<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended MARCH 31, 1997 OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____________ to ______________
Commission file number: 0-18613
TRIMARK HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4272695
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2644 30TH STREET
SANTA MONICA, CALIFORNIA 90405
(Address of principal executive offices) (Zip Code)
(310) 314-2000
(Registrant's telephone number, including area code)
NO CHANGE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
As of May 9, 1997, 4,140,881 shares of Trimark Holdings, Inc. common stock were
outstanding, excluding shares held by Trimark Holdings, Inc. as treasury
stock.
Exhibit Index: Page 17
<PAGE>
TRIMARK HOLDINGS, INC.
INDEX
<TABLE>
<CAPTION>
<S> <C> <C>
Part I. Financial Information Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets at March 31, 3
1997 and June 30, 1996
Consolidated Statements of Operations - 4
Nine months ended March 31, 1997 and 1996
Consolidated Statements of Cash Flows - 5
Nine months ended March 31, 1997 and 1996
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and 8-13
Analysis of Financial Condition and
Results of Operations
Item 3. Quantitative and Qualitative not
Disclosures about Market Risk applicable
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 14-15
</TABLE>
2
<PAGE>
TRIMARK HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
------------------------------------------------------
(Dollars in Thousands, Except Share Data)
<TABLE>
<CAPTION>
March 31, June 30,
1997 1996
--------- --------
(Unaudited)
<S> <C> <C>
Assets
------
Cash and cash equivalents $ 477 $ 344
Accounts receivable, less allowances of
$4,549 and $4,269, respectively 15,570 12,457
Film costs, net (Note 2) 55,547 29,853
Deferred marketing costs 1,804 1,524
Inventories, net 582 624
Property and equipment at cost, less accumulated
depreciation of $1,968 and $1,749, respectively 572 604
Other assets 5,169 2,995
------- -------
$79,721 $48,401
======= =======
Liabilities and Stockholders' Equity
------------------------------------
Debt $ 44,000 $15,000
Accounts payable and accrued expenses 9,684 2,191
Minimum guarantees and royalties payable 3,174 4,639
Deferred income 1,144 2,144
Income taxes payable 386 77
------- -------
Total liabilities 58,388 24,051
------- -------
Commitments and contingencies (Note 4) -- --
------- -------
Stockholders' equity:
Common stock, $.001 par value. Authorized
20,000,000 shares; 5,093,081 shares issued
at March 31, 1997 and 5,064,581 shares
issued at June 30, 1996 5 5
Additional paid in capital 15,460 15,385
Preferred stock, $.01 par value. Authorized
2,000,000 shares; no shares issued and
outstanding -- --
Retained earnings 10,293 12,683
Less treasury shares, at cost - 950,900 shares
and 789,850 shares (4,425) (3,723)
------- -------
Stockholders' equity 21,333 24,350
------- -------
$79,721 $48,401
======= =======
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
TRIMARK HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------------------------------
(Amounts in Thousands, Except (Loss) Earnings Per Share)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
March 31, March 31,
-------------------- -------------------
1997 1996 1997 1996
------- ------- ------- -------
(Unaudited)
<S> <C> <C> <C> <C>
Net revenues (Note 3) $44,127 $46,428 $13,632 $13,517
Film costs and distribution expenses 36,834 44,466 9,952 10,941
------- ------- ------- -------
Gross profit 7,293 1,962 3,680 2,576
------- ------- ------- -------
Operating expenses:
Selling 5,043 4,750 1,824 1,631
General and administrative 3,285 3,975 1,158 1,049
Bad debt 295 (525) 72 (440)
------- ------- ------- -------
8,623 8,200 3,054 2,240
------- ------- ------- -------
Operating (loss) earnings (1,330) (6,238) 626 336
Other (income) expenses:
Interest expense 1,122 765 555 217
Interest and investment income (62) (92) (13) (4)
Minority interest -- (38) -- --
------- ------- ------- -------
1,060 635 542 213
------- ------- ------- -------
(Loss) earnings before income taxes (2,390) (6,873) 84 123
Income taxes -- (2,543) -- 45
------- ------- ------- -------
Net (loss) earnings $(2,390) $(4,330) $ 84 $ 78
======= ======= ======= =======
Net (loss) earnings per common share $ (0.56) $(1.01) $ 0.02 $ 0.02
======= ======= ======= =======
Average common and common equivalent shares
outstanding used in computation above 4,240 4,288 4,244 4,393
======= ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
TRIMARK HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
---------------------------------------------------------------------
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
--------------------
1997 1996
-------- --------
(Unaudited)
<S> <C> <C>
Operating activities:
Net loss $ (2,390) $ (4,330)
Adjustments to reconcile net loss to
net cash used by operating activities:
Film amortization 27,428 29,050
Depreciation and other amortization 219 249
Provision for returns (16) 1,050
Provision for bad debt 296 (671)
Provision for inventory obsolescence (494) 251
Minority interest in net loss -- (38)
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable (3,393) 6,931
Additions to film costs (53,122) (23,398)
(Increase) decrease in deferred marketing costs (280) 690
Decrease (increase) in inventories 536 (522)
Increase in other assets (2,174) (1,347)
Increase (decrease) in accounts payable and
accrued expenses 7,493 (799)
Decrease in minimum guarantees and
royalties payable (1,465) (1,816)
Increase (decrease) in income taxes payable 309 (1,119)
(Decrease) increase in deferred income (1,000) 1,544
-------- --------
Net cash (used) provided by operating activity (28,053) 5,725
-------- --------
Investing activities:
Acquisition of property and equipment (187) (255)
-------- --------
Net cash used by investing activities (187) (255)
-------- --------
Financing activities:
Net increase (decrease) in debt 29,000 (5,000)
Exercise of stock options 75 34
Purchase of treasury stock (702) (429)
-------- --------
Net cash provided (used) by financing activity 28,373 (5,395)
-------- --------
Increase in cash and cash equivalents 133 75
Cash and cash equivalents at beginning of period 344 1,735
-------- --------
Cash and cash equivalents at end of period $ 477 $ 1,810
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE>
TRIMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - THE COMPANY:
- ---------------------
The consolidated financial statements of Trimark Holdings, Inc. and subsidiaries
(the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. The accompanying
financial statements should be read in conjunction with the more detailed
financial statements and related footnotes filed with the Form 10K for the year
ended June 30, 1996. Significant accounting policies used by the Company are
summarized in Note (2) to the June 30, 1996 financial statements.
In the opinion of management, all adjustments required for a fair presentation
of the financial position as of March 31, 1997 and the results of operations and
cash flows for the periods ended March 31, 1997 and March 31, 1996 have been
made and all adjustments were of a normal and recurring nature. Operating
results for the quarter are not necessarily indicative of the operating results
for a full year.
NOTE 2 - FILM COSTS:
- --------------------
Film costs, net of amortization, consist of the following:
<TABLE>
<CAPTION>
March 31, June 30,
1997 1996
--------- ---------
(in thousands)
<S> <C> <C>
Released $ 28,648 $ 17,766
Completed not released 6,730 3,065
In process and development 20,169 9,022
--------- ---------
$ 55,547 $ 29,853
--------- ---------
</TABLE>
6
<PAGE>
NOTE 3 - NET REVENUES:
- ----------------------
<TABLE>
<CAPTION>
Nine months ended Three months ended
March 31, March 31,
----------------------------------------
1997 1996 1997 1996
---- ---- ---- ----
(in thousands)
<S> <C> <C> <C> <C>
Domestic:
Home video distribution $26,161 $28,005 $ 8,431 $10,346
Theatrical distribution 2,027 229 1,977 51
Television distribution 4,389 3,683 979 1,699
Foreign:
All media 10,185 12,298 1,947 1,309
Interactive:
All media 1,365 2,213 298 112
------- ------- ------- -------
$44,127 $46,428 $13,632 $13,517
------- ------- ------- -------
</TABLE>
NOTE 4 - COMMITMENTS & CONTINGENCIES:
- -------------------------------------
The Company has entered into certain agreements which provide for royalty
advances and promotional and advertising commitments totaling $4.4 million. If
the conditions to these agreements are not met by the licensors, the Company may
withdraw from the arrangements. These commitments extend to January 1998.
NOTE 5 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
- -----------------------------------------------------------
Cash paid during the nine month period for:
<TABLE>
<CAPTION>
March 31,
1997 1996
---- ----
(in thousands)
<S> <C> <C>
Interest $1,582 $ 811
Income taxes 376 1,222
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
NET REVENUES: Net revenues for the quarter ended March 31, 1997 increased
$115,000 or 0.9% compared with the same period in fiscal 1996. The increase was
primarily due to increases in domestic theatrical revenue partially offset by
decreases in domestic home video revenue. Net revenues for the nine months ended
March 31, 1997 decreased $2.3 million or 5.0% compared with the same period in
fiscal 1996. The decrease for the nine month period was primarily due to
decreases in net revenues from foreign distribution, domestic home video
distribution and interactive distribution of $2.1 million, $1.8 million and
$848,000, respectively, partially offset by an increase in domestic theatrical
distribution and television distribution of $1.8 million and $751,000,
respectively. The decrease in foreign net revenues was primarily due to the
timing of releases. In the first nine months of fiscal 1997, three (3) motion
pictures, "Leprechaun 4," "Never Ever" and "Warrior of Waverly Street" were
initially released into the foreign market, whereas five (5) motion pictures
were released in the same time period in fiscal 1996. The decrease in domestic
home video net revenues for the nine month period ended March 31, 1997 was
primarily due to seven (7) titles released in the quarter ended March 31, 1997
as compared to nine (9) titles released in the three months ended March 31, 1996
partially offset by the recognition of revenue from a laser-disc sublicense
agreement. Interactive revenues for the nine months ended March 31, 1997
primarily reflect the initial release of the Sony PlayStation version of "The
Hive," whereas for the nine months ended March 31, 1996 interactive revenues
primarily reflect the initial release of the Windows 95 version of "The Hive."
The increase in domestic theatrical net revenue was primarily due to the release
of the motion picture "Meet Wally Sparks" on approximately 1,500 screens in
January 1997 without a comparable theatrical release in the first nine months of
fiscal 1996. The increase in domestic television net revenue was primarily due
to the release of the two (2) motion pictures "The Dentist" and "Crossworlds" as
cable premiers in the first nine months of fiscal 1997 compared to one (1)
motion picture "Iron Eagle 4" released as a cable premier in the first nine
months of fiscal 1996.
8
<PAGE>
ITEM 2: (Continued)
RESULTS OF OPERATIONS
Primarily as a result of continuing competition in the domestic home video
market, the Company is focusing its resources on producing and acquiring an
increased number of films with theatrical potential (both mainstream and
specialized).
GROSS PROFIT: The Company's gross profits for the nine months ended March 31,
1997 increased $5.3 million compared with the same period in fiscal 1996. the
company's gross profit for the three months ended March 31, 1997 increased $1.1
million compared with the same period in fiscal 1996. The results for the three
months ended March 31, 1997 included the recognition of revenue from a laser-
disc sublicense agreement. The gross profit for the nine months ended March 31,
1997 was negatively impacted by a $3.0 million charge associated with the
January 1997 theatrical release of "Meet Wally Sparks" which was partially
offset by a reduction of the inventory obsolescence reserve due to the
salability of inventory and the recognition of revenue from a laser-disc
sublicense agreement. The prior year results were negatively impacted by write
downs associated with the video releases of "Death Machine" and "Kids", the
disappointing performances of additional home video titles released during the
periods, a return reserve recorded for the Windows 95 version of the interactive
title "The Hive", and write downs associated with foreign distribution. The
company anticipates that the domestic home video market will continue to be
extremely competitive.
SELLING EXPENSES: The Company's selling expenses for the nine months and quarter
ended March 31, 1997 increased $293,000 or 6.2% and $193,000 or 11.8%,
respectively, compared with the same periods in fiscal 1996. The increases
reflect the increase in theatrical operations partially offset by the decrease
in interactive operations. During the quarter ended March 31, 1997, the company
sold substantially all assets of Trimark Interactive.
Selling expenses as a percentage of net revenues for the nine month periods
ended March 31, 1997 and 1996 were 11.4% and 10.2%, respectively, and for the
quarters ended March 31, 1997 and 1996 were 13.4% and 12.1%, respectively.
Selling expenses are anticipated to increase in future periods in connection
with the Company's expansion of its theatrical
9
<PAGE>
ITEM 2: (Continued)
RESULTS OF OPERATIONS
distribution division. See "Liquidity and Capital Resources" for further
discussion of the Company's upcoming theatrical releases.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses for
the nine months ended March 31, 1997 decreased $690,000 or 17.4% compared with
the same period in fiscal 1996. General and administrative expenses for the
quarter ended March 31, 1997 increased $109,000 or 10.4% compared with the same
period in fiscal 1996. The decrease for the nine months was primarily due to a
company reorganization undertaken in January 1996. The increase for the quarter
was primarily due to amortization of closing costs associated with the Company's
new credit facility. The closing costs will be amortized over the four year
term of the credit facility. See "Liquidity and Capital Resources" for further
discussion of the Company's new credit facility.
BAD DEBT EXPENSE: Bad debt expense for the nine months ended March 31, 1997 was
$295,000. Bad debt expense for the quarter ended March 31, 1997 was $72,000. Bad
debt expenses primarily represent reserves taken against domestic video and
foreign sales.
INTEREST EXPENSE: Interest expense for the nine months and quarter ended March
31, 1997 increased $357,000 or 46.7% and $338,000 or 155.8%, respectively,
compared with the same periods in fiscal 1996. The increase in interest expense
was primarily due to higher levels of borrowing under the Company's credit
facility for purposes of funding the costs associated with the acquisition and
distribution of theatrical motion pictures. As of March 31, 1997, there was
$44.0 million outstanding under the credit facility. See "Liquidity and Capital
Resources."
INTEREST AND INVESTMENT INCOME: Interest and investment income for the nine
months ended March 31, 1997 decreased $30,000 or 44.3% compared with the same
period in fiscal 1996. The decrease was due to interest income from federal tax
returns received in the fiscal 1996 periods without any comparable interest
income in the fiscal 1997 periods.
10
<PAGE>
ITEM 2: (Continued)
RESULTS OF OPERATIONS
NET LOSS: The Company's net loss for the nine months ended March 31, 1997 was
$2.4 million. The fiscal 1997 loss was primarily due to a $3.0 million write
down associated with the January 1997 theatrical release of "Meet Wally Sparks."
the prior year losses were associated with the Company's performance in the
domestic home video and interactive markets.
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended March 31, 1997 the Company experienced negative cash
flow from operations primarily due to increased investment in film inventory.
The Company increased additions to film costs by $29.7 million as compared to
the nine months ended March 31, 1996. The additions to film costs were
primarily incurred to build up the Company's theatrical film slate.
The Company's new credit facility and increased emphasis on theatrical
distribution have increased the length of time from initial investment in film
costs to recoupment in home video and international markets. The Company's cash
requirements vary with the size and timing of delivery and minimum guarantee
payments along with the timing of its home video, theatrical, television,
international and interactive releases. In the nine months ended March 31, 1997
the principal sources of funds have been provided by availability of the
Company's credit line.
The Company's principal operating subsidiaries, Trimark Pictures, Inc. and
Trimark Television, Inc., on December 20, 1996 entered into a $75 million
revolving credit facility with a consortium of banks agented and arranged by The
Chase Manhattan Bank which replaced a $25 million revolving credit facility with
Bank of America NT & SA and Westdeustche Landesbank. The credit facility
expires December 19, 2000. Under the credit agreement, the Company may borrow
for various corporate purposes provided that the aggregate borrowings do not
exceed the Borrowing Base which is derived from specified percentages of
approved accounts receivable and film library. The credit agreement is
guaranteed by the Company and certain of its subsidiaries and is secured by
substantially all of the assets of the Company and its significant subsidiaries.
Loans outstanding under the credit facility bear interest at the rate of 1.25%
above Chase Manhattan's prime rate
11
<PAGE>
ITEM 2: (Continued)
LIQUIDITY AND CAPITAL RESOURCES
or 2.25% above Chase Manhattan's London Interbank Market for Eurodollars for the
loan term specified. An unused commitment fee is payable on the average unused
availability under the credit facility, at the rate of 0.375% per annum. As of
March 31, 1997 there was $44.0 million outstanding under the bank facility.
The Company's credit facility has been designed to fund certain acquisition and
related costs previously reported as contingent contractual obligations. This
has contributed to the Company's $29.0 million increase in debt for the nine
months ended March 31, 1997. As of June 30, 1996 the Company had entered into
certain contingent contractual obligations which provided for guaranteed royalty
advances and print and advertising commitments of approximately $35.5 million.
As of March 31, 1997 the Company had certain contingent contractual obligations
of $4.4 million, a decrease of $31.1 million from June 30, 1996.
The Company believes that its present sources of working capital will be
sufficient to maintain its level of operations in accordance with the
anticipated release schedule, as described below.
During fiscal 1997, the Company plans to distribute approximately five (5) films
in the domestic theatrical market, two (2) of which were released prior to March
31, 1997, to release approximately twenty seven (27) motion pictures into the
domestic home video rental market, twenty one (21) of which were released prior
to March 31, 1997, and to expand distribution in the sell-through market.
Subsequent to March 31, 1997, in excess of 150,000 video units of "Meet Wally
Sparks" were sold to distributors in North America. This home video release has
generated receivables in excess of $8.0 million.
Technicolor Videocassette, Inc. currently serves as the Company's video cassette
duplicator and fulfillment contractor. Technicolor Videocassette, Inc. has a
general lien on all of the Company's materials and products in its possession.
As of March 31, 1997, the Company had net expenditures of $5.5 million
(approximately $300,000 expended in fiscal 1997) in
12
<PAGE>
ITEM 2: (Continued)
LIQUIDITY AND CAPITAL RESOURCES
Trimark Interactive, its 90% owned subsidiary. As previously reported, on or
about March 4, 1997 the Company sold substantially all assets of Trimark
Interactive to an unrelated independent entertainment and interactive music
publisher. As a result of this asset sale, the Company does not expect any
significant future expenditures in Trimark Interactive.
On February 21, 1997, the Company announced a stock repurchase program pursuant
to which it could spend up to $1,500,000, $750,000 per fiscal year, to purchase
shares of its outstanding common stock in the open market. During the nine
months ended March 31, 1997, the Company spent approximately $700,000 under the
repurchase program.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Except for the historical information contained herein, the matters discussed in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievement of the Company, or industry
results, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: General economic and business
conditions, which will, among other things, impact demand for the Company's
products; changes in public tastes, industry trends and demographic changes,
which may influence the distribution and exhibition of films in certain areas;
public reaction to and acceptance of the Company's video, theatrical and
television product, which will impact the Company's revenues; competition,
including competition from major motion picture studios, which may affect the
Company's ability to generate revenues; reliance on management and key
personnel; consolidation in the retail video industry; new methods of
distributing motion pictures; and other factors referenced in this Form 10-Q and
the Form 10K filed for the year ended June 30, 1996.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit No Description
- ---------- ------------------------------------------------
<S> <C>
2.1 Asset Purchase Agreement between the Registrant,
Trimark Interactive, and Graphix Zone, Inc.
dated February 26, 1997. 1
10.66 Pledge Agreement, dated February 28, 1997, by
and between Trimark Pictures Inc. and Johan
Wassenaar and Anne Wassenaar.
10.67 Secured Promissory Note, dated February 28,
1997, executed in favor of Trimark Pictures Inc.
by Johan Wassenaar.
10.68 Letter waiver and amendment to Credit, Security,
Guaranty and Pledge Agreement, dated February
20, 1997, by and between the Registrant's
principal operating subsidiaries, Trimark
Pictures, Inc. and Trimark Television, Inc., and
The Chase Manhattan Bank, as Administrative
Agent and Fronting Bank.
10.69 Non-Qualified Stock Option Certificate dated
January 14, 1997, by and between the Registrant
and Matthew Saver.
10.70 Non-Qualified Stock Option Certificate dated
January 14, 1997, by and between the Registrant
and Tofigh Shirazi.
10.71 Non-Qualified Stock Option Certificate dated
January 14, 1997, by and between the Registrant
and Gordon Stulberg.
27 Financial Data Schedule.
</TABLE>
14
<PAGE>
PART II. OTHER INFORMATION (Continued)
1 Incorporated by reference to the identical exhibit number in
Registrant's Current Report on Form 8-K Dated February 21, 1997.
(b) Reports on Form 8-K:
On March 14, 1997, Trimark Holdings, Inc. filed a report dated
February 21, 1997 under Item 2, announcing that it has executed an
agreement pursuant to which Trimark Interactive sold substantially all
its assets, and under Item 5, announcing that its Board of Directors
has authorized management to spend up to $1.5 million, $750,000 per
fiscal year, to purchase shares of Trimark common stock in the open
market or through privately negotiated transactions.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TRIMARK HOLDINGS, INC.
By: /s/ James E. Keegan
-------------------------------
James E. Keegan
Senior Vice President - Finance
and Chief Financial Officer
(Principal Financial Officer
and authorized to sign on
behalf of the Registrant)
Date: May 14, 1997
------------
16
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No Description Method of Filing
- ---------- ----------------------- ----------------
<S> <C> <C>
2.1 Asset Purchase Incorporated by
Agreement between the reference to the
Registrant, Trimark identical exhibit
Interactive, and number in Registrant's
Graphix Zone, Inc. Current Report on Form
dated February 26, 8-K Dated February 21,
1997. 1997
10.66 Pledge Agreement, filed herewith
dated February 28, electronically
1997, by and between
Trimark Pictures Inc.
and Johan Wassenaar
and Anne Wassenaar.
10.67 Secured Promissory filed herewith
Note, dated February electronically
28, 1997, executed in
favor of Trimark
Pictures Inc. by Johan
Wassenaar
10.68 Letter waiver and filed herewith
amendment to Credit, electronically
Security, Guaranty and
Pledge Agreement,
dated February 20,
1997, by and between
the Registrant's
principal operating
subsidiaries, Trimark
Pictures, Inc. and
Trimark Television,
Inc., and The Chase
Manhattan Bank, as
Administrative Agent
and Fronting Bank.
10.69 Non-Qualified Stock filed herewith
Option Certificate electronically
dated January 14,
1997, by and between
the Registrant and
Matthew Saver.
10.70 Non-Qualified Stock filed herewith
Option Certificate electronically
dated January 14,
1997, by and between
the Registrant and
Tofigh Shirazi.
</TABLE>
17
<PAGE>
INDEX TO EXHIBITS (continued)
<TABLE>
<CAPTION>
Exhibit No Description Method of Filing
- ---------- -------------------- ----------------
<S> <C> <C>
10.71 Non-Qualified Stock filed herewith
Option Certificate electronically
dated January 14,
1997, by and between
the Registrant and
Gordon Stulberg.
27 Financial Data filed herewith
Schedule. electronically
</TABLE>
18
<PAGE>
Exhibit 10.66
PLEDGE AGREEMENT
----------------
THIS PLEDGE AGREEMENT is made this 28 day of February 1997, between Johan
Wassenaar ("Wassenaar") and Anne Wassenaar (collectively, the "Pledgor") on the
one hand, and TRIMARK PICTURES, INC., a California corporation (the "Company")
on the other hand, with reference to the following facts:
Concurrently herewith, the Company is making a loan to Wassenaars in the
aggregate principal amount of up to $250,000 evidenced by that certain Secured
Promissory Note dated of even date herewith (the "Note"), which Note is attached
hereto as Exhibit A and incorporated herein by reference as though set forth in
full. The Pledgor has agreed to pledge the collateral described herein to the
Company as collateral security for the repayment of the Note.
In consideration of the promises and covenants contained herein, and in
order to secure the Note, the parties hereto hereby agree as follows:
1. Pledge. For good and valuable consideration, the receipt of which is
------
hereby acknowledged, the Pledgor hereby pledges, hypothecates, assigns,
transfers, sets over and delivers unto the Company, and grants the Company a
security interest in 141,800 shares of common stock of Trimark Holdings,
Inc.("Holdings") represented by Certificate Nos. V 1246, 1260 and 1267 (the
"Shares") with attached stock powers duly endorsed by the Wassenaars in blank.
The Company shall not encumber or dispose of the Shares except in accordance
with the terms and provisions of this Pledge Agreement.
2. Additional Security. In the event that at any time during the term
-------------------
of this Pledge Agreement the "current market value" of the Shares is not at
least equal to 200% of the then aggregate outstanding principal balance and
accrued but unpaid interest owed under the Note (the "Deficiency"), the Pledgor
agrees to promptly pledge and deliver to the Company and to grant the Company a
security interest in such additional number of shares of Holdings stock (or, if
Johan Wassenaar does not then own sufficient shares of Holdings stock, such
other security deemed appropriate by the Company) having a current market value
at
1
<PAGE>
least equal to 200% of the Deficiency. Such additional shares shall be subject
to the same provisions of this Pledge Agreement as the Shares. The "current
market value" of the Shares shall be determined in compliance with section
207.2(c) of Regulation G of the Federal Reserve Board and to the extent
consistent therewith shall be computed by multiplying the number of Shares by
the closing price of Holdings common stock on the NASDAQ Stock Market on the day
in question as reported in The Wall Street Journal, or, if shares of Holdings
common stock are not at such time quoted on the NASDAQ Stock Market, the closing
price or the average of the closing bid and asked prices in the over-the-counter
market as reported in The Wall Street Journal, or if not so reported, as
otherwise reported by the NASDAQ Stock Market or by the National Quotations
Bureau, Incorporated, or similar organization, or, if no such quotations are
available, the fair market price as determined by the Company (whose
determination shall be conclusive).
3 Voting Right. So long as the Pledgor is not in default in the
------------
performance of any of the terms or conditions of this Pledge Agreement or the
Note, the Pledgor shall have all voting rights attaching to the Shares.
However, notwithstanding the foregoing, upon the occurrence and during the
continuance of any default by the Pledgor in the performance of any of the terms
of this Pledge Agreement or the Note, there shall become vested immediately in
the Company exclusive authority to exercise all voting rights relative to the
Shares.
4. Representations. The Pledgor hereby represents and warrants that there
---------------
are now, and during the term of this Pledge Agreement will be, no restrictions
upon his transfer of the Shares, other than under the securities laws, state or
federal including without limitation, the Securities Act of 1933, as amended,
and that the Pledgor has the right to pledge the Shares in accordance with the
terms of this Pledge Agreement and the Note, free of any other encumbrances or
claims whatsoever
5. Stock Adjustments. In the event that during the term of this
-----------------
Pledge Agreement any stock dividend, reclassification, adjustment,
recapitalization or any other change is declared or effected in the capital
structure of Holdings, or any distributions in property or otherwise are made on
or in respect of the Shares, whether resulting from any stock dividend,
reclassification, adjustment, recapitalization or any other change relative to
the Shares or received in exchange for the
2
<PAGE>
Shares, or any part thereof, or as a result of any merger, consolidation,
acquisition, or other exchange of assets, all new, substituted or additional
shares, or other securities, property or distributions issued or received by the
Pledgor by reason of any of the foregoing occurrences shall be held by the
Company under the terms of this Pledge Agreement, and in the same manner as the
Shares are being held hereunder.
6. Payment of Note. Upon payment of the Note in full and all accrued but
---------------
unpaid interest thereon, and when all of the terms and conditions of the Note
are satisfied, the Company shall deliver to the Pledgor the Shares, or such
portion thereof then being held by the Company hereunder, free and clear of any
lien of the Company.
7. Default. In the event that the Pledgor defaults in the performance of
-------
any of the terms or conditions of this Pledge Agreement or of the Note, and
provided that the Company has given the Pledgor five (5) days' written notice of
such default and within such period the default has not been cured, the Company
shall have all of the rights and remedies as provided by the Uniform Commercial
Code then in force in the State of California. In order to effectuate the
foregoing in the circumstances in which the collateral consists of the Shares,
upon any uncured default by the Pledgor, the fair market value of the Shares (as
determined in accordance with Paragraph 2 hereof) shall be computed as of the
close of business of the next business day following expiration of the cure
period. The Company shall retain such number of Shares having a fair market
value equal to the outstanding principal balance of the Note and all accrued but
unpaid interest thereon, plus the amount of the expenses incurred by the Company
arising out of the default, including, but not limited to, reasonable attorney's
fees, and shall return the balance of the Shares to the Pledgor. The Shares
retained by the Company shall be reissued in the Company's or Holdings name and
shall be held by the Company or Holdings as treasury stock and shall thereafter
not be subject to the provisions of this Pledge Agreement. In the event that the
fair market value of the Shares is less than the outstanding principal balance
of the Note, accrued but unpaid interest thereon, plus the foregoing expenses,
Wassenaar shall remain liable to the Company for any such deficiency.
8. Power of Attorney. The Pledgor hereby appoints the Company
-----------------
as the Pledgor's attorney-in-fact for the purposes of carrying
3
<PAGE>
out the provisions of this Pledge Agreement, and taking any action and executing
any instrument which the Company may deem necessary or advisable to accomplish
the purposes hereof, which appointment is irrevocable and is coupled with an
interest.
9. No Waiver. No failure on the part of the Company to exercise, and no
---------
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy exclude any other further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.
10. Termination. This Pledge Agreement shall terminate when the Note and
-----------
all interest accrued thereon have been paid in full, and when all of the other
terms and conditions of this Pledge Agreement and the Note have been fully
performed and satisfied.
11. Binding Agreement; Assignment. This Pledge Agreement and the terms,
-----------------------------
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto and to the holders of all indebtedness secured hereby and
their respective heirs, successors and permitted assigns; provided, however,
that the Pledgor shall not be permitted to assign his rights in, or obligations
under, this Pledge Agreement or any other interest herein, or any interest in
the Shares, or any part thereof, or otherwise pledge, encumber or grant any
option with respect to the Shares, or any part thereof, or any other property
held by the Company as collateral security under this Pledge Agreement.
With the Company's consent the Pledgor shall retain the right to sell Shares at
any time for the sole purpose of reducing the Note, provided that the proceeds
of the Shares are paid directly to the Company.
12. Law. This Pledge Agreement shall be construed in accordance with and
---
governed by the laws of the State of California.
13. Representation. The execution of this Pledge Agreement by Wassenaar
--------------
constitutes an acknowledgment and representation that Anne Wassenaar has at
least a half (50%) community property interest in the Shares.
4
<PAGE>
14. Notices. All notices, consents, demands or other communications
-------
required or permitted to be given pursuant to this Pledge Agreement shall be in
writing and shall be deemed sufficiently given on (i) the day on which delivered
personally or delivered by fax (with prompt confirmation by mail) during a
business day to the appropriate location listed as the address below, or (ii)
two (2) business days after the posting thereof by United States registered or
certified first class mail, return receipt requested with postage and fees
prepaid.
IN WITNESS WHEREOF, the parties hereto have executed this Pledge
Agreement on the date first above written.
PLEDGOR:
/s/
----------------------------------------
JOHAN WASSENAAR
Address:
1510 Cantera Avenue
Santa Barbara, CA 93110
/s/
----------------------------------------
ANNE WASSENAAR
Address:
132 Eucalyptus Hill Circle
Santa Barbara, CA 93103-2806
COMPANY:
TRIMARK PICTURES, INC.
a California corporation
By:____________________________
Its:___________________________
Address:
2644 30th Street
Santa Monica, CA 90405
Attn: Chief Financial Officer
5
<PAGE>
Exhibit 10.67
SECURED PROMISSORY NOTE
$250,000 February 28, 1997
Los Angeles, California
FOR VALUE RECEIVED, Johan Wassenaar ("Maker") promises to pay to the order
of Trimark Pictures, Inc., a California corporation, ("Lender"), at its place of
business at 2644 30th Street, Santa Monica, California, the principal sum of Two
Hundred Fifty Thousand Dollars ($250,000) or the sum of the aggregate unpaid
principal amount of all advances made by Lender to Maker shown on the schedule
attached hereto (loan balance), whichever is less, plus interest on the unpaid
principal balance at the weighted average cost of funds, as the same may change
from time to time, to the Lender under its Credit, Security, Guaranty and Pledge
Agreement dated as of December 20, 1996 with The Chase Manhattan Bank, but in no
event less than the applicable federal rate set forth in Section 1274(d) of the
Internal Revenue Code of 1986, as amended, interest only to be due and payable
quarterly on the last day of March, June, September and December of each year
commencing on March 31, 1997 and continuing until June 30, 2000, at which time
the entire principal balance and all accrued and unpaid interest thereon shall
be due and payable.
Payment of such sums shall be in lawful currency of the United States of
America.
Maker reserves the privilege of prepaying this Note in full or in part at any
time, with interest to the time of payment but without payment of any penalty or
premium.
This Note is entitled to the benefits and subject to all of the terms and
conditions of that certain Pledge Agreement dated of even date herewith between
Maker and Lender ("Pledge Agreement").
Maker acknowledges, represents and warrants to Lender that no portion of the
proceeds of this Note will be used, directly or indirectly, whether immediately,
incidentally or ultimately (i) to purchase or carry any Margin Stock (as defined
in Regulation U
<PAGE>
of the Board of Governors of the Federal Reserve System) or to extend credit to
others for the purpose of purchasing or carrying any Margin Stock, or (ii) for
any other purpose, in each case, violative of or inconsistent with any of the
provisions of any regulation of the Board of Governors of the Federal Reserve
System.
The entire unpaid principal balance, together with all interest thereon,
shall, at the option of the holder hereof, become immediately due and payable on
the occurrence of any of the following events of default: (1) the failure to
make any payment under this Note within five (5) days of the due date for such
payment; (2) Maker defaults under the Pledge Agreement; (3) Maker makes an
assignment for the benefit of creditors or petitions or applies for the
appointment of a trustee or receiver or commences any proceeding under any
bankruptcy, insolvency, or similar law of any jurisdiction, now or hereafter in
effect, or shall be adjudicated bankrupt or insolvent; or (4) such a petition or
application is filed, or such a proceeding is commenced, against Maker, and
Maker indicates his approval thereof, consents thereto or acquiesces therein, or
an order is entered appointing any such trustee or receiver or approving a
petition in any such proceeding, and such order remains in effect for more than
30 days, whether or not consecutive.
Maker waives presentment, demand, notice, protest and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement of this Note, assents to any extension or postponement of the time
of payment or any other indulgence, and/or to the addition or release of any
other party or person primarily or secondarily liable.
In the event of commencement of suit to enforce payment of this Note, Maker
agrees to pay such attorneys' fees and costs of collection as the court may
adjudge reasonable.
No delay or omission on the part of the holder hereof in exercising any right
hereunder shall operate as a waiver of such right or of any other right under
this Note. A waiver on any one occasion shall not be construed as a bar to or
waiver of any such right and/or remedy on any further occasion.
As herein used, the word "holder" shall mean the payee or other endorsee of
this Note, who is in possession of it.
<PAGE>
MAKER:
/s/ Johan Wassenaar
---------------------------------
Johan Wassenaar
<PAGE>
Exhibit 10.68
as of February 20, 1997
Trimark Pictures, Inc.
Trimark Television, Inc.
2644 30th Street
Santa Monica, CA 90405
Dear Sirs:
Reference is hereby made to that certain Credit, Security, Guaranty and
Pledge Agreement, dated as of December 20, 1997 (as the same has been, and may
be, amended, supplemented or otherwise modified, renewed or replaced from time
to time, the "Credit Agreement"), among Trimark Pictures, Inc. and Trimark
Television, Inc. (the "Borrowers"), the Guarantors referred to therein, the
Lenders referred to therein and The Chase Manhattan Bank, as Administrative
Agent and Fronting Bank. Capitalized terms used herein and not otherwise
defined are used herein as defined in the Credit Agreement.
The Borrowers have requested that the Lenders (i) waive the obligation of
the Borrowers to pay the Special Production Tranche Fee under Section 2.5(d) of
the Credit Agreement solely with respect to the motion pictures "Chairman of the
Board" and "Eve's Bayou" and (ii) amend Section 6.4 of the Credit Agreement to
permit certain loans and advances to officers and employees.
Each of the undersigned hereby waives the obligation of the Borrowers to
pay the Special Production Tranche Fee under Section 2.5(d) of the Credit
Agreement solely with respect to the motion pictures "Chairman of the Board" and
"Eve's Bayou".
In addition, the parties hereby amend Section 6.4 of the Credit Agreement
to add a new clause (ix) at the end of the existing text to read as follows:
"(ix) loans and advances to officers and directors of the Credit Parties not to
exceed $1,000,000 in the aggregate at any time outstanding."
By execution hereof, the Borrowers hereby represent and warrant that as of
the date hereof, there exists no Default or Event of Default.
This waiver and amendment may be executed in counterparts, each of which
shall constitute an original, but all of which when taken together, shall
constitute one and the same instrument.
<PAGE>
This waiver shall become effective when the Administrative Agent shall have
received executed counterparts of this waiver and amendment which, when taken
together, bear the signatures of all the Lenders and all the Credit Parties.
This waiver and amendment shall not be construed as extending to any other
matter, similar or dissimilar, or entitling the Credit Parties to any future
waivers or amendments regarding similar matters or otherwise.
Except to the extent expressly set forth above, this letter does not
constitute a waiver or modification of any provision of the Credit Agreement or
a waiver of any Default or Event of Default, whether or not known to any of the
Agents or the Lenders. Except as expressly modified herein, all terms of the
Credit Agreement remain in full force and effect.
THIS WAIVER AND AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent
By:
Name: Title:
CITY NATIONAL BANK
By_______________________________
Name: Title:
COMERICA BANK-CALIFORNIA
By_______________________________
Name: Title:
FIRST HAWAIIAN BANK
By_______________________________
Name: Title:
IMPERIAL BANK
By_______________________________
Name: Title:
SILICON VALLEY BANK
By_______________________________
Name: Title:
<PAGE>
THE SUMITOMO TRUST & BANKING
CO., LTD., NEW YORK BRANCH
By_______________________________
Name: Title:
UNION BANK OF CALIFORNIA, N.A.
By_______________________________
Name: Title:
DE NATIONALE
INVESTERINGSBANK N.V.
By_______________________________
Name: Title:
AGREED TO BY:
TRIMARK PICTURES, INC.
TRIMARK TELEVISION, INC.
TRIMARK HOLDINGS, INC.
TRIMARK MUSIC
CHEAP DATE, INC.
WRITERS ON THE WAVE
PURPLE TREE PRODUCTIONS, INC.
LOVING GUN PRODUCTIONS, INC.
TRIMARK INTERACTIVE
By______________________________
Name:
Title: Authorized Signatory for each of the
foregoing
<PAGE>
Exhibit 10.69
TRIMARK HOLDINGS, INC.
Non-qualified Stock Option Granted Under
The Trimark Holdings, Inc. Directors' Stock Option Plan
Certificate No. 9
Option granted on January 14, 1997 (the "Date of Grant") by Trimark
Holdings, Inc., a Delaware corporation (the "Company"), to Matthew H. Saver (the
"Optionee"):
Section 1. Grant of Option. The Company grants to the Optionee a
---------- ----------------
non-qualified option to purchase, on the terms and conditions hereinafter set
forth, 2,000 shares (the "Shares") of the Company's Common Stock, par value
$0.001 per share (the "Stock"), at the option price of $5.25 per share. This
Option is granted pursuant to the Company's Directors' Stock Option Plan (the
"Plan"), a copy of which is attached hereto as Annex I. This Option is subject
in its entirety to the provisions of the Plan, all of which are incorporated by
reference herein.
Section 2. Period of Option. This Option will expire at
---------- -----------------
the close of business on January 14, 2007, ten years from the Date of Grant (the
----------------
"Expiration Date"), unless earlier terminated pursuant to Section 5 below.
Section 3. Right of Exercise. The Option granted to the
---------- ------------------
Optionee shall become exercisable in full on the Date of Grant. Once
exercisable, the Option may be exercised at any time prior to its expiration,
cancellation or termination as provided in the Plan. Partial exercise is
permitted from time to time provided that no partial exercise of the Option
shall be for a number of Shares having a purchase price of less than $1,000 or
for a fractional number of Shares.
Section 4. Exercise of Option.
-------------------------------
(a) Method of Exercise. This Option shall be exercised by the delivery
------------------
to the Company of a written notice signed by the Optionee, which specifies the
number of Shares with respect to which the Option is being exercised and the
date of the proposed exercise. Such notice shall be delivered to the Company's
office as set forth in Section 8, no less than three business days in advance of
the date of the proposed exercise and shall be accompanied by this
<PAGE>
Option Certificate. The Optionee may withdraw such notice at any time prior to
the close of business on the proposed date of exercise, in which case this
Option Certificate shall be returned to him or her.
Payment for Shares purchased upon exercise of the Option shall be made
at the time of exercise either in cash, by certified check or bank cashier's
check or, at the option of the Board of Directors of the Company, in Stock owned
by the Optionee and valued at its Fair Market Value (as defined in the Plan) on
the date of exercise, or partly in Stock with the balance in cash or by
certified check or bank cashier's check. Any payment in Stock shall be effected
by its delivery to the Secretary of the Company, endorsed in blank or
accompanied by stock powers executed in blank.
(b) Delivery of Stock Certificates Upon Exercise. Upon
---------------------------------------------
each exercise of this Option, the Company shall mail or deliver to the Optionee,
as soon as practicable, a stock certificate or certificates representing the
Shares then purchased. Notwithstanding the foregoing, no Option granted under
the Plan may be exercised unless and until the Shares to be issued upon the
exercise thereof have been registered under the Securities Act of 1933 and
applicable state securities laws, or are, in the opinion of counsel to the
Company, exempt from such registration. The Company shall not be under any
obligation to register under applicable federal or state securities laws any
Shares to be issued upon the exercise of an Option granted under the Plan, or to
comply with an appropriate exemption from registration under such laws in order
to permit the exercise of an Option and the issuance and sale of the Shares
subject to such Option. If the Company chooses to comply with such an exemption
from registration, the Shares issued under the Plan may bear an appropriate
restrictive legend restricting the transfer or pledge of the Shares represented
thereby, and the Company may also give appropriate stop-transfer instructions to
the transfer agent to the Company.
Further, the Company (or any subsidiary of the Company) may take such
provisions as it may deem appropriate for the withholding of any taxes or
payment of any taxes which it determines it may be required to withhold or pay
in connection with any Option or the payment of Stock pursuant to an Option. The
obligation of the Company to issue and deliver Shares pursuant to the Option is
conditioned upon the satisfaction of the provisions set forth in this Section.
<PAGE>
Section 5. Termination of Option. Except as herein
---------- ----------------------
otherwise stated, the Option, to the extent not theretofore exercised, shall
terminate upon the first to occur of the following:
(a) the expiration of three months after the date on which the Optionee
ceases to be a director of the Company by reason of such Optionee's retirement;
(b) the expiration of one year after the date on which the Optionee
ceases to be a director of the Company by reason of the Optionee's death or
disability; or
(c) the Expiration Date.
Notwithstanding anything in this Option Certificate to the contrary,
in the event that the Optionee ceases to be a director of the Company prior to
the exercise of the Option, otherwise than as described in (a) and (b) above,
the Option shall automatically terminate.
Section 6. Reclassification, Consolidation or Merger.
---------- ------------------------------------------
(c) If the capital stock of the Company shall be subdivided or
combined, whether by reclassification, stock dividend, stock split, reverse
stock split or other similar transaction, then the number of Shares and the
exercise price per Share will be adjusted proportionately.
(d) In the case of any capital reorganization or any reclassification
of the capital stock of the Company (except pursuant to a transaction described
in paragraph (a) above (a "Reorganization"), appropriate adjustment may be made
by the Company in the number and class of shares subject to or relating to
Options awarded under the Plan and outstanding at the time of such
Reorganization.
Section 7. Rights Prior to Exercise of Option. The
---------- -----------------------------------
Option is non-transferable by the Optionee, except that in the event of the
Optionee's death the Option may be transferred by the Optionee's will or by the
laws of descent and distribution. During the Optionee's lifetime, the Option
shall be exercisable only by the Optionee. The Optionee shall have no rights as
a stockholder with respect to the Shares until exercise of the Option and
delivery to him or her of shares of Stock.
Section 8. Notices, Etc. Any notice hereunder by the
---------- -------------
Optionee shall be given to the Company in writing, and such notice and any
payment by the Optionee hereunder shall be deemed duly given or made only upon
receipt thereof at the Company's office at 2644
<PAGE>
30th Street, Santa Monica, California 90405, or at such other address as the
Company may designate by notice to the Optionee.
Any notice or other communication to the Optionee hereunder shall be in
writing and any such communication and any delivery to the Optionee hereunder
shall be deemed duly given or made if mailed or delivered to the Optionee at
such address as the Optionee may have on file with the Company.
Section 9. Construction. The interpretation and
---------- -------------
construction of this Option is vested in the Company's Board of Directors, and
such construction thereby shall be final and conclusive.
IN WITNESS WHEREOF, the Company has caused this Option Certificate to
be executed by its proper corporate officer thereunto duly authorized.
TRIMARK HOLDINGS, INC.
By /s/ James E.Keegan
---------------------------------
Name: James E. Keegan
Title: Senior Vice President
and Chief Financial Officer
<PAGE>
Exhibit 10.70
TRIMARK HOLDINGS, INC.
Non-qualified Stock Option Granted Under
The Trimark Holdings, Inc. Directors' Stock Option Plan
Certificate No. 10
Option granted on January 14, 1997 (the "Date of Grant") by Trimark
Holdings, Inc., a Delaware corporation (the "Company"), to Tofigh Shirazi (the
"Optionee"):
Section 1. Grant of Option. The Company grants to the Optionee a non-
--------- ---------------
qualified option to purchase, on the terms and conditions hereinafter set forth,
2,000 shares (the "Shares") of the Company's Common Stock, par value $0.001 per
share (the "Stock"), at the option price of $5.25 per share. This Option is
granted pursuant to the Company's Directors' Stock Option Plan (the "Plan"), a
copy of which is attached hereto as Annex I. This Option is subject in its
entirety to the provisions of the Plan, all of which are incorporated by
reference herein.
Section 2. Period of Option. This Option will expire at the close of
--------- ----------------
business on January 14, 2007, ten years from the Date of Grant (the "Expiration
----------------
Date"), unless earlier terminated pursuant to Section 5 below.
Section 3. Right of Exercise. The Option granted to the Optionee shall
--------- -----------------
become exercisable in full on the Date of Grant. Once exercisable, the Option
may be exercised at any time prior to its expiration, cancellation or
termination as provided in the Plan. Partial exercise is permitted from time to
time provided that no partial exercise of the Option shall be for a number of
Shares having a purchase price of less than $1,000 or for a fractional number of
Shares.
Section 4. Exercise of Option.
--------- ------------------
(a) Method of Exercise. This Option shall be exercised by the delivery to
------------------
the Company of a written notice signed by the Optionee, which specifies the
number of Shares with respect to which the Option is being exercised and the
date of the proposed exercise. Such notice shall be delivered to the Company's
office as set forth in Section 8, no less than three
<PAGE>
business days in advance of the date of the proposed exercise and shall be
accompanied by this Option Certificate. The Optionee may withdraw such notice at
any time prior to the close of business on the proposed date of exercise, in
which case this Option Certificate shall be returned to him or her.
Payment for Shares purchased upon exercise of the Option shall be made at
the time of exercise either in cash, by certified check or bank cashier's check
or, at the option of the Board of Directors of the Company, in Stock owned by
the Optionee and valued at its Fair Market Value (as defined in the Plan) on the
date of exercise, or partly in Stock with the balance in cash or by certified
check or bank cashier's check. Any payment in Stock shall be effected by its
delivery to the Secretary of the Company, endorsed in blank or accompanied by
stock powers executed in blank.
(b) Delivery of Stock Certificates Upon Exercise.
--------------------------------------------
Upon each exercise of this Option, the Company shall mail or deliver to the
Optionee, as soon as practicable, a stock certificate or certificates
representing the Shares then purchased. Notwithstanding the foregoing, no Option
granted under the Plan may be exercised unless and until the Shares to be issued
upon the exercise thereof have been registered under the Securities Act of 1933
and applicable state securities laws, or are, in the opinion of counsel to the
Company, exempt from such registration. The Company shall not be under any
obligation to register under applicable federal or state securities laws any
Shares to be issued upon the exercise of an Option granted under the Plan, or to
comply with an appropriate exemption from registration under such laws in order
to permit the exercise of an Option and the issuance and sale of the Shares
subject to such Option. If the Company chooses to comply with such an exemption
from registration, the Shares issued under the Plan may bear an appropriate
restrictive legend restricting the transfer or pledge of the Shares represented
thereby, and the Company may also give appropriate stop-transfer instructions to
the transfer agent to the Company.
Further, the Company (or any subsidiary of the Company) may take such
provisions as it may deem appropriate for the withholding of any taxes or
payment of any taxes which it determines it may be required to withhold or pay
in connection with any Option or the payment of Stock pursuant to an Option.
<PAGE>
The obligation of the Company to issue and deliver Shares pursuant to the Option
is conditioned upon the satisfaction of the provisions set forth in this
Section.
Section 5. Termination of Option. Except as herein otherwise stated, the
--------- ---------------------
Option, to the extent not theretofore exercised, shall terminate upon the first
to occur of the following:
(a) the expiration of three months after the date on which the Optionee
ceases to be a director of the Company by reason of such Optionee's retirement;
(b) the expiration of one year after the date on which the Optionee ceases
to be a director of the Company by reason of the Optionee's death or disability;
or
(c) the Expiration Date.
Notwithstanding anything in this Option Certificate to the contrary, in the
event that the Optionee ceases to be a director of the Company prior to the
exercise of the Option, otherwise than as described in (a) and (b) above, the
Option shall automatically terminate.
Section 6. Reclassification, Consolidation or Merger.
---------- -----------------------------------------
(c) If the capital stock of the Company shall be subdivided or combined,
whether by reclassification, stock dividend, stock split, reverse stock split or
other similar transaction, then the number of Shares and the exercise price per
Share will be adjusted proportionately.
(d) In the case of any capital reorganization or any reclassification of
the capital stock of the Company (except pursuant to a transaction described in
paragraph (a) above (a "Reorganization"), appropriate adjustment may be made by
the Company in the number and class of shares subject to or relating to Options
awarded under the Plan and outstanding at the time of such Reorganization.
Section 7. Rights Prior to Exercise of Option. The Option is non-
--------- ----------------------------------
transferable by the Optionee, except that in the event of the Optionee's death
the Option may be transferred by the Optionee's will or by the laws of descent
and distribution. During the Optionee's lifetime, the Option shall be
exercisable only by the Optionee. The Optionee shall have no rights as a
stockholder with respect to the Shares until exercise of the Option and delivery
to him or her of shares of Stock.
<PAGE>
Section 8. Notices, Etc. Any notice hereunder by the Optionee shall be
--------- -------------
given to the Company in writing, and such notice and any payment by the Optionee
hereunder shall be deemed duly given or made only upon receipt thereof at the
Company's office at 2644 30th Street, Santa Monica, California 90405, or at such
other address as the Company may designate by notice to the Optionee.
Any notice or other communication to the Optionee hereunder shall be in
writing and any such communication and any delivery to the Optionee hereunder
shall be deemed duly given or made if mailed or delivered to the Optionee at
such address as the Optionee may have on file with the Company.
Section 9. Construction. The interpretation and construction of this
--------- ------------
Option is vested in the Company's Board of Directors, and such construction
thereby shall be final and conclusive.
IN WITNESS WHEREOF, the Company has caused this Option Certificate to be
executed by its proper corporate officer thereunto duly authorized.
TRIMARK HOLDINGS, INC.
By /s/
----------------------------
Name: James E. Keegan
Title: Senior Vice President
and Chief Financial
Officer
<PAGE>
Exhibit 10.71
TRIMARK HOLDINGS, INC.
Non-qualified Stock Option Granted Under
The Trimark Holdings, Inc. Directors' Stock Option Plan
Certificate No. 8
Option granted on January 14, 1997 (the "Date of Grant") by Trimark
Holdings, Inc., a Delaware corporation (the "Company"), to Gordon Stulberg (the
"Optionee"):
Section 1. Grant of Option. The Company grants to the Optionee a
--------- ---------------
non-qualified option to purchase, on the terms and conditions hereinafter set
forth, 2,000 shares (the "Shares") of the Company's Common Stock, par value
$0.001 per share (the "Stock"), at the option price of $5.25 per share. This
Option is granted pursuant to the Company's Directors' Stock Option Plan (the
"Plan"), a copy of which is attached hereto as Annex I. This Option is subject
in its entirety to the provisions of the Plan, all of which are incorporated by
reference herein.
Section 2. Period of Option. This Option will expire at the close
--------- ----------------
of business on January 14, 2007, ten years from the Date of Grant (the
----------------
"Expiration Date"), unless earlier terminated pursuant to Section 5 below.
Section 3. Right of Exercise. The Option granted to
--------- -----------------
the Optionee shall become exercisable in full on the Date of Grant. Once
exercisable, the Option may be exercised at any time prior to its expiration,
cancellation or termination as provided in the Plan. Partial exercise is
permitted from time to time provided that no partial exercise of the Option
shall be for a number of Shares having a purchase price of less than $1,000 or
for a fractional number of Shares.
Section 4. Exercise of Option.
--------- ------------------
(a) Method of Exercise. This Option shall be exercised by the
------------------
delivery to the Company of a written notice signed by the Optionee, which
specifies the number of Shares with respect to which the Option is being
exercised and the date of the proposed exercise. Such notice shall be delivered
to the Company's office as set forth in Section 8, no less than three
<PAGE>
business days in advance of the date of the proposed exercise and shall be
accompanied by this Option Certificate. The Optionee may withdraw such notice at
any time prior to the close of business on the proposed date of exercise, in
which case this Option Certificate shall be returned to him or her.
Payment for Shares purchased upon exercise of the Option shall be made
at the time of exercise either in cash, by certified check or bank cashier's
check or, at the option of the Board of Directors of the Company, in Stock owned
by the Optionee and valued at its Fair Market Value (as defined in the Plan) on
the date of exercise, or partly in Stock with the balance in cash or by
certified check or bank cashier's check. Any payment in Stock shall be effected
by its delivery to the Secretary of the Company, endorsed in blank or
accompanied by stock powers executed in blank.
(b) Delivery of Stock Certificates Upon Exercise. Upon each exercise
--------------------------------------------
of this Option, the Company shall mail or deliver to the Optionee, as soon as
practicable, a stock certificate or certificates representing the Shares then
purchased. Notwithstanding the foregoing, no Option granted under the Plan may
be exercised unless and until the Shares to be issued upon the exercise thereof
have been registered under the Securities Act of 1933 and applicable state
securities laws, or are, in the opinion of counsel to the Company, exempt from
such registration. The Company shall not be under any obligation to register
under applicable federal or state securities laws any Shares to be issued upon
the exercise of an Option granted under the Plan, or to comply with an
appropriate exemption from registration under such laws in order to permit the
exercise of an Option and the issuance and sale of the Shares subject to such
Option. If the Company chooses to comply with such an exemption from
registration, the Shares issued under the Plan may bear an appropriate
restrictive legend restricting the transfer or pledge of the Shares represented
thereby, and the Company may also give appropriate stop-transfer instructions to
the transfer agent to the Company.
Further, the Company (or any subsidiary of the Company) may take such
provisions as it may deem appropriate for the withholding of any taxes or
payment of any taxes which it determines it may be required to withhold or pay
in connection with any Option or the payment of Stock pursuant to an Option.
<PAGE>
The obligation of the Company to issue and deliver Shares pursuant to the Option
is conditioned upon the satisfaction of the provisions set forth in this
Section.
Section 5. Termination of Option. Except as herein otherwise stated,
---------- ----------------------
the Option, to the extent not theretofore exercised, shall terminate upon the
first to occur of the following:
(a) the expiration of three months after the date on which the Optionee
ceases to be a director of the Company by reason of such Optionee's retirement;
(b) the expiration of one year after the date on which the Optionee
ceases to be a director of the Company by reason of the Optionee's death or
disability; or
(c) the Expiration Date.
Notwithstanding anything in this Option Certificate to the contrary, in
the event that the Optionee ceases to be a director of the Company prior to the
exercise of the Option, otherwise than as described in (a) and (b) above, the
Option shall automatically terminate.
Section 6. Reclassification, Consolidation or Merger.
--------- -----------------------------------------
(c) If the capital stock of the Company shall be subdivided or
combined, whether by reclassification, stock dividend, stock split, reverse
stock split or other similar transaction, then the number of Shares and the
exercise price per Share will be adjusted proportionately.
(d) In the case of any capital reorganization or any reclassification
of the capital stock of the Company (except pursuant to a transaction described
in paragraph (a) above (a "Reorganization"), appropriate adjustment may be made
by the Company in the number and class of shares subject to or relating to
Options awarded under the Plan and outstanding at the time of such
Reorganization.
Section 7. Rights Prior to Exercise of Option. The Option is
--------- ----------------------------------
non-transferable by the Optionee, except that in the event of the Optionee's
death the Option may be transferred by the Optionee's will or by the laws of
descent and distribution. During the Optionee's lifetime, the Option shall be
exercisable only by the Optionee. The Optionee shall have no rights as a
stockholder with respect to the Shares until exercise of the Option and delivery
to him or her of shares of Stock.
<PAGE>
Section 8. Notices, Etc. Any notice hereunder by the Optionee shall
--------- ------------
be given to the Company in writing, and such notice and any payment by the
Optionee hereunder shall be deemed duly given or made only upon receipt thereof
at the Company's office at 2644 30th Street, Santa Monica, California 90405, or
at such other address as the Company may designate by notice to the Optionee.
Any notice or other communication to the Optionee hereunder shall be in
writing and any such communication and any delivery to the Optionee hereunder
shall be deemed duly given or made if mailed or delivered to the Optionee at
such address as the Optionee may have on file with the Company.
Section 9. Construction. The interpretation and construction of this
--------- ------------
Option is vested in the Company's Board of Directors, and such construction
thereby shall be final and conclusive.
IN WITNESS WHEREOF, the Company has caused this Option Certificate to
be executed by its proper corporate officer thereunto duly authorized.
TRIMARK HOLDINGS, INC.
By /s/James E. Keegan
---------------------------
Name: James E. Keegan
Title: Senior Vice President
and Chief Financial
Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1997 AND THE CONSOLIDATED STATEMENT
OF OPERATIONS FOR THE PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 477
<SECURITIES> 0
<RECEIVABLES> 20,119
<ALLOWANCES> 4,549
<INVENTORY> 582
<CURRENT-ASSETS> 0<F1>
<PP&E> 2,540
<DEPRECIATION> 1,968
<TOTAL-ASSETS> 79,721
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 44,000
0
0
<COMMON> 5
<OTHER-SE> 21,328
<TOTAL-LIABILITY-AND-EQUITY> 79,721
<SALES> 44,127
<TOTAL-REVENUES> 44,127
<CGS> 36,834
<TOTAL-COSTS> 36,834
<OTHER-EXPENSES> 8,328
<LOSS-PROVISION> 295
<INTEREST-EXPENSE> 1,122
<INCOME-PRETAX> (2,390)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,390)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,390)
<EPS-PRIMARY> (0.56)
<EPS-DILUTED> (0.56)
<FN>
<F1>
IN ACCORDANCE WITH INDUSTRY PRACTICE, THE COMPANY PREPARES AN UNCLASSIFIED
BALANCE SHEET.
</FN>
</TABLE>
