHOLDER PROPOSALS
Any proposal of a stockholder intended to be presented at the Company's
2000 Annual Meeting of Stockholders must be received by the Secretary of the
Company by September 30, 1999, for inclusion in the notice of meeting and proxy
statement relating to the 2000 Annual Meeting.
FORM 10-K
A copy of the Company's Annual Report on Form 10-K, as amended, for the
fiscal year ended September 30, 1998 ("Form 10-K") accompanies this Proxy
Statement. Additional copies of the Form 10-K may be obtained by writing to
Caribiner International, Inc., 16 West 61st Street, New York, New York 10023,
Attention: Secretary.
18
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of the Forms 3, 4 and 5 and any amendments
thereto furnished to the Company pursuant to Rule 16a-3(c) promulgated under the
Exchange Act, the Company is not aware of any failure of any officer, director
or beneficial owner of more than 10% of the Common Stock to timely file with the
Securities and Exchange Commission any Form 3, 4 or 5 in respect of the Company
during fiscal 1998, except for Mark M. Cohen and Brian Shepherd, each of whom
filed one late report on Form 4.
By Order of the Board of Directors
/s/ Harold E. Schwartz
Harold E. Schwartz
Secretary
Dated: January 27, 1999
New York, New York
19
<PAGE>
ANNEX A-1
CARIBINER INTERNATIONAL, INC.
(FORMERLY KNOWN AS BUSINESS COMMUNICATIONS GROUP, INC.)
1996 STOCK OPTION PLAN
(AS AMENDED AS OF FEBRUARY 27, 1998)
ARTICLE 1
ESTABLISHMENT AND PURPOSE
1.1 ESTABLISHMENT AND EFFECTIVE DATE. Caribiner International, Inc., a
Delaware corporation (the "Corporation"), hereby establishes a stock incentive
plan to be known as the Caribiner International, Inc. 1996 Stock Option Plan
(the "Plan"). The Plan shall become effective as of January 1, 1996, subject to
the approval of the Corporation's stockholders. In the event that such
stockholder approval is not obtained, any awards made hereunder shall be
canceled and all rights of employees with respect to such awards shall thereupon
cease. Upon approval by the Board of Directors of the Corporation (the "Board")
and the Board's Compensation Committee (the "Committee"), awards may be made as
provided herein.
1.2 PURPOSE. The purpose of the Plan is to encourage and enable employees
(subject to such requirements as may be prescribed by the Committee) of the
Corporation and its subsidiaries to acquire a proprietary interest in the
Corporation through the ownership of the Corporation's common stock, par value
$.01 per share ("Common Stock"). Such ownership will provide such employees with
a more direct stake in the future welfare of the Corporation and encourage them
to remain with the Corporation and its subsidiaries. It is also expected that
the Plan will encourage qualified persons to seek and accept employment with the
Corporation and its subsidiaries.
ARTICLE 2
AWARDS
2.1 FORM OF AWARDS. Awards under the Plan may be granted in incentive
stock options ("Incentive Stock Options") meeting the requirements of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code") or
non-qualified stock options ("Non-qualified Stock Options") (unless otherwise
indicated, references in the Plan to "Options" shall include both Incentive
Stock Options and Non-qualified Stock Options).
2.2 MAXIMUM SHARES AVAILABLE. The maximum aggregate number of shares of
Common Stock available for award under the Plan is 1,928,000*, subject to
adjustment pursuant to Article 8 hereof. Shares of Common Stock issued pursuant
to the Plan may be either authorized but unissued shares or issued shares
reacquired by the Corporation. In the event that prior to the end of the period
during which Options may be granted under the Plan, any Option under the Plan
expires unexercised or is terminated, surrendered or canceled, then such shares
shall be available for subsequent awards under the Plan, upon such terms as the
Committee may determine.
2.3 RETURN OF PRIOR AWARDS. As a condition to any subsequent award, the
Committee shall have the right at its discretion, to require employees to return
to the Corporation awards previously granted under the Plan. Subject to the
provisions of the Plan, such new award shall be upon such terms and conditions
as are specified by the Committee at the time the new award is granted.
- ------------------
*If the proposed amendments to the 1996 Stock Option Plan are approved, the
maximum aggregate number of shares available for award will be increased to
2,500,000.
A-1-1
<PAGE>
ARTICLE 3
ADMINISTRATION
3.1 COMMITTEE. Awards shall be determined, and the Plan shall be
administered, by the Committee as appointed from time to time by the Board,
which Committee shall consist of not less than two (2) members of the Board.
Except as permitted by Rule 16b-3 of the Securities Exchange Age of 1934, as
amended (the "Act"), and by Section 162(m) of the Code (or Regulations
promulgated thereunder), no member of the Board may serve on the Committee if
such member: (i) is or has been granted or awarded stock options, pursuant to
the Plan or any other plan of the Corporation or its affiliates either while
serving on the Committee or during the one year period prior to being appointed
to the Committee; (ii) is an employee or former employee of the Corporation; or
(iii) receives remuneration from the Corporation, either directly or indirectly,
in any capacity other than as a director.
3.2 POWERS OF COMMITTEE. Subject to the express provisions of the Plan,
the Committee shall have the power and authority (i) to grant Options and to
determine the purchase price of the Common Stock covered by each Option, the
term of each Option, the number of shares of Common Stock to be covered by each
Option and any performance objectives or vesting standards applicable to each
Option; (ii) to designate Options as Incentive Stock Options or Non-qualified
Stock Options; and (iii) to determine the employees to whom and the time or
times at which Options shall be granted.
3.3 DELEGATION. The Committee may delegate to one or more of its members
or to any other person or persons such ministerial duties as it may deem
advisable; provided, however, that the Committee may not delegate any of its
responsibilities hereunder if such delegation would cause the Plan to fail to
comply with the "disinterested administration" rules under Section 16 of the
Act. The Committee may also employ attorneys, consultants, accountants or other
professional advisors and shall be entitled to rely upon the advice, opinions or
valuations of any such advisors.
3.4 INTERPRETATIONS. The Committee shall have sole discretionary authority
to interpret the terms of the Plan, to adopt and revise rules, regulations and
policies to administer the Plan and to make any other factual determinations
which it believes to be necessary or advisable for the administration of the
Plan. All actions taken and interpretations and determinations made by the
Committee in good faith shall be final and binding upon the Corporation, all
employees who have received awards under the Plan and all other interested
persons.
3.5 LIABILITY; INDEMNIFICATION. No member of the Committee, nor any person
to whom ministerial duties have been delegated, shall be personally liable for
any action, interpretation or determination made with respect to the Plan or
awards made thereunder, and each member of the Committee shall be fully
indemnified and protected by the Corporation with respect to any liability he or
she may incur with respect to any such action, interpretation or determination,
to the extent permitted by applicable law and to the extent provided in the
Corporation's Certificate of Incorporation and Bylaws, as amended from time to
time, or under any agreement between any such member and the Corporation.
ARTICLE 4
ELIGIBILITY
Awards may be made to employees of the Corporation or any of its
subsidiaries (subject to such requirements as may be prescribed by the
Committee); provided, however, that no employee may receive awards of or
relating to more than 200,000* shares of Common Stock in the aggregate in any
fiscal year of the Corporation. Awards may be made to a director of the
Corporation who is not also a member of the Committee, provided that the
director is also an employee. In determining the employees to whom awards shall
be granted and the number of shares to be covered by each award, the Committee
shall take into account the nature of the services rendered by such employees,
their present and potential contributions to the success of the Corporation and
its subsidiaries and such other factors as the Committee in its sole discretion
shall deem relevant.
- ------------------
*If the proposed amendments to the 1996 Stock Option Plan are approved, the
maximum number of awards that an employee may receive in the aggregate in any
fiscal year of the Corporation will be increased to 750,000.
A-1-2
<PAGE>
As used herein, the term "subsidiary" shall mean any present or future
corporation, partnership or joint venture in which the Corporation owns,
directly or indirectly, 50% or more of the economic interests. Notwithstanding
the foregoing, only employees of the Corporation and any present or future
corporation which is or may be a "subsidiary corporation" of the Corporation (as
such term is defined in Section 424(f) of the Code) shall be eligible to receive
Incentive Stock Options.
ARTICLE 5
OPTION TERMS
5.1 GRANT OF OPTIONS. Options may be granted under the Plan for the
purchase of shares of Common Stock. Options shall be granted in such form and
upon such terms and conditions, including the satisfaction of corporate or
individual performance objectives and other vesting standards, as the Committee
shall from time to time determine.
5.2 DESIGNATION AS NON-QUALIFIED STOCK OPTION OR INCENTIVE STOCK
OPTION. In connection with any grant of Options, the Committee shall designate
in the written agreement required pursuant to Article 10 hereof whether the
Options granted shall be Incentive Stock Options or Non-qualified Stock Options,
or in the case both are granted, the number of shares of each.
5.3 OPTION PRICE. The purchase price per share under each Incentive Stock
Option or Non-qualified Stock Option, shall be the Market Price (as hereinafter
defined) (the "Exercise Price"), of the Common Stock on the date the Option is
granted. In the case of an Incentive Stock Option granted to an employee owning
(actually or constructively under Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of the Corporation or of
a subsidiary (a "10% Stockholder"), the Exercise Price shall not be less than
110% of the Market Price of the Common Stock on the date of grant.
The "Market Price" of the Common Stock on any day shall be determined as
follows (i) if the Common Stock is listed on a national securities exchange or
quoted through the Nasdaq Stock Market/Nasdaq National Market, the Market Price
on any day shall be the average of the high and low reported consolidated
trading sales prices, or if no such sale is made on such day, the average of the
closing bid and asked prices reported on the consolidated trading listing for
such day; (ii) if the Common Stock is quoted through the Nasdaq inter-dealer
quotation system, the Market Price on any day shall be the average of the
representative bid and asked prices at the close of business for such day; or
(iii) if the Common Stock is not listed on a national stock exchange or quoted
through Nasdaq, the Market Price on any day shall be the average of the high bid
and low asked prices reported by the National Quotation Bureau, Inc. for such
day. In no event shall the Market Price of a share of Common Stock subject to an
Incentive Stock Option be less than the fair market value as determined for
purposes of Section 422(b)(4) of the Code.
5.4 LIMITATION ON AMOUNT OF INCENTIVE STOCK OPTIONS. In the case of an
Incentive Stock Option, the aggregate Market Price (determined at the time the
Incentive Stock Option is granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any optionee
during any calendar year (under all plans of the Corporation and any subsidiary)
shall not exceed $100,000.
5.5 LIMITATION ON TIME OF GRANT. No grant of an Incentive Stock Option
shall be made under the Plan more than ten (10) years after the date the Plan is
approved by stockholders of the Corporation.
5.6 EXERCISE AND PAYMENT. Options may be exercised in whole or in part.
Common Stock purchased upon the exercise of Options shall be paid for in full at
the time of purchase. Such payment shall be made in cash or, in the discretion
of the Committee, through delivery of shares of Common Stock or a combination of
cash and Common Stock, in accordance with procedures to be established by the
Committee. Any shares so delivered shall be valued at their Market Price on the
date of exercise. Upon receipt of notice of exercise and payment in accordance
with procedures to be established by the Committee, the Corporation or its agent
shall deliver to the person exercising the Option (or his or her designee) a
certificate for such shares.
A-1-3
<PAGE>
5.7 TERM. The term of each Option granted hereunder shall be determined by
the Committee; provided, however, that, notwithstanding any other provision of
the Plan, in no event shall an Incentive Stock Option be exercisable after ten
(10) years from the date it is granted, or in the case of an Incentive Stock
Option granted to a 10% Stockholder, five (5) years from the date it is granted.
5.8 RIGHTS AS A STOCKHOLDER. A recipient of Options shall have no rights
as a stockholder with respect to any shares issuable or transferable upon
exercise thereof until the date a stock certificate is issued to such recipient
representing such shares.
5.9 GENERAL RESTRICTIONS. Each Option granted under the Plan shall be
subject to the requirement that, if at any time the Board shall determine, in
its discretion, that the listing, registration or qualification of the shares
issuable or transferable upon exercise thereof upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Option or the issue, transfer, or purchase of shares
thereunder, such Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Board.
The Board or the Committee may, in connection with the granting of any
Option, require the individual to whom the Option is to be granted to enter into
an agreement with the Corporation stating that as a condition precedent to each
exercise of the Option, in whole or in part, such individual shall if then
required by the Corporation represent to the Corporation in writing that such
exercise is for investment only and not with a view to distribution, and also
setting forth such other terms and conditions as the Board or the Committee may
prescribe.
ARTICLE 6
NONTRANSFERABILITY OF OPTIONS
No Option may be transferred, assigned, pledged or hypothecated (whether by
operation of law or otherwise), except as provided by will or the applicable
laws of descent and distribution, and no Option shall be subject to execution,
attachment or similar process. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of an Option not specifically permitted
herein shall be null and void and without effect. An Option may be exercised by
the recipient only during his or her lifetime, or following his or her death
pursuant to Section 7.3 hereof.
Notwithstanding anything to the contrary in the preceding paragraph, the
Committee may, in its sole discretion, cause the written agreement relating to
any Non-qualified Stock Options granted hereunder to provide that the recipient
of such Non-qualified Stock Options may transfer any of such Non-qualified Stock
Options other than by will or the laws of descent and distribution in any manner
authorized under applicable law; provided, however, that in no event may the
Committee permit any transfers which would cause this Plan to fail to satisfy
the applicable requirements of Rule 16b-3 under the Act, or would cause any
recipient of awards hereunder to fail to be entitled to the benefits of
Rule 16b-3 or other exemptive rules under Section 16 of the Act or be subject to
liability thereunder.
ARTICLE 7
EFFECT OF TERMINATION OF EMPLOYMENT, DISABILITY,
RETIREMENT OR DEATH
7.1 GENERAL RULE. If the services of an employee of the Corporation (the
"Employee") who holds an unexercised Option are terminated for any reason other
than death, Disability, Retirement or Cause (each as defined below), an Option
shall be exercisable by the Employee at any time prior to the expiration date of
the Option or within 30 days after the date of such termination, whichever is
earlier, but only to the extent the Employee had the right to exercise such
Option on the date of termination. The Option shall not be affected by any
change of employment as long as the Employee continues to be employed by either
the Corporation or a subsidiary.
A-1-4
<PAGE>
7.2 DISABILITY OR RETIREMENT. Except as otherwise expressly provided in
the written agreement relating to any Option granted under the Plan, in the
event of the Disability or Retirement of a recipient of Options, the Options
which are held by such recipient 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; provided, however, that any
Incentive Stock Option of such recipient shall no longer be treated as an
Incentive Stock Option unless exercised within three (3) months of the date of
such Disability or Retirement (or within one (1) year in the case of an employee
who is "disabled" within the meaning of Section 22(e)(3) of the Code).
"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
Committee 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. The decision of the
Committee shall be final and conclusive.
7.3 DEATH. In the event of the death of a recipient of Options while an
employee of the Corporation or any subsidiary, Options which are held by such
employee at the date of death, whether or not otherwise exercisable on the date
of death, shall be exercisable by the beneficiary designated by the employee for
such purpose (the "Designated Beneficiary") or if no Designated Beneficiary
shall be appointed or if the Designated Beneficiary shall predecease the
employee, by the employee's personal representatives, heirs or legatees at any
time within one (1) year from the date of death (subject to the limitation in
Section 5.7 hereof), at which time such Options shall terminate; provided,
however, that any Incentive Stock Option of such recipient shall no longer be
treated as an Incentive Stock Option unless exercised within three (3) months of
the date of the recipient's death.
In the event of the death of a recipient of Options following a termination
of employment due to Retirement or Disability, if such death occurs before the
Options are exercised, the Options which are held by such recipient on the date
of termination of employment, whether or not otherwise exercisable on such date,
shall be exercisable by such recipient's Designated Beneficiary, or if no
Designated Beneficiary shall be appointed or if the Designated Beneficiary shall
predecease such recipient, by such recipient's personal representatives, heirs
or legatees to the same extent such Options were exercisable by the recipient
following such termination of employment.
7.4 CAUSE. The Committee may, in its sole discretion, cause any Option to
be forfeited upon an employee's termination of employment if the employee was
terminated for one (or more) of the following reasons ("Cause"): (i) the
employee's conviction, or plea of guilty or nolo contendere to the commission of
a felony, (ii) the employee's commission of any fraud, misappropriation or
misconduct which causes demonstrable injury to the Corporation or a subsidiary,
(iii) an act of dishonesty by the employee resulting or intended to result,
directly or indirectly, in gain or personal enrichment at the expense of the
Corporation or a subsidiary, (iv) any breach of the employee's fiduciary duties
to the Corporation as an employee or officer or (v) any other serious violation
of a Corporation policy. It shall be within the sole discretion of the Committee
to determine whether the employee's termination was for one of the foregoing
reasons, and the decision of the Committee shall be final and conclusive.
7.5 CHANGE OF CONTROL. If there should be a Change of Control of the
Corporation (as defined below), the Corporation shall give the employee written
notice of such Change of Control as promptly as practicable and the Option,
whether or not currently exercisable, shall become immediately exercisable as of
the effective date of such Change of Control.
Notwithstanding the foregoing, 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 of Directors of the
Corporation, 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 only that the
excess of the aggregate Market Price of the shares subject to the Option
immediately after such substitution over the 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 Exercise Price thereof.
A-1-5
<PAGE>
For purposes of this Section 7.5, a "Change of Control" shall be deemed to
have occurred if, at any time following the effective date of the Plan, (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 of the Corporation; (ii) during any
period of two consecutive years, individuals that at the beginning of such
period constitute the Board of Directors of the Corporation cease for any reason
to constitute a majority thereof, unless the election, or the nomination for
election by the shareholders, 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 a wholly-owned
subsidiary of the Company).
7.6 LEAVE OF ABSENCE. In the case of an employee on an approved leave of
absence, the Options of such employee shall not be affected unless such leave is
longer than 13 weeks. The date of exercisability of any Options of an employee
which are unexercisable at the beginning of an approved leave of absence lasting
longer than 13 weeks shall be postponed for a period equal to the length of such
leave of absence. Notwithstanding the foregoing, the Committee may, in its sole
discretion, waive in writing any such postponement of the date of exercisability
of any Options due to a leave of absence.
ARTICLE 8
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
Notwithstanding any other provision of the Plan, the Committee may, (i) at
any time, make or provide for such adjustments to the Plan or to the number and
class of shares available thereunder or (ii) at the time of grant of any
Options, provide for such adjustments to such Options as the Committee shall
deem appropriate to prevent dilution or enlargement of rights, including without
limitation, adjustments in the event of stock dividends, stock splits,
recapitalizations, restructurings, mergers, consolidations, combinations or
exchanges of shares, separations, spin-offs, reorganizations, liquidation's and
the like.
ARTICLE 9
AMENDMENT AND TERMINATION
The Board may suspend, terminate, modify or amend the Plan, provided that
any amendment that would (i) materially increase the aggregate number of shares
which may be issued under the Plan, (ii) materially increase the benefits
accruing to employees under the Plan, or (iii) materially modify the
requirements as to eligibility for participation in the Plan, shall be subject
to the approval of the Corporation's stockholders, except that any such increase
or modification that may result from adjustments authorized by Article 8 hereof
shall not require such stockholder approval. If the Plan is terminated, the
terms of the Plan shall, notwithstanding such termination, continue to apply to
awards granted prior to such termination. No suspension, termination,
modification or amendment of the Plan may, without the consent of the employee
to whom an award shall theretofore have been granted, adversely affect the
rights of such employee under such award.
ARTICLE 10
WRITTEN AGREEMENT
Each award of Options shall be evidenced by a written agreement containing
such restrictions, terms and conditions, if any, as the Committee may require.
In the event of any conflict between a written agreement and the Plan, the terms
of the Plan shall govern.
A-1-6
<PAGE>
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 TAX WITHHOLDING. The Corporation shall have the right to require
employees or their beneficiaries or legal representatives to remit to the
Corporation an amount sufficient to satisfy Federal, state and local withholding
tax requirements. The Committee may, in its sole discretion, permit an employee
to satisfy his or her tax withholding obligation either by (i) surrendering
shares owned by the employee or (ii) having the Corporation withhold from shares
otherwise deliverable to the employee. Shares surrendered or withheld shall be
valued at their Market Price as of the date on which income is required to be
recognized for income tax purposes.
11.2 COMPLIANCE WITH SECTION 16(B). In the case of employees who are or
may be subject to Section 16 of the Act, it is the intent of the Corporation
that the Plan and each award granted hereunder satisfy and be interpreted in a
manner that satisfies the applicable requirements of Rule 16b-3, so that such
persons will be entitled to the benefits of Rule 16b-3 or other exemptive rules
under Section 16 of the Act and will not be subjected to liability thereunder.
If any provision of the Plan or any award would otherwise conflict with the
intent expressed herein, that provision, to the extent possible, shall be
interpreted and deemed amended so as to avoid such conflict. To the extent of
any remaining irreconcilable conflict with such intent, such provision shall be
deemed void as applicable to employees who are or may be subject to Section 16
of the Act.
11.3 SUCCESSORS. The obligations of the Corporation under the Plan shall
be binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the assets and business of the
Corporation. In the event of any of the foregoing, the Committee may, at its
discretion prior to the consummation of the transaction and subject to
Article 9 hereof, cancel, offer to purchase, exchange, adjust or modify any
outstanding awards, at such time and in such manner as the Committee deems
appropriate and in accordance with applicable law.
11.4 GENERAL CREDITOR STATUS. Employees shall have no right, title, or
interest whatsoever in or to any investments which the Corporation may make to
aid it in meeting its obligations under the Plan. Nothing contained in the Plan,
and no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Corporation
and any employee or beneficiary or legal representative of such employee. To the
extent that any person acquires a right to receive payments from the Corporation
under the Plan, such right shall be no greater than the right of an unsecured
general creditor of the Corporation. All payments to be made hereunder shall be
paid from the general funds of the Corporation and no special or separate fund
shall be established and no segregation of assets shall be made to assure
payment of such amounts except as expressly set forth in the Plan.
11.5 NO RIGHT OF EMPLOYMENT. Nothing in the Plan or in any written
agreement entered into pursuant to Article 10 hereof, nor the grant of any
award, shall confer upon any employee any right to continue in the employ of the
Corporation or a subsidiary or to be entitled to any remuneration or benefits
not set forth in the Plan or such written agreement or interfere with or limit
the right of the Corporation or a subsidiary to modify the terms of or terminate
such employee's employment at any time.
11.6 NOTICES. Notices required or permitted to be made under the Plan
shall be sufficiently made if personally delivered to the employee or sent by
regular mail addressed (a) to the employee at the employee's address as set
forth in the books and records of the Corporation or its subsidiary, or (b) to
the Corporation or the Committee at the principal office of the Corporation
clearly marked "Attention: Compensation Committee."
11.7 SEVERABILITY. In the event that any provision of the Plan shall be
held illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision shad not been included.
11.8 GOVERNING LAW. To the extent not preempted by Federal law, the Plan,
and all agreement hereunder, shall be construed in accordance with and governed
by the laws of the State of New York.
A-1-7
<PAGE>
ANNEX B-1
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.
B-1-1
<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.
B-1-2
<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
B-1-3
<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.
B-1-4
<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
B-1-5
<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
B-1-6
<PAGE>
ANNEX B-2
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.
B-2-1
<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
B-2-2
<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.
B-2-3
<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.
B-2-4
<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.
B-2-5
<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
B-2-6
<PAGE>
CARIBINER INTERNATIONAL, INC. Revocable Proxy
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CARIBINER
INTERNATIONAL, INC., FOR USE ONLY AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON MARCH 16, 1999, AND ANY ADJOURNMENT THEREOF.
The undersigned hereby acknowledges prior receipt of the Notice of the
Annual Meeting of Stockholders (the "Meeting") and the Proxy Statement
describing the matters set forth below, and indicating the date, time and place
of the Meeting, and hereby appoints the Board of Directors of Caribiner
International, Inc. (the "Company"), or any of them acting alone, as proxy, each
with full power of substitution to represent the undersigned at the Meeting, and
at any adjournment or adjournments thereof, and thereat to act with respect to
all votes that the undersigned would be entitled to cast, if then personally
present on the matters referred to on the reverse side in the manner specified.
This Proxy, if executed, will be voted as directed, but, if no instructions
are specified, this Proxy will be voted FOR the proposals listed. Please sign
and date this Proxy on the reverse side and return it in the enclosed envelope.
This Proxy must be received by the Company no later than March 16, 1999.
This Proxy is revocable and the undersigned may revoke it at any time prior
to the Meeting by giving written notice of such revocation to the Secretary of
the Company. Should the undersigned be present and wish to vote in person at the
Meeting, or any adjournment thereof, the undersigned may revoke this Proxy by
giving written notice of such revocation to the Secretary of the Company on a
form provided at the Meeting.
(Continued and to be signed on reverse side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
Annual Meeting Of Stockholders
Caribiner International, Inc.
Tuesday, March 16, 1999
12:00 noon
The Radisson Empire Hotel
44 West 63rd Street
New York, New York
<PAGE>
Please mark
your votes as | X |
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 TO 4.
(1) Election of Directors of all nominees listed
Errol M. Cook; Raymond S. Ingleby; Bryan D. Langton; Sidney Lapidus;
David E. Libowitz; Christopher A. Sinclair; C. Anthony Wainwright
FOR WITHHOLD
all nominees AUTHORITY
listed to the right to vote for
(Except As Marked all nominees
To The Contrary) listed to the right
| | | |
INSTRUCTION: To withhold your vote for any individual nominee, write that
nominee's name on the line provided below.
----------------------------------------------------
(2) Approval of amendments to increase the number of shares of Common Stock
available for grant under the Company's 1996 Stock Option Plan from
1,928,000 shares to 2,500,000 shares and to increase the maximum annual
grant of options to an employee from 200,000 to 750,000.
FOR AGAINST ABSTAIN
| | | | | |
(3) Ratification and approval of grant of an aggregate of 600,000 stock options
to Christopher A. Sinclair.
FOR AGAINST ABSTAIN
| | | | | |
(4) Ratification and approval of the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending September 30,
1999.
FOR AGAINST ABSTAIN
| | | | | |
(5) To vote, in its discretion, upon any other matters that may properly come
before the Annual Meeting or any Adjournment thereof. See "Other Business"
in the Caribiner International, Inc. Proxy Statement.
Signature(s)_________________________________________ Date________________, 1999
Please sign your name exactly as it appears hereon. Joint accounts need only one
signature, but all accountholders should sign if possible. When signing as an
administrator, agent, corporation officer, executor, trustee, guardian or
similar positon or under a power of attorney, please add your full title to your
signature. PLEASE RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE-PAID ENVELOPE.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
Annual Meeting Of Stockholders
Caribiner International, Inc.
Tuesday, March 16, 1999
12:00 noon
The Radisson Empire Hotel
44 West 63rd Street
New York, New York
<PAGE>
Caribiner
INTERNATIONAL
[GRAPHIC OF A GLOBE]
loud & clear
1998 Annual Report on Form 10-K
<PAGE>
Caribiner International
a letter from the chairman
[PHOTO OF RAYMOND S. INGLEBY]
Raymond S. Ingleby
Chairman
In a short period of time, Caribiner International has become a leader in the
business communications services industry. Through a combination of organic
growth and acquisitions, we have developed a comprehensive package of business
communications services. Whether it be for the production of meetings and
events, the rental of audiovisual equipment or the development of education and
training programs, more and more of the world's most respected corporations and
institutions are turning to Caribiner. We closed fiscal 1998 with over 700
active accounts in our Communications Group, up from approximately 500 accounts
at the end of fiscal 1997. In addition, our audiovisual, staging and rental
services businesses now provide a comprehensive range of services to
approximately 500 hotels.
Financial Results: Caribiner has grown rapidly since our initial public
offering in March 1996. Our revenue in fiscal 1998 of approximately $697
million represents an increase of 760% over our fiscal 1995 revenue of
approximately $81 million. This top line growth reflects both the strong
competitive position of our company, as well as the strong demand for business
communications services across our markets.
[PHOTO OF THE MILENNIUM DOME IN GREENWICH, ENGLAND]
However, during fiscal 1998 this rapid growth placed significant strain on
our organization as we worked to integrate acquisitions and organize our
diversified business units. While our top line grew dramatically, our bottom
line results fell below our expectations. Higher-than-expected costs and
slower-than-expected benefits from certain acquisitions, as well as delays in
implementing cost controls and upgrading information technology systems
negatively impacted our results. As a result of these growing pains, we shifted
our
o Fiscal 1998 revenue of $697 million represented an increase of more than 100%
over fiscal 1997 revenue of $342 million.
o Caribiner's Presentation Technologies Division received high honors for its
integrated audiovisual systems with a Grand Prize Award from Presentations
Magazine for best board room installation of the year at the Medtronic, Inc.
facility in Minneapolis, Minnesota.
<PAGE>
[PHOTO OF GLOBE AND EXHIBITS]
Above: Examples of Caribiner designed
exhibits for the annual Bass Hotels
and Resorts worldwide conference.
Left: The Millennium Dome, located in
Greenwich, England will be the site
for a massive World Expo beginning in
January, 2000. Caribiner is working
with the New Millennium Experience
Company as consultant on Dome content
and as sponsorship liaison, as well as
providing ongoing communications
delivery to the event's various
audiences. Caribiner is also
responsible for the design and
execution of two of the ten exhibit
zones within the Dome.
primary focus in the latter half of the year toward restructuring our
assets and upgrading our management team in order to build an infrastructure to
support the Company's growth. Costs associated with this restructuring program
combined with the above factors were largely responsible for the 98% decrease
in our fiscal 1998 net income as compared with fiscal 1997.
Restructuring Program: Our financial performance was disappointing
considering the world class assets that Caribiner International has assembled.
However, we believe we are taking the necessary steps to restore the profitable
growth of our business. Caribiner's two primary operating divisions, the
Communications Group and Hospitality Resources, occupy leading positions in
their markets. I believe the leaders of these divisions, together with their
colleagues who oversee our worldwide businesses, make us a force to be reckoned
with in the new millennium. In each of our operating units we are working to
improve accounting and administrative functions, decentralize operations and
reduce our operating expenses, while at the same time continuing to grow our
client base and generate organic revenue growth. We expect these initiatives to
result in gradual improvements in our overall results in future periods.
Strengthening Our Management Team: In addition to restructuring our
operations, during fiscal 1998 we also focused on expanding and strengthening
our senior management team. The process was essentially completed with the
December 1998 appointment of Christopher A. Sinclair as President, Chief
Executive Officer and Board member. Chris brings to Caribiner over 25 years of
management experience, including having served in senior positions with
PepsiCo, Inc., Frito-Lay, General Foods Corporation and Newsweek, Inc. Chris
will provide Caribiner with invaluable hands-on direction as we continue to
grow
o Christopher Sinclair joined Caribiner International as President, Chief
Executive Officer and Board member in December 1998.
o In January 1998, Caribiner's Communications Group produced the Centennial
Bottler's Meeting for Pepsi-Cola Company, launching a new integrated global
marketing program for the beverage company.
<PAGE>
[PHOTO OF EXHIBIT DISPLAY]
Above: The central display for the
GEAC Alliance Conference in Orlando,
Florida designed by Caribiner's Atlanta
3D Design Team.
Right: A website created for Porsche
by Caribiner's Digital Media Group in [PHOTO OF PORSCHE WEBSITE]
Seattle, Washington.
and improve upon our operating practices and systems. Further, Chris'
appointment will allow me to more effectively focus my efforts on further
expanding Caribiner's leadership position.
In June 1998, we appointed Robert F. Burlinson as Executive Vice President
and Chief Financial Officer. Bob brings to Caribiner over 30 years of financial
management experience, including having served in senior positions with The
National Guardian Corporation, Kane-Miller Corporation and Handy & Harman. Bob
has brought to Caribiner particularly valuable experience in planning and
implementing cost control programs and effective corporate accounting systems
in fast-growing companies. As a result of each of these appointments, we have
entered 1999 with a strong management team that is focused on improving
Caribiner's operating practices and bottom line returns.
Summary: During the past three years, we have successfully implemented our
strategy to build an international leader in the business communications
services industry. With the critical mass we have achieved and our superior mix
of capabilities, we have now turned our attention toward improving our bottom
line performance.
In the second half of fiscal 1998 we slowed down the pace of our
acquisition program to allow our business lines to strengthen their
administrative and back office infrastructures, achieve cost savings and drive
best practices. These initiatives will continue through the first half of
fiscal 1999. In addition, we will embark on promoting our company like never
before to increase brand and product offering awareness and to cross sell our
services to current and potential clients.
I believe Caribiner International has world-class assets managed by a
world-class leadership team supported by some of the best talent in the
industry. Our businesses are seeing more and more demand from clients and our
future looks bright. We thank you for your support and look forward to
reporting our progress to you in the new year.
o The Communications Group undertook the logistics, staging and media center
requirements for the high profile G8 Summit in the United Kingdom.
o Caribiner's Meeting Services group entered into a strategic alliance with GES
Exposition Services, making Caribiner the preferred audio-visual services
provider for designated meetings, tradeshows and events in which GES serves
as the general contractor-decorator.
<PAGE>
[PHOTO OF CEREMONY]
Caribiner produced the historic
event marking the transfer
of Hong Kong from British to Chinese
administration on June 30, 1997.
Caribiner International
our promise: your message loud and clear (Service Mark)
The Communications Group: Caribiner International is a leading "direct"
communications company. Direct communications includes all live and virtually
live communication environments, including meetings, events, trade shows,
exhibits, performance improvement programs, digital media, certain corporate
communications, product launches, music, entertainment and audiovisual
productions.
Direct communications is a unique medium not unlike print, radio and
television. However, unlike ad agencies that specialize in delivering short
messages to broad audiences, or public relations firms that specialize in
delivering medium length messages via the news media, Caribiner specializes in
delivering full and complete messages to highly select audiences in controlled,
often live situations. This communications medium is what we call "direct"
communications.
Caribiner International was founded as a meetings and events company for
primarily corporate clients, but over time, the world of direct communications
has changed, and accordingly, Caribiner has changed to be more responsive to
its clients' needs. Today, clients demand that their complex and comprehensive
messages be fully integrated and delivered in a host of environments through
varied technological media.
There are few communications opportunities relating to meetings, events,
trade shows or exhibits that cannot be addressed with a Caribiner
Communications solution - and those opportunities don't stop with live events.
Caribiner has expanded its capabilities over the past several years to include
outsourced education and training, product launch services, digital media,
corporate communications and brand development.
Hospitality Resources: Caribiner's Hospitality Resources Division is a
leading provider of audiovisual outsourcing services to hotels, resorts and con-
o Caribiner's Audio Visual Headquarters Staging Division provided projection
equipment, screens and technical staff for the live telecast of the annual
Academy Awards for the nineteenth consecutive year.
o Caribiner's Melville Exhibition Services subsidiary served as the official
electrical contractor for the International Spring Fair, the largest
exhibition of giftware manufacturers in the United Kingdom, for the ninth
consecutive year.
<PAGE>
Caribiner International is a leader in meetings and events,
exhibits and visitor centers, learning and performance improvement, digital
media, video production, corporate communications, product launches and
audiovisual services.
[PHOTOS OF AUDIOVISUAL TECHNICIANS AND HOTEL MEETING ROOM]
Caribiner's Hospitality Resources
division provides on-site technical
support to hotel properties hosting
meetings and events that utilize
sound, video, lighting and special
effects.
ference centers internationally. Hospitality Resources provides integrated
hospitality support services, including comprehensive audiovisual, staging,
telecommunications and other allied services and support for hotels and resorts
with large meeting and conference room space.
Hospitality Resources' Presentation Services subdivision is a full-service
meeting and presentation support resource that can service meeting and event
clients from arrival to departure, from script to screen. The unit maintains a
comprehensive inventory of audiovisual equipment available for rental to its
hotel clients' guests and continues to add state-of-the-art technology to its
inventory.
Hospitality Resources' Executive Express subdivision is a hotel business
center resource specifically created to support the needs of business
travelers, meeting planners, presenters and participants. This subdivision
offers a full range of services including computer workstations, office
equipment rental, mailing and shipping, administrative services, copying and
printing, as well as on-site assistance including temporary staffing and
shipping desks.
Hospitality Resources' "consider it done" philosophy characterizes the
spirit in which it conducts its business and tends to each of its customer's
requests.
The Staging, Meeting and Rental Services Divisions: These divisions provide
staging services and audiovisual equipment needs to corporate clients,
convention centers, production companies, trade associations and other business
communications services companies. These divisions maintain regional inventory
support and sales offices in various locations throughout the United States.
The Presentation Technologies Division: Caribiner's Presentation
Technologies Division provides audiovisual installation and design services to
corporate clients in the design of their meeting and conference rooms. Similar
to
o The Communications Group produced the U.S. and Brazilian sales launches of
Pfizer's Viagra.
o For the 22nd year, the Audio Visual Headquarters Staging Division provided
projection equipment, screens and technical staff for the prestigious Kennedy
Center Honors event.
o In December 1998, Caribiner's Hospitality Resources Division entered into an
agreement to provide on-site audiovisual equipment and services to properties
owned and managed by Starwood Hotels and Resorts Worldwide.
<PAGE>
[PHOTO OF AUTOMOBILE PRODUCT LAUNCH]
Above: The finale in Alabama of the
Mercedes-Benz M-Class Launch
designed and produced by Caribiner's
Atlanta team.
Right: The Communications Group's
New York office produced the U.S. and
Brazilian sales launches for Pfizer's
Viagra.
VIAGRA (Trade Mark) [LOGO]
(sildenafil citrate)
the Hospitality Resources division, the Presentation Technologies division
may employ on-site personnel within a client's office and maintains several
regional offices with their own sales, engineering and support staffs to
service clients.
Melville Exhibition Services: Through Caribiner's Melville Exhibition
Services subsidiary, Caribiner provides exhibit and trade show services,
principally in the United Kingdom, to exhibition organizers, hall owners and
exhibitors.
Delivering Our Client's Message Loud And Clear: During fiscal 1998
Caribiner International attracted a highly diverse group of clients who came to
Caribiner because they knew we could deliver their message - loud and clear.
In fact, delivering messages loud and clear is our company commitment. To
this end, we have developed a proprietary process to guide the development of
our client's communications solutions. This process, known as "Integrated
Message Delivery," integrates our client's various communications needs with a
coordinated message delivery plan. The result is a focused, coherent message
delivered to a specifically targeted audience.
As the world heads toward the millennium, Caribiner has positioned itself
as a specialist in direct communications - specialists in a media which bridges
centuries of communication from speeches made in the Roman forum to the closing
of a deal at trade shows like Comdex. But despite the world's headlong rush
into mass media, the importance of direct communications to educate, to inform
and to motivate is growing, not diminishing, in importance.
o Caribiner's Rental Services Division entered into agreements to provide
audiovisual equipment and services to Glaxo Wellcome, Hewlett Packard,
Johnson & Johnson and Physicians World on a nationwide basis.
o The Communications Group produced the worldwide product launch and related
events for Gillette's MACH 3 shaving system.
o The Communications Group worked with PricewaterhouseCoopers to create a
global communications strategy to mark the merger of Price Waterhouse and
Coopers & Lybrand.
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[PHOTO]
our promise: your message loud and clear
Caribiner International, Inc.
Corporate Information
Executive Officers and
Directors of the Company
Raymond S. Ingleby
Chairman of the Board
Christopher A. Sinclair
President, Chief Executive Officer
and Director
Robert F. Burlinson
Executive Vice President
and Chief Financial Officer
Martin Kwitschau
Executive Vice President
and Chief Executive Officer,
Hospitality Resources Division
Brian Shepherd
Executive Vice President
and Chief Executive Officer,
Communications Group
Errol M. Cook
Director and Senior Adviser
to E.M. Warburg, Pincus & Co., LLC
Bryan D. Langton
Director
Sidney Lapidus
Director and Managing Director
of E.M. Warburg, Pincus & Co., LLC
David E. Libowitz
Director and Managing Director
of E.M. Warburg, Pincus & Co., LLC
C. Anthony Wainwright
Director and Vice Chairman
of McKinney and Silver
Stock Market
The Company's common stock trades
on the New York Stock Exchange.
Symbol: CWC
Transfer Agent
ChaseMellon Shareholder Services
Overpeck Centre
85 Challenger Road
Ridgefield Park, New Jersey 07660
Telephone: 800.526.0801
Independent Auditors
Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
Telephone: 212.773.3000
Form 10-K
Additional copies of the Company's
Annual Report on Form 10-K for
the fiscal year ended September 30,
1998, which has been filed with the
Securities and Exchange Commis-
sion, are available by writing to:
Caribiner International, Inc.
16 West 61st Street
New York, New York 10023
Attention: Secretary
(Copyright) Caribiner International, Inc. 1999
[LOGO] Caribiner International, Inc.
Corporate Headquarters, 16 West 61st Street
New York, NY 10023
Tel: 212.541.5300
www.caribiner.com
