<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 quarterly period ended MARCH 31, 1999 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 13, 1999, 4,599,077 shares of Trimark Holdings, Inc. common stock
were outstanding, excluding shares held by Trimark Holdings, Inc. as treasury
stock.
<PAGE>
TRIMARK HOLDINGS, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
Part I. Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets at March 31, 1999 and June 30, 1998 3
Consolidated Statements of Operations - Nine months and three months ended
March 31, 1999 and 1998 4
Consolidated Statements of Cash Flows - Nine months ended March 31, 1999 and
1998 5
Notes to Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9-17
Item 3. Quantitative and Qualitative Disclosures about Market Risk 17
Part II. Other Information
Item 2. Changes in Securities and Use of Proceeds 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 19-93
</TABLE>
<PAGE>
TRIMARK HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Share Data)
<TABLE>
<CAPTION>
March 31, June 30,
1999 1998
------------ ----------
(Unaudited)
<S> <C> <C>
Assets
------
Cash and cash equivalents $ 1,442 $ 1,159
Accounts receivable, less allowances of
$5,938 and $6,005, respectively 18,772 16,568
Film costs, net (Note 2) 62,491 65,064
Deferred marketing costs 1,129 1,963
Inventories, net 1,521 1,190
Investments 5,420 --
Property and equipment at cost, less accumulated
depreciation of $2,759 and $2,433 respectively 602 741
Due from officers 793 780
Other assets 1,460 1,755
----------- ----------
$ 93,630 $ 89,220
=========== ==========
Liabilities and Stockholders' Equity
------------------------------------
Revolving line of credit $ 53,330 $ 57,250
Accounts payable and accrued expenses 5,660 8,060
Minimum guarantees and royalties payable 13,307 7,623
Deferred income 3,240 1,100
Income taxes payable 49 43
----------- ----------
Total liabilities 75,586 74,076
----------- ----------
Stockholders' equity:
Common stock, $.001 par value. Authorized
20,000,000 shares; 5,564,492 shares issued
at March 31, 1999 and 5,134,827 6 5
shares issued at June 30, 1998
Additional paid in capital 18,601 15,588
Preferred stock, $.01 par value. Authorized
2,000,000 shares; no shares issued and
outstanding -- --
Retained earnings 1,415 3,981
Accumulated comprehensive income 2,485 --
Less treasury shares, at cost - 965,415 shares
and 952,200 shares (4,463) (4,430)
----------- ----------
Stockholders' equity 18,044 15,144
----------- ----------
$ 93,630 $ 89,220
=========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
TRIMARK HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except earnings (loss) Per Share)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
March 31, March 31,
------------------------- -------------------------
1999 1998 1999 1998
---------- --------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C>
Net revenues $ 66,270 $ 62,163 $ 19,989 $ 24,618
Film costs and distribution expenses 56,611 53,200 19,323 19,284
---------- --------- --------- ---------
Gross Profit 9,659 8,963 666 5,334
---------- --------- --------- ---------
Operating expenses:
Selling 5,555 5,536 1,867 2,005
General and administrative 4,106 3,660 1,434 1,193
Bad debt (162) 1,000 179 852
---------- --------- --------- ---------
9,499 10,196 3,480 4,050
---------- --------- --------- ---------
Operating earnings (loss) 160 (1,233) (2,814) 1,284
Other (income) expenses:
Interest expense 3,023 3,257 871 1,166
Interest and investment income (57) (115) (40) (35)
---------- --------- --------- ---------
2,966 3,142 831 1,131
---------- --------- --------- ---------
Earnings (loss) before income taxes (2,806) (4,375) (3,645) 153
Income taxes (Note 5) (240) -- -- --
---------- --------- --------- ---------
Net earnings (loss) $ (2,566) $ (4,375) $ (3,645) $ 153
---------- --------- --------- ---------
Other comprehensive income, net of tax (Note 6) 2,485 -- 2,485 --
---------- --------- --------- ---------
Comprehensive income (81) (4,375) (1,160) 153
========== ========= ========= =========
Weighted average number of common shares
basic and fully diluted (Note 7) 4,341 4,183 4,341 4,183
========== ========= ========= =========
Net earnings (loss) per common share
basic and fully diluted (Note 7) $ (0.59) $ (1.05) $ (0.84) $ 0.04
========== ========= ========= =========
</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,
1999 1998
--------- -----------
(Unaudited)
<S> <C> <C>
Operating activities:
Net earnings (loss) $ (2,566) $ (4,375)
Adjustments to reconcile net earnings (loss) to
Net cash used by operating activities:
Film amortization 35,231 37,304
Depreciation and other amortization 326 276
Provision for returns and bad debt (67) 2,048
Provision for inventory obsolescence (268) 3
Change in operating assets and liabilities:
Increase in accounts receivable (2,137) (3,637)
Additions to film costs (32,658) (42,072)
Decrease (increase) in deferred marketing costs 834 (248)
Increase in inventories (63) (251)
Increase in notes receivable from officers (13) (319)
Decrease in other assets 295 16
(Decrease) increase in accounts payable and
accrued expenses (2,400) 3,294
Increase in minimum guarantees and
royalties payable 5,684 2,422
Increase (decrease) in income taxes payable 6 (22)
Increase (decrease) in deferred income 2,140 (17)
---------- ---------
Net cash provided (used) by operating activities 4,344 (5,578)
---------- ---------
Investing activities:
Acquisition of property and equipment (187) (258)
---------- ---------
Net cash used by investing activities (187) (258)
---------- ---------
Financing activities:
Net (decrease) increase in revolving line of credit (3,920) 4,050
Exercise of stock options 79 114
Purchase of treasury stock (33) --
---------- ---------
Net cash (used) provided by financing activities (3,874) 4,164
---------- ---------
Increase (decrease) in cash and cash equivalents 283 (1,672)
Cash and cash equivalents at beginning of period 1,159 3,665
---------- ---------
Cash and cash equivalents at end of period $ 1,442 $ 1,993
========== =========
</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 its
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 10-K for the year ended June 30, 1998. Significant
accounting policies used by the Company are summarized in Note 2 to the June
30, 1998 financial statements.
In the opinion of management, all adjustments required for a fair
presentation of the financial position as of March 31, 1999 and the results
of operations and cash flows for the periods ended March 31, 1999 and March
31, 1998 have been made and all adjustments were of a normal and recurring
nature. Operating results for the nine and three month periods 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,
1999 1998
------------- -------------
(in thousands)
<S> <C> <C>
Released $ 35,695 $ 50,541
Completed not released 7,621 3,419
In process and development 19,175 11,104
-------------- -------------
$ 62,491 $ 65,064
-------------- -------------
</TABLE>
6
<PAGE>
NOTE 3 - COMMITMENTS & CONTINGENCIES:
The Company has entered into certain agreements, which provide for royalty
advances and promotional and advertising commitments totaling $7.5 million.
If the conditions to these agreements are not met by the licensors, the
Company may withdraw from the arrangements. These commitments extend to
November 1999.
NOTE 4 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the nine month period for:
<TABLE>
<CAPTION>
March 31,
1999 1998
------------- -------------
(in thousands)
<S> <C> <C>
Interest $3,438 $3,662
Income taxes 155 279
</TABLE>
NOTE 5 - INCOME TAXES
The $240,000 tax benefit represents a tax receivable from a prior year return
recognized in the nine month period ended March 31, 1999.
NOTE 6 - OTHER COMPREHENSIVE INCOME
The $2,485,000 other comprehensive income, net of tax, represents the
unrealized gain on investment in broadcast.com common stock.
NOTE 7 - NET EARNINGS (LOSS) PER COMMON SHARE:
Basic earnings (loss) per common share amounts are based on the weighted
average number of common shares outstanding during the respective periods.
There is no assumed conversion of stock options for the nine months ended
March 31, 1999 and 1998 as the effect would be anti-dilutive. Fully diluted
earnings per common share amounts are based on the weighted average common
shares outstanding during the period and shares assumed issued upon
conversion of stock options when the effect of such conversions would have
been diluted to net earnings (loss).
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
NET REVENUES:
<TABLE>
<CAPTION>
Nine months ended Three months ended
March 31, March 31,
----------------------------------- -----------------------------------
1999 1998 1999 1998
--------------- --------------- ---------------- ---------------
(in thousands)
<S> <C> <C> <C> <C>
Domestic:
Home video distribution $42,256 $37,019 $13,232 $15,172
Theatrical distribution 857 7,687 136 2,664
Television distribution 10,397 7,743 3,665 3,222
Foreign:
All media 12,760 9,714 2,956 3,560
--------------- --------------- ---------------- ---------------
$66,270 $62,163 $19,989 $24,618
--------------- --------------- ---------------- ---------------
</TABLE>
Net revenue for the nine months ended March 31, 1999 increased $4.1 million or
7% compared with the same period in fiscal year 1998. Net revenue for the
quarter ended March 31, 1999 decreased $4.6 million or 19% compared with the
same period in fiscal year 1998. The increase for the nine month period was due
to increases in net revenue from the home video, television and foreign markets
of $5.2 million, $2.7 million, and $3 million, respectively, partially offset by
a decrease in theatrical revenue of $6.8 million. The increase in domestic home
video revenue was primarily due to increased distribution and emphasis on
sell-through titles and DVD titles. Sell-through revenue increased due to the
straight to video title "A Kid in Aladdin's Palace" without any comparable
straight to sell-through release in the nine months ended March 31, 1998. The
Company also released forty two (42) DVD titles during the nine months ended
March 31, 1999 as compared to the release of only one (1) title in the same
period in fiscal year 1998. The overall home video revenue increase was
partially offset by a decrease in gross home video rental revenue due to the
release of "Eve's Bayou" in the third quarter of fiscal year 1998. The increase
in television revenue was primarily due to the availability of "Star Kid,"
"Eve's Bayou" and "The Dentist 2" in the cable market and "Ground Control" in
the network television market during the nine month period ended March 31, 1999.
In contrast, only the made for pay television film "Trucks" and the theatrically
released "Meet Wally Sparks" were released during the same period in fiscal year
1998. The increase in foreign distribution revenue was primarily due to the
release of seven (7) films in the foreign market including "Eve's Bayou" in many
major foreign territories for the nine months ended March 31, 1999; in contrast,
six (6) films were released in the same period for fiscal year 1998 and none
with the commercial success of "Eve's Bayou". The decrease in theatrical
8
<PAGE>
ITEM 2: (CONTINUED)
distribution was due to the release of "Eve's Bayou" during the nine month
period ended March 31, 1998. No comparable title was released in the same
period for fiscal year 1999.
The decrease in net revenues for the quarter ended March 31, 1999 was
primarily due to decreases in home video and theatrical distribution of $1.9
million and $2.5 million, respectively. The decrease in home video revenue
was primarily due to the release of the theatrical film "Eve's Bayou" in the
third quarter of fiscal year 1998 with no comparable release in the same
period in fiscal year 1999. The decrease in theatrical revenue was due to the
wide theatrical release of "Star Kid" in January 1998; in contrast, there
were no wide theatrical releases in the third quarter of fiscal year 1999.
The Company continues to focus its resources on producing and acquiring films
with specialized theatrical potential and those that are made for initial
release on network and cable television. See "Liquidity and Capital
Resources."
The Company anticipates that the domestic home video market will continue to be
extremely competitive.
The Company recently announced a multi year agreement with NBC Enterprises in
which the Company will distribute in retail certain NBC Home Video
entertainment titles.
GROSS PROFIT: Gross profit as a percentage of net revenues for the nine month
periods ended March 31, 1999 and 1998 was 14.6% and 14.4%, respectively, and
for the quarters ended March 31, 1999 and 1998 was 3.3% and 21.7%,
respectively.
The Company's gross profit for the nine months ended March 31, 1999 increased
$696,000 or 8% compared with the same period in fiscal year 1998. The
Company's gross profit for the quarter ended March 31, 1999 decreased $4.7
million or 88% from the same quarter in fiscal 1998. The gross profit for the
quarter ended March 31, 1999 included approximately $4.9 million in write
downs to net realizable value of film inventory. These write downs primarily
related to a charge associated with the lower than anticipated video
sell-through performance of "Chairman of the Board" and a write down
associated with management's decision to limit the marketing campaign on the
video sell-through release of "Star Kid". There were no comparable write
downs during the quarter ended March 31, 1998.
GENERAL AND ADMINISTRATIVE EXPENSES: For the nine months ended March 31, 1999,
general and administrative expenses increased $446,000 or 12.2% compared with
the same period in fiscal 1998. For the three months ended March 31, 1999,
general and administrative expenses increased $241,000 or 20.2% compared with
9
<PAGE>
ITEM 2: (CONTINUED)
the same period in fiscal year 1998. The nine month and three month period
increase in general and administrative expenses in fiscal 1999 as compared to
fiscal 1998 resulted from increases in medical benefits and consulting and
accounting fees.
BAD DEBT EXPENSE: Bad debt expense for the nine months ended March 31, 1999
decreased $1,162,000 or 116% compared with the same period in fiscal 1998. For
the three months ended March 31, 1999, bad debt expense decreased $673,000 or
79% compared to the same period in fiscal year 1998. Bad debt expense primarily
represents reserves taken against domestic video and foreign sales. The decrease
was partially due to $355,000 in collections on past due video and international
receipts. The Company also took $852,000 in reserves during the third quarter of
fiscal year 1998 due to the Asian currency crisis. No comparable reserves were
taken during the most recent fiscal quarter.
INTEREST EXPENSE: Interest expense for the nine month period ended March 31,
1999 decreased $234,000 or 7.2% compared with the same period in fiscal year
1998. Interest expense for the quarter ended March 31, 1999 decreased $295,000
or 25.3% compared with the same period in fiscal 1998. The decrease in interest
expense in the third quarter of fiscal 1999 was primarily due to a lower average
borrowing level from the same period in fiscal 1998. As of March 31, 1999, there
was $53.3 million outstanding under the credit facility. The Company expects to
use excess cash flow generated by theatrical and library product to decrease
current debt levels. See "Liquidity and Capital Resources."
NET EARNINGS (LOSS): The Company's net loss for the nine months ended March
31, 1999 decreased $1.8 million and increased $3.8 million for the three
months ended March 31, 1999 as compared with the same periods in fiscal 1998.
The decrease in net loss during the nine month period ended March 31, 1999 as
compared to the prior year is primarily due to the $696,000 increase in gross
profits coupled with the $1.2 million decrease in bad debt. The decrease in
the quarterly earnings compared to the prior year was a result of the $4.9
million film inventory write down taken in the third quarter of 1999 without
any comparable write down in the same period of fiscal 1998. This was
partially offset by decreases in operating and other expenses in the most
recent quarter.
OTHER COMPREHENSIVE INCOME: Pursuant to an agreement reached on February 22,
1999, the Company exchanged 412,363 of its shares; or 9% of its outstanding
shares, for 45,858 shares of broadcast.com. See Part II, Item 2 herein. The
resulting other comprehensive income reported in the third quarter of 1999
represents the unrealized gain, net of taxes, on the broadcast.com shares
based on the market price of the shares on March 31, 1999. As a result of
this new business venture, the Company and broadcast.com will work together
to distribute movies on the internet under a variety of new revenue models
including pay-per-view, electronic commerce, integrated advertising,
personalized marketing and user
10
<PAGE>
ITEM 2: (CONTINUED)
interactive content. Under this agreement, which terminates on January 31,
2001 unless extended, the Company will use its best efforts on future titles
to give broadcast.com streaming rights or in certain circumstances rights of
first refusal in connection therewith.
11
<PAGE>
ITEM 2: (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
The Company relies on cash generated by operations and borrowings under its
credit facility to finance its operations. The Company's cash flows from
operating, investing and financing activities for the nine months ended March
31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
------------------------------------
1999 1998
---------------- ----------------
(in thousands)
<S> <C> <C>
Net cash provided (used) by operating activities $ 4,344 $ (5,578)
Net cash used by investing activities (187) (258)
Net cash (used) provided by financing activities (3,874) 4,164
</TABLE>
Cash provided by operations increased by $9.9 million for the nine month
period ended March 31, 1999 compared to the same period in fiscal 1998. The
most significant change from the prior period was the decrease in additions
to film costs of $9.4 million. The decrease was primarily due to the wide
theatrical release of "Star Kid", in January 1998. There were no comparable
or wide theatrical releases in the nine months ended March 31, 1999. The
$32.7 million addition to film costs was primarily used for the production
and acquisition of new product with approximately $4.7 million used for
prints and advertising costs on the specialized theatrical releases of
"Billy's Hollywood Screen Kiss," "Cube," "Slam" and "Another Day in Paradise."
Two principal factors have increased the length of time from investment in film
costs to recoupment, which generally has increased the Company's cash
requirements. The first factor is the terms of the Company's current credit
facility entered into in December 1996, as amended December 31, 1998. Under the
current credit facility, described below, the Company directly pays production
costs that generally were previously paid by off balance sheet production
company financing. This change in financing has accelerated certain film
acquisition payments that were previously made at the time of film delivery and
are now made periodically throughout the production process. The production
process often takes from nine months to a year or more. Commitments to purchase
films from production companies upon delivery are included in contingent
contractual obligations. Theatrical films generally require significant
marketing expenditures for prints and advertising which are capitalized as film
costs. Theatrical marketing campaigns begin well in advance of the theatrical
release to generate the maximum level of awareness for the film. The opening
date must be carefully selected and is often changed to
12
<PAGE>
ITEM 2: (CONTINUED)
address competition, screen availability and other factors. In addition, the
decision to release a film theatrically is often not made until a theatrical
test is conducted which can take several months. The home video release and
other ancillary market revenues are also not realized for several months to
years after the theatrical release. For further information see "Results of
Operations."
Investing activities for the nine months ended March 31, 1999 and 1998 have
primarily consisted of expenditures on production equipment improvements and
computer hardware and software.
Financing activities, consisting primarily of borrowings under the Company's
credit facility, decreased in the nine months ended March 31, 1999 as
compared to the nine months ended March 31, 1998, primarily as the result of
the increase in operating cash flows. The Company is no longer financing the
prints and advertising costs associated with wide theatrical releases as in
the prior year. The Company's cash requirements vary in part with the size
and timing of production advances and minimum guarantee payments along with
the timing of its theatrical, home video, television and international
releases. In the nine months ended March 31, 1999 and 1998, the principal
sources of funds have been provided by the Company's credit facility and
available cash. During the three month period ended March 31, 1999, the
outstanding debt balance has decreased $6.3 million or 11%.
On December 20, 1996, the Company's principal operating subsidiaries, Trimark
Pictures, Inc. and Trimark Television, Inc., 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 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, 1999 there was $53.3 million outstanding under
the credit facility. The Company expects to use excess cash flow generated by
theatrical and library product to decrease current borrowing levels. The credit
agreement contains various financial and other covenants to which
13
<PAGE>
ITEM 2: (CONTINUED)
the Company must adhere. These covenants, among other things, require the
maintenance of minimum net worth and various financial ratios which are
reported to the bank on a quarterly basis and include limitations on
additional indebtedness, liens, investments, disposition of assets,
guarantees, affiliate transactions and the use of proceeds. In relation to
management's strategic review and release schedule described below, the
Company amended the current credit agreement as of December 31, 1998. The
amended agreement provides for less stringent minimum net worth ratios. In
consideration for the adjustment of these ratios, the amended credit facility
reduces the borrowing limits over the remaining life of the credit facility.
For the quarter ended March 31, 1999, the amended borrowing limit was $60
million. By January 31, 2000, the borrowing limit is reduced to $50 million
and by June 30, 2000 is reduced to $40 million. The amendments to the debt
covenants and borrowing limits were structured to incorporate the Company's
overall strategy and presently planned productions, acquisitions,
distribution, and overhead expenditures. The Company is in compliance with
all debt covenants as of March 31, 1999.
Management of the Company conducted a strategic review of the Company's
theatrical operations in fiscal 1998. This strategic review focused on the
increase in the theatrical exhibition of specialized films, with which the
Company has demonstrated past successes including "Eve's Bayou" and "Kama Sutra:
A Tale of Love," and a reduction in the distribution of wide mainstream features
with wide releases to greater than 1,000 screens and which require substantial
print and advertising commitments. The Company does not plan to release any wide
theatrical releases in fiscal 1999.
In the domestic specialized theatrical market, the Company plans to release
five (5) to seven (7) motion pictures in fiscal 1999(of which four (4) were
released in the first nine months of fiscal 1999). Furthermore, the Company
plans to release approximately thirty-five (35) motion pictures into the
domestic home video rental market (of which twenty four (24) were released in
the first nine months of fiscal 1999) and to continue to expand distribution
in the sell-through market. The Company intends to distribute four (4) to six
(6) films and "movies of the week" which will premiere on major cable
networks or broadcast stations. Also in fiscal 1999, the Company plans to
release approximately seven (7) to nine (9) motion pictures initially into
international distribution (of which four (4) were released in the first nine
months of the fiscal year).
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.
14
<PAGE>
ITEM 2: (CONTINUED)
The Company is currently authorized to spend up to $150,000 in fiscal 1999 to
purchase shares of its outstanding common stock in the open market or
otherwise. The amended debt covenant at December 31, 1998 limits the purchase
of outstanding common stock to $50,000 per fiscal year. During the first
quarter of fiscal 1999, the Company purchased 13,215 shares at an average
price of $2.39 per share. No shares were purchased during the third quarter
of the fiscal year.
As previously announced by the Company, a hearing was held on October 16,
1998 with a panel authorized by the National Association of Securities
Dealers Inc. Board of Governors regarding the public float requirements of
the Company's common stock and its continued listing on the NASDAQ National
Market. On November 16, 1998, the panel determined to move the listing of the
Company's common stock from the NASDAQ National Market to the NASDAQ Small
Cap Market.
IMPACT OF YEAR 2000. The Company is currently working to resolve the
potential impact of the year 2000 on the processing of time-sensitive
information by computerized information systems. Year 2000 issues may arise
if computer programs have been written using two digits (rather than four) to
define the applicable year. In such case, programs that have time-sensitive
logic may recognize a date using "00" as the year 1900 rather than the year
2000, which could result in miscalculations or system failures. Management
completed a review of all significant software and equipment used in the
Company's operations and, to the extent practical, in the operations of its
key business partners, in order to determine if any year 2000 risks exist
that may be material to the Company as a whole. The Company estimates that
repairing all time sensitive hardware and software will cost the Company
approximately $240,000. As of the nine months ended March 31, 1999, the
Company has purchased approximately $165,000 in new computer hardware and
software through its normal upgrading of old computer hardware and software
as well as a direct result of year 2000 issues. The Company also entered into
a licensing agreement on February 6, 1999 for the implementation of a new
general ledger software system. The Company anticipates the system to be
fully operational by July 1, 1999. If the Company, its customers or vendors
are unable to resolve the year 2000 processing issues in a timely manner, it
could result in a material financial risk.
PROPERTIES. The Company leases its corporate office space in Santa Monica,
California for a term of seven years expiring April 30, 1999. The Company
negotiated an extension of its current lease until May 31, 1999 and is currently
in negotiations to extend the lease term until August 1, 1999. In April 1999,
the Company signed a ten (10) year lease agreement for new office space
beginning August 1, 1999 at which time the Company will move its corporate
15
<PAGE>
ITEM 2: (CONTINUED)
offices to Marina del Rey, California. The Company believes the new rent and
moving costs will not represent a material increase in the Company's expenses.
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: 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;
entertainment market, 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; whether the Company's current strategy which includes theatrical
releases of only specialized films and production and acquisition of made for
television product is successful; new methods of distributing motion
pictures; the potential success of its transaction with broadcast.com; the
costs and risks associated with the year 2000 issue; and other factors
referenced in this Form 10-Q and the Company's other filings with the
Securities and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not consider that the potential loss of future earnings
which could be caused by interest rate volatility would have a material
impact on its financial position.
16
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. CHANGES IN SECURITIES AND USE OF PROCEEDS
On March 29, 1999, pursuant to the terms of a February 22, 1999 agreement
between the Company and broadcast.com inc. to jointly market certain of the
Company's movies by streaming them on the broadcast.com web site, the Company
issued and sold to broadcast.com 412,363 shares of the Company's common stock
in exchange for 45,858 shares of common stock of broadcast.com. The shares of
common stock of the Company were issued pursuant to exemptions from
registration requirements under Section 4(2) of the Securities Act of 1933,
as amended (the "Act"), and Regulation D promulgated thereunder, on the basis
that the transaction did not involve any public offering, and accordingly
such shares were not registered under the Act and may not be offered or sold
absent registration or an applicable exemption from registration
requirements. The shares of broadcast.com issued to the Company are subject
to the same restrictions.
ITEM 5. OTHER INFORMATION
Roger A. Burlage recently resigned as a Director of the Company to become
Chairman and Chief Executive Officer of The Harvey Entertainment Company.
17
<PAGE>
PART II: OTHER INFORMATION (CONTINUED)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit No Description
- ---------- ----------------------------------------------------------------------------------
<S> <C>
10.98 Non-Qualified Stock Option Agreement dated February 2, 1999 between the Company
and Cami Winikoff
10.99 Employment Agreement dated February 1, 1999 between Trimark Pictures, Inc.
and Cami Winikoff
10.100 Trimark Holdings, Inc. 1999 Directors' Option Plan
10.101 Non-Qualified Stock Option Certificate dated January 8, 1999 between the Company and
Gordon Stulberg
10.102 Non-Qualified Stock Option Certificate dated January 8, 1999 between the Company and
Matthew H. Saver
10.103 Non-Qualified Stock Option Certificate dated January 8, 1999 between the Company and
Tofigh Shirazi
10.104 Non-Qualified Stock Option Certificate dated January 8, 1999 between the Company
and Roger Burlage
10.105 Agreement dated February 22, 1999 among broadcast.com inc., the Company, Trimark
Pictures, Inc., Trimark Television, Inc. and Trimark Music, and amendment thereto
dated March 15, 1999 (as indicated by asterisk, portions of the February 22, 1999
agreement have been redacted pursuant to a confidentiality request)
10.106 Waiver letter dated as of March 15, 1999 regarding the Credit, Security, Guaranty and
Pledge Agreement dated as of December 20, 1996, as amended, among Trimark Pictures, Inc.,
Trimark Television, Inc., the Guarantors referred to therein, the Lenders referred to
therein, and The Chase Manhattan Bank, as Administrative Agent and Fronting Bank
27 Financial Data Schedule.
</TABLE>
18
<PAGE>
PART II: OTHER INFORMATION (CONTINUED)
(b) Reports on Form 8-K:
On March 5, 1999, the Company filed a Report on Form 8-K,
under item 5 thereof, regarding its agreement with broadcast.com inc. The date
of the report (date of earliest event reported) was February 22, 1999.
19
<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/ Jeff Gonzalez
-----------------------------
Jeff Gonzalez
Chief Financial Officer
(Principal Financial
Officer and authorized to sign
on behalf of the Registrant)
Date: May 17, 1999
20
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO DESCRIPTION METHOD OF FILING
- ---------- ----------- ----------------
<S> <C> <C>
10.98 Non-Qualified Stock Option Agreement Filed herewith
dated February 2, 1999 between the electronically
Company and Cami Winikoff
10.99 Employment Agreement dated February 1, Filed herewith
1999 between Trimark Pictures, Inc. and electronically
Cami Winikoff
10.100 Trimark Holdings, Inc. 1999 Directors' Filed herewith
Option Plan electronically
10.101 Non-Qualified Stock Option Certificate Filed herewith
dated January 8, 1999 between the electronically
Company and Gordon Stulberg
10.102 Non-Qualified Stock Option Certificate Filed herewith
dated January 8, 1999 between the electronically
Company and Matthew H. Saver
10.103 Non-Qualified Stock Option Certificate Filed herewith
dated January 8, 1999 between the electronically
Company and Tofigh Shirazi
10.104 Non-Qualified Stock Option Certificate Filed herewith
dated January 8, 1999 between the electronically
Company and Roger Burlage
10.105 Agreement dated February 22, 1999 among Filed herewith
broadcast.com inc., the Company, Trimark electronically
Pictures, Inc., Trimark Television, Inc.
and Trimark Music, and amendment thereto
dated March 15, 1999 (as indicated by
asterisk, portions of the February 22,
1999 agreement have been redacted
pursuant to a confidentiality request)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO DESCRIPTION METHOD OF FILING
- ---------- ----------- ----------------
<S> <C> <C>
10.106 Waiver letter dated as of March 15, 1999 Filed herewith
regarding the Credit, Security, Guaranty electronically
and Pledge Agreement dated as of
December 20, 1996, as amended, among
Trimark Pictures, Inc., Trimark
Television, Inc., the Guarantors
referred to therein, the Lenders
referred to therein, and The Chase
Manhattan Bank, as Administrative Agent
and Fronting Bank
Financial Data Schedule. filed herewith
27 electronically
</TABLE>
<PAGE>
EXHIBIT 10.98
NON-QUALIFIED STOCK OPTION
AGREEMENT FOR CAMI WINIKOFF
NON-QUALIFIED STOCK OPTION AGREEMENT ("Option Agreement") dated as of
the 2nd day of February, 1999 providing for the granting of an option by
Trimark Holdings, Inc., a Delaware corporation (the "Company"), to CAMI
WINIKOFF, an employee of the Company or of a subsidiary (the "Employee").
The Board of Directors of the Company has duly adopted, and the
stockholders of the Company have approved, the 1990 Stock Option and Stock
Appreciation Rights Plan of Trimark Holdings, Inc., as amended from time to
time (the "Plan"), which is incorporated herein by reference. Unless
otherwise expressly stated, all defined terms herein shall have the same
meaning ascribed to them in the Plan. In accordance with Paragraph 2 of the
Plan, the Stock Option Plan Committee of the Board of Directors of the
Company (the "Committee") has determined that the Employee is to be granted
an option under the Plan to buy shares of the Company's common stock, par
value $.001 (the "Shares"), on the terms and subject to the conditions
hereinafter provided.
1. NUMBER OF SHARES, OPTION PRICE. The Company hereby grants to the
Employee a non-qualified option (the "Option"), to purchase 36,000 Shares
(the "Option Shares") at a price per Share (the "Option Price") of $4.50 on
the terms and subject to the conditions set forth herein. The Employee shall
not have any of the rights of a stockholder with respect to the Option Shares
covered hereby unless and until the Employee has paid the Option Price with
respect thereto.
2. PERIOD OF OPTION AND CONDITIONS OF EXERCISE.
a) The term of the Option shall commence on February 2, 1999(the "Date of
Grant") and terminate upon the earlier of February 2, 2009 (the "Expiration
Date") and the time at which the Option is completely terminated pursuant to
Section 3 or Section 4 hereof. Upon the termination of the Option, all
rights of the Employee hereunder and under the Plan shall cease. Employee
understands and agrees that the Option granted to her is intended to comply
with the provisions of Rule 16b-3 under the Securities Exchange Act of 1934,
as amended, and is subject to the express terms thereof and the
interpretations of the Securities and Exchange Commission thereunder.
<PAGE>
b) The Option, subject to the following provisions of this Section 2 and to
Section 3, shall become exercisable with respect to 50% of the Shares subject
to such Option on January 13, 2001 and shall become exercisable with respect
to an additional 50% of the Shares on January 13, 2002; PROVIDED, HOWEVER,
that under the circumstances specified in Paragraph 9 of that certain
employment agreement between Employee and Trimark Pictures, Inc. dated as of
February 1, 1999 (the "Employment Agreement") the Option shall become
immediately exercisable to the full extent of the original grant upon a
Change of Control of the Company. For purposes of this Option Agreement and,
as applicable, the Employment Agreement, a "Change of Control" shall mean the
following:
(i) Approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to which
persons who were the stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own
more than fifty percent (50%) of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged or
consolidated corporation's then outstanding voting securities; or
(ii) The acquisition (other than from the Company) by any person,
entity or "group," within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934 ("Exchange Act"), of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
fifty-one percent (51%) or more of either the then outstanding shares or the
combined voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors, but excluding, for
this purpose, any such acquisition by the Company or any of its subsidiaries,
or any employee benefit plan (or related trust) of the Company or its
subsidiaries, or any corporation with respect to which, following such
acquisition, more than fifty percent (50%) of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by the
individuals and entities who were the beneficial owners of the voting
securities of the Company immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately prior to
such acquisition, of the then outstanding combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in
the election of directors.
c) The Option may be exercised only to purchase whole Shares, and in
no case may a fraction of a Share be purchased.
24
<PAGE>
The right of the Employee to purchase Option Shares may be exercised in
whole at any time or in part from time to time after and to the extent
that the Option becomes exercisable and prior to the earlier of the
Expiration Date and, as to any portion of the Option, the time at which
such portion is terminated pursuant to Section 3 or Section 4. No
partial exercise of the Option for less than ten (10) Option Shares is
permissible.
3. TERMINATION OF EMPLOYMENT. Subject to Section 4 hereof, the Option
(whether or not exercisable) shall terminate three (3) months after the
Employee ceases to be a full-time employee of the Company or any of its
subsidiaries; provided, however, that in the event of the Employee's
termination for Cause (as defined below), the Option shall terminate
immediately. Notwithstanding the foregoing provisions and Section 4, no
portion of the Option that is unexercisable as of the date Employee ceases to
be a full-time Employee of the Company or any of its subsidiaries shall
thereafter become exercisable. For purposes of the Option Agreement, "Cause"
means the engaging by the Employee in gross and willful misconduct involving
a substantial and material obligation under an employment agreement between
the Employee and the Company (or subsidiary) or, if no such employment
agreement is in effect, Cause means Employee's negligence or misconduct or
habitual failure or inability to perform his employment duties.
4. DEATH OR PERMANENT DISABILITY OF EMPLOYEE. If the Employee dies or
becomes permanently disabled while the Employee is employed by the Company or
one of its subsidiary corporations (as defined in Section 425(f) of the
Code), the Option shall expire one year after the date of such death or
permanent disability unless by its terms it expires sooner. During such
period after death, such Option may, to the extent that it remained
unexercised (but exercisable by the Employee according to the Option's terms)
on the date of such death, be exercised by the person or persons to whom the
rights under the Option shall pass by the Employee's will or by the laws of
descent and distribution. The term "permanent disability" shall have the
meaning set forth in the Company's disability policy then in effect, which
shall allow Employee to receive disability benefits thereunder. If there is
no disability policy in effect at the date of Employee's potential disability
and Employee is unable to render services for a period of six consecutive
months upon the determination of two physicians Board certified in the field
of disability (in the case of dispute as to permanent disability), Employee
shall be deemed to be permanently disabled.
25
<PAGE>
5. NON-TRANSFERABILITY OF OPTION. The Option and this Option Agreement
shall not be transferable otherwise than by will or by the laws of descent
and distribution; and the Option may be exercised, during the lifetime of the
Employee, only by the Employee, regardless of any community property interest
therein of the spouse of the Employee, or such spouse's successors in
interest. If the spouse of the Employee shall have acquired a community
property interest in the Option, the Employee, or the Employee's permitted
successors in interest, may exercise the Option on behalf of the spouse of
the Employee or such spouse's successors in interest. More particularly, but
without limiting the generality of the foregoing, the Option may not be
assigned, transferred (except as provided above), pledged or hypothecated in
any way, shall not be assignable by operation of law and shall not be subject
to execution, attachment or similar process. Any attempted assignment,
transfer, pledge, hypothecation or other disposition of the Option contrary
to the provisions hereof shall be null and void and without effect.
6. EXERCISE OF OPTION. The Option shall be exercised as specified in
Paragraph 6 of the Plan.
7. WITHHOLDING TAX. Upon the exercise of the Option, the Company shall
have the right to require the Employee, and such Employee agrees, to pay the
Company the amount of any taxes which the Company may be required to withhold
with respect thereto and the Company shall not be obligated to issue
certificates representing the Shares to be acquired through the exercise of
such Options if the Employee fails to provide the Company with adequate
assurance that the Employee will pay such amounts to the Company as herein
required. Such withholding tax may be paid in accordance with the provisions
of Paragraph 9 of the Plan.
8. HOLDING OF STOCK AFTER EXERCISE OF OPTION. By accepting the Option,
Employee represents and agrees, for the Employee and the Employee's permitted
transferees, that none of the Option Shares acquired upon exercise of the
Option will be acquired with a view to any sale, transfer or distribution of
said shares in violation of the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations promulgated thereunder, and
the person entitled to exercise the same shall furnish evidence satisfactory
to the Company (including a written and signed representation) to that effect
in form and substance satisfactory to the Company, including an
indemnification of the Company in the event of any violation of the
Securities Act by such person.
26
<PAGE>
a) Employee acknowledges that in the event of the exercise of this Option,
unless the Option Shares received upon such exercise shall have been
registered under an effective registration statement under the Securities
Act, such shares will constitute "restricted securities," as defined in Rule
144 promulgated under such Act, and agrees that such shares (a) may not be
sold except in compliance with the applicable provisions of such Act and the
rules and regulations promulgated thereunder, and (b) have been acquired for
investment purposes, and not with a view to distribution. The Company may
issue stop-transfer restrictions to its transfer agent with respect to the
Option Shares. The certificate or certificate representing the Option Shares
may in the discretion of the Committee bear the following legend:
"No sale, offer to sell or transfer of the shares represented by this
certificate shall be made unless a registration statement under the
Securities Act of 1933, as amended, with respect to such shares is then in
effect or an exemption from the registration requirements of such Act is then
in effect applicable to such shares."
9. NOTICES. Any notice required or permitted under this Option Agreement
shall be deemed given when delivered personally, or when deposited in a
United States Post Office as registered mail, postage prepaid, addressed, as
appropriate, either to the Employee at his or her address set forth below or
such other address as he or she may designate in writing to the Company, or
to Trimark Holdings, Inc., 2644 30th Street, Santa Monica, California
90405-3009, Attention: Secretary or such other address(es) as the Company may
designate in writing to the Employee.
10. FAILURE TO ENFORCE NOT A WAIVER. The failure of the Company to enforce
at any time any provision of this Option Agreement shall in no way be
construed to be a waiver of such provision or of any other provision hereof.
11. GOVERNING LAW. The Option Agreement shall be governed by and construed
according to the laws of the State of Delaware.
12. ADJUSTMENTS UPON CERTAIN CHANGES. In the event of a transaction
specified in Paragraph 15.1 of the Plan, the Board of Directors or the
Committee shall, in order to prevent the dilution or enlargement of rights
under this Option Agreement, make such adjustments in the number and type of
Option Shares subject to the Option and the Option Price as may be determined
to be appropriate and equitable. Adjustments made by the Board of Directors
or
27
<PAGE>
Committee shall be final, binding and conclusive. No fractional shares of
stock will be issued on any such adjustment.
13. TERMINATION. Upon the dissolution or liquidation of the Company, or
upon a reorganization, merger or consolidation of the Company with one or
more corporations as a result of which the Company is not the surviving
corporation, or upon the sale of substantially all the property or more than
eighty percent of the then outstanding stock of the Company to another
corporation, the Option granted hereunder shall terminate.
14. PROVISIONS OF THE PLAN. The Option provided for herein is granted
pursuant to the Plan, and said Option and this Option Agreement are in all
respects governed by the Plan and subject to all of the terms and provisions
thereof, whether such terms and provisions are incorporated in this Option
Agreement solely by reference or are expressly cited herein. A copy of the
Plan has been furnished to the Employee, and the Employee hereby acknowledges
receipt thereof.
IN WITNESS WHEREOF, the Company has executed this Option Agreement in
duplicate on the day and year first above written.
TRIMARK HOLDINGS, INC.
BY: ________________________
TITLE
The undersigned hereby accepts, and agrees to, all terms and provisions of
the foregoing Option Agreement.
/s/ Cami Winikoff
-----------------------------
CAMI WINIKOFF
-----------------------------
-----------------------------
-----------------------------
[ADDRESS]
28
<PAGE>
EXHIBIT 10.99
as of February 1, 1999
Cami Winikoff
c/o Trimark Pictures, Inc.
2644 30th Street
Santa Monica, CA 90405
Dear Cami:
This letter (the "Agreement") shall confirm the terms of your employment
with Trimark Pictures, Inc. ("Trimark").
1. TERM: January 13, 2000 through January 13, 2002 (the "Term").
2. TITLE: Chief Administrative Officer/Executive Vice President
3. BASE SALARY: One hundred seventy-five thousand dollars ($175,000.00) paid
in accordance with your current employment agreement.
4. SIGNING BONUS: Upon your signature of this Agreement, Trimark shall pay you
the sum of forty thousand dollars ($40,000.00).
5. STOCK OPTIONS: Trimark shall request that the Option Committee of Trimark
Holdings, Inc. ("Holdings") authorize and grant you the right (the "Option") to
purchase thirty-six thousand (36,000) shares of stock of Holdings (the "Stock
Options"), said right to vest over the Term (or earlier as set forth elsewhere
herein) at the exercise price of four dollars and fifty cents ($4.50) per share.
6. BENEFITS: You will be eligible for all Employee Benefits, Medical, Dental,
Vision, Life and 401(k) per Trimark's standard benefit program for employees at
your level. In addition, you shall be eligible to share in Trimark's Executive
Bonus Plan upon terms consistent with said plan and your position with Trimark.
7. SERVICES: You shall render exclusive services to Trimark during the Term
as customarily rendered by persons in your capacity.
8. RENEWAL: You agree that for the period commencing no earlier than one
hundred eighty (180) days prior to the conclusion of the Term you shall provide
Trimark with an exclusive sixty (60) day negotiating period regarding the
renewal of your employment with Trimark. You shall have the obligation to
provide Trimark with notice of said sixty (60) day period. If at the end of
such sixty (60) day period, you and Trimark are unable to reach an agreement
<PAGE>
EXHIBIT 10.99 (CONTINUED)
regarding the renewal of your employment with Trimark, your employment shall
continue on a month to month basis at the salary set forth herein unless
terminated by you or Trimark upon 30 days prior written notice.
9. MITIGATION; CHANGE OF CONTROL:
1. If you are terminated by Trimark for any reason other than your
breach, you shall receive as severance the greater of:
1. A Severance Package consisting of:
(1) an immediate vesting of one hundred percent of the un-vested
Stock Options; plus
(2) fifty percent (one hundred percent (100%) in the event that
you are terminated as a result of a change of control of Trimark due to a sale
or merger of Trimark) of the remaining salary due you pursuant to this
Agreement.
OR
2. the difference between:
(1) Five hundred thousand dollars ($500,000.00)
LESS
(2) The aggregate of:
(1) the value of the Stock Options; plus
(2) the value of all other Trimark stock options which you
have as of the date of this Agreement; plus
(3) fifty percent (one hundred percent (100%) in the event
that you are terminated as a result of a change of control of Trimark due to a
sale or merger of Trimark) of the remaining salary due you pursuant to this
Agreement.
Trimark's payment to you of said severance shall relieve each party of any
further obligation to the other. In the event of a change of control of Trimark
by reason of a purchase or merger of Trimark and Trimark does not terminate your
services as set forth herein, notwithstanding anything herein to the contrary,
commencing upon the date of such change of control your base salary shall be
increased to two hundred fifty thousand dollars ($250,000.00) per year and one
hundred percent (100%) of the Stock Options shall immediately vest.
2. In the event that control of Trimark changes as aforesaid and Mark
Amin is no longer rendering services in a senior management capacity, you shall
have the right, within thirty (30) days of such change of control, to provide
Trimark with notice of your election to terminate your employment with Trimark.
In the event that you provide such notice, you shall continue to render services
for the ninety (90) day period following such notice and, thereafter,
notwithstanding anything herein to the contrary,
30
<PAGE>
EXHIBIT 10.99 (CONTINUED)
neither party shall have any further obligation to the other provided,
however, that one hundred percent (100%) of the Stock Options shall
immediately vest. Without limiting the generality of the foregoing, in the
event that you so terminate your employment, notwithstanding anything herein
to the contrary, you shall not receive any severance payment from Trimark
(except as required by law) provided, however, that in the event that you are
terminated by Trimark after you have provided such notice, you shall receive
a severance payment equal to ninety (90) days salary.
10. CONFIDENTIAL INFORMATION; RESULTS AND PROCEEDS: You hereby expressly
agree that while employed by Trimark Pictures you will not disclose any
confidential matters of Trimark prior to, during, or after the conclusion of
your employment including the specifics of this contract. In addition, you
agree that Trimark shall own all rights of every kind and character
throughout the universe, in perpetuity to any material and/or ideas suggested
or submitted by you during the Term in connection with any of Trimark's then
existing business interests or suggested or submitted to you by a third party
during the Term. You agree also that Trimark shall own all other results and
proceeds of your services during your employment.
11. MISCELLANEOUS: This agreement shall be binding and supersedes any and
all other agreements, either oral or in writing. Any modification of this
agreement will be effective only if signed by Trimark and you.
Sincerely, AGREED TO AND ACCEPTED BY:
Mark Amin /s/ Cami Winikoff
-----------------
President Cami Winikoff Date
31
<PAGE>
EXHIBIT 10.100
TRIMARK HOLDINGS, INC. 1999 DIRECTORS' OPTION PLAN
1. PURPOSE.
The purposes of the Plan are to enable the Company to attract and retain the
services of non-employee members of the Board and to provide them with increased
motivation and incentive to exert their best efforts on behalf of the Company by
enlarging their personal stake in the Company.
2. DEFINITIONS.
A. As used in the Plan, the following definitions apply to the terms
indicated below:
"Board" means the Board of Directors of the Company or any committee
thereof authorized to exercise the powers of the Board of Directors.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Company" means Trimark Holdings, Inc., a Delaware corporation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Fair Market Value" of a Share on a given day means, if Shares are listed
on an established stock exchange or exchanges or quoted on The NASDAQ Small Cap
Market, the highest closing or last sales price of a Share as reported on such
stock exchange or exchanges or system; or if not so reported, the average of the
bid and asked prices, as reported on the NASDAQ. If the price of a Share shall
not be so quoted, the Fair Market Value shall be determined by taking into
account all relevant facts and circumstances.
"Option" means a non-qualified option to purchase Shares under the terms
and conditions of the Plan as evidenced by an option certificate in such form
not inconsistent with the Plan.
"Participant" means a director, eligible to participate in the Plan under
Section 4 hereof, to whom an Option is granted under the Plan.
"Plan" means the Trimark Holdings, Inc. 1999 Directors' Option Plan,
including any amendments to the Plan.
"Shares" means shares of the Company's Common Stock, par value $0.001 per
share, now or hereafter owned by the Company as treasury stock or authorized but
unissued shares of the Company's Common Stock, subject to adjustment as provided
in the Plan.
As used herein, the masculine includes the feminine, the plural includes
the singular, and the singular includes the plural.
32
<PAGE>
EXHIBIT 10.100 (CONTINUED)
3. PLAN ADOPTION AND TERM.
A. The Plan shall become effective following its adoption by the Board,
but no Option granted under the Plan shall be exercisable unless and until the
Plan has been approved by the shareholders of the Company.
B. Subject to the provisions hereinafter contained relating to amendment
or discontinuance, the Plan shall continue in effect through and including
January 8, 2008. No Option may be granted hereunder after such date.
4. ELIGIBILITY; AUTOMATIC GRANT.
Each director of the Company, who is not an employee of the Company or any of
its subsidiaries, in office as of January 8, 1999 (the "Effective Date") shall
be eligible to participate in the Plan and shall automatically receive, on the
Effective Date, a non-qualified Option to purchase 2,000 Shares. (Furthermore,
on the Effective Date, the directors of the Company identified in Schedule A,
shall also receive on a one-time basis only an additional non-qualified Option
to purchase Shares as set forth in Schedule A). In addition, each person who is
a director of the Company on an annual anniversary date of the Effective Date
(including and terminating with the anniversary date in the year 2008) and who
is not an employee of the Company or any of its subsidiaries, shall be eligible
to participate in the Plan and shall automatically receive, on such anniversary
date, a non-qualified Option to purchase 2,000 Shares. The price per share at
which Shares may be purchased pursuant to any Option granted under the Plan
shall be the Fair Market Value of a Share on the date the Option is granted (the
"Date of Grant"). All Options granted under the Plan shall be evidenced by an
option certificate in such form not inconsistent with the Plan.
5. STOCK SUBJECT TO THE PLAN.
Subject to adjustment as provided in Section 10 hereof, Options may be issued
pursuant to the Plan with respect to a number of Shares that, in the aggregate,
does not exceed 106,000 Shares. If, prior to the termination of the Plan, an
Option shall expire or terminate for any reason without having been exercised in
full, the unpurchased Shares subject thereto shall again be available for the
purposes of the Plan.
6. DURATION OF OPTIONS.
No Option granted hereunder shall be exercisable after the expiration of
ten years from the Date of Grant. All Options shall be subject to earlier
termination as provided elsewhere in the Plan.
7. CONDITIONS RELATING TO EXERCISE OF OPTIONS.
33
<PAGE>
EXHIBIT 10.100 (CONTINUED)
A. Subject to Section 3A hereof, options granted to Participants shall
become exercisable in full on the Date of Grant. Once exercisable, an 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 an Option shall be for a number of
Shares having a purchase price of less than $1,000 or for a fractional number of
Shares.
B. No Option shall be transferable by a Participant otherwise than by
will or the laws of descent and distribution and Options shall be exercisable
during the lifetime of a Participant only by such Participant.
C. An Option shall be exercised by the delivery to the Company of a
written notice signed by the Participant, 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 principal office, to
the attention of its Secretary, no less than three business days in advance of
the date of the proposed exercise and shall be accompanied by the applicable
option certificate evidencing the Option. A Participant may withdraw such
notice at any time prior to the close of business on the proposed date of
exercise, in which case the option certificate evidencing the Option shall be
returned to him or her.
D. Payment for Shares purchased upon exercise of an 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, in Shares owned by the Participant and
valued at their Fair Market Value on the date of exercise, or partly in Shares
with the balance in cash or by certified check or bank cashier's check. Any
payment in Shares shall be effected by their delivery to the Secretary of the
Company, endorsed in blank or accompanied by stock powers executed in blank.
E. Certificates for Shares purchased upon exercise of Options shall be
issued and delivered as soon as practicable following the date the Option is
exercised. Certificates for Shares purchased upon exercise of Options shall be
issued in the name of the Participant.
F. Notwithstanding any other provision in the Plan, no Option 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 hereunder, 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
34
<PAGE>
EXHIBIT 10.100 (CONTINUED)
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.
G. Any person exercising an Option or transferring or receiving Shares
shall comply with all regulations and requirements of any governmental authority
having jurisdiction over the issuance, transfer, or sale of capital stock of the
Company, and as a condition to receiving any Shares, shall execute all such
instruments as the Company in its sole discretion may deem necessary or
advisable.
H. In the event that a Participant shall cease to be a director by reason
of such Participant's disability within the meaning of Section 22(e)(3) of the
Code, any outstanding Option held by such Participant shall remain so
exercisable but only for a period of one year after such date, at the end of
which time it shall terminate (unless such Option expires earlier by its terms).
I. In the event that a Participant shall cease to be a director by reason
of death (including death during an approved leave of absence or following a
Participant's disability), any Option then held by him or her which shall not
have lapsed or terminated prior to his or her death shall be or immediately
become fully exercisable by the executors, administrators, legatees, or
distributees of his or her estate, as may be appropriate, as to the total number
of Shares subject thereto and shall remain so exercisable but only for a period
of one year after death, at the end of which time it shall terminate (unless
such Option expires earlier by its terms).
J. In the event that a Participant shall cease to be a director otherwise
than as described in paragraphs (H) and (I), any outstanding Option held by such
Participant shall terminate.
8. NO ELECTION RIGHTS.
Nothing contained in the Plan or any Option shall confer upon any
Participant any right with respect to the continuation of his or her tenure as a
director of the Company or interfere in any way with the right of the Company's
shareholders or the Board, at any time, to terminate such tenure or to fail to
elect such Participant to the Board.
9. RIGHTS OF A SHAREOWNER.
No person shall have any rights with respect to any Shares covered by or
relating to any grant hereunder of an Option until the date of issuance of a
certificate to him or her evidencing such Shares. Except as otherwise expressly
provided in the Plan, no adjustment to any Option shall be made for dividends or
other rights for which the record date occurs prior to the date such certificate
is issued.
10. ADJUSTMENT UPON CHANGES IN CAPITAL STOCK.
35
<PAGE>
EXHIBIT 10.100 (CONTINUED)
A. 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 authorized under the Plan,
the number of Shares then subject to or relating to unexercised Options granted
hereunder and the exercise price per Share will be adjusted proportionately. A
stock dividend shall be treated as a subdivision of the whole number of Shares
outstanding immediately prior to such dividend into a number of Shares equal to
such whole number of Shares so outstanding plus the number of Shares issued as a
stock dividend.
B. 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 of this Section 10) (a "Reorganization"), appropriate adjustment may
be made in the number and class of shares authorized to be issued under the Plan
and the number and class of shares subject to or relating to Options awarded
under the Plan and outstanding at the time of such Reorganization.
C. Each Participant will be notified of any adjustment made pursuant to
this Section 10 and any such adjustment, or the failure to make such adjustment,
shall be binding on the Participant.
D. Except as expressly set forth herein, the number and kind of Shares
subject to Options awarded under the Plan, and the exercise prices of any such
Options, shall not be affected by any transaction (including, without
limitation, any merger, recapitalization, stock split, stock dividend, issuance
of stock or similar transaction) affecting the capital stock of the Company and
no Participant shall be entitled to any additional Options on account thereof.
11. WITHHOLDING TAXES.
A. Whenever Shares are to be issued upon the exercise of an Option, the
Company shall have the right to require the Participant to remit to the Company
in cash an amount sufficient to satisfy federal, state and local withholding tax
requirements, if any, prior to the delivery of any certificate or certificates
for such Shares.
B. Notwithstanding Paragraph A of this Section 11, at the election of a
Participant when Shares are to be issued upon the exercise of an Option, the
Participant may tender to the Company a number of Shares, or the Company shall
withhold a number of such Shares, the Fair Market Value of which is sufficient
to satisfy the federal, state and local tax requirements, if any, attributable
to such exercise or occurrence.
AMENDMENT OF THE PLAN.
C. The Board may at any time and from time to time suspend, discontinue,
modify or amend the Plan in any respect whatsoever
36
<PAGE>
EXHIBIT 10.100 (CONTINUED)
except that the Board may not suspend, discontinue, modify or amend the Plan
so as to adversely affect the rights of a Participant with respect to any
grants that have heretofore been made to such Participant without such
Participant's approval.
D. No amendment to or modification of the Plan shall be made by the Board
without shareholder approval where the absence of such approval would cause the
Plan to fail to comply with any requirement of applicable law or regulation,
including the requirements of The NASDAQ Stock Market, if applicable.
12. MISCELLANEOUS.
A. It is expressly understood that the Plan grants powers to the Board
but does not require their exercise; nor shall any rights be deemed to accrue
under the Plan except as Options may be granted hereunder.
B. All expenses of the Plan, including the cost of maintaining records,
shall be borne by the Company.
C. SCHEDULE A
<TABLE>
<CAPTION>
ONE TIME GRANT OF
NON-QUALIFIED
OPTION TO PURCHASE
THE FOLLOWING
NAME OF DIRECTOR NUMBER OF SHARES
---------------- ------------------
<S> <C>
1. Gordon Stulberg 10,000
2. Matthew H. Saver 8,000
3. Tofigh Shirazi 8,000
</TABLE>
37
<PAGE>
EXHIBIT 10.101
TRIMARK HOLDINGS, INC.
Non-qualified Stock Option Granted Under
The Trimark Holdings, Inc. 1999 Directors' Option Plan
Certificate No. 1
Option granted on January 8, 1999 (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, 12,000 shares (the "Shares") of the Company's Common Stock, par value
$0.001 per share (the "Stock"), at the option price of $3.00 per share. This
Option is granted pursuant to the Company's 1999 Directors' 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 8, 2009, 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 the Plan has been approved by the
shareholders of the Company. If the shareholders reject approval of the Plan,
the Option shall be deemed null and void and of no further force or effect.
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 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.
<PAGE>
EXHIBIT 10.101 (CONTINUED)
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.
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 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
(b) 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) above, the Option shall automatically terminate.
SECTION 6. RECLASSIFICATION, CONSOLIDATION OR MERGER.
39
<PAGE>
EXHIBIT 10.101 (CONTINUED)
(a) 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.
(b) 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 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 ________________________________
Name: Jeff Gonzalez
Title: Chief Financial Officer
40
<PAGE>
EXHIBIT 10.102
TRIMARK HOLDINGS, INC.
Non-qualified Stock Option Granted Under
The Trimark Holdings, Inc. 1999 Directors' Option Plan
Certificate No. 2
Option granted on January 8, 1999 (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, 10,000 shares (the "Shares") of the Company's Common Stock, par value
$0.001 per share (the "Stock"), at the option price of $3.00 per share. This
Option is granted pursuant to the Company's 1999 Directors' 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 8, 2009, 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 the Plan has been approved by the
shareholders of the Company. If the shareholders reject approval of the Plan,
the Option shall be deemed null and void and of no further force or effect.
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 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.
<PAGE>
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.
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 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
(b) 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,
42
<PAGE>
otherwise than as described in (a) above, the Option shall automatically
terminate.
SECTION 6. RECLASSIFICATION, CONSOLIDATION OR MERGER.
(a) 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.
(b) 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 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
--------------------------------
Name: Jeff Gonzalez
Title: Chief Financial Officer
43
<PAGE>
EXHIBIT 10.103
TRIMARK HOLDINGS, INC.
Non-qualified Stock Option Granted Under
The Trimark Holdings, Inc. 1999 Directors' Option Plan
Certificate No. 3
Option granted on January 8, 1999 (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, 10,000 shares (the "Shares") of the Company's Common Stock, par value
$0.001 per share (the "Stock"), at the option price of $3.00 per share. This
Option is granted pursuant to the Company's 1999 Directors' 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 8, 2009, 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 the Plan has been approved by
the shareholders of the Company. If the shareholders reject approval of the
Plan, the Option shall be deemed null and void and of no further force or
effect. 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 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.
<PAGE>
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.
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 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
(b) 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) above, the Option shall automatically terminate.
46
<PAGE>
SECTION 6. RECLASSIFICATION, CONSOLIDATION OR MERGER.
(a) 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.
(b) 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 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
--------------------------------
Name: Jeff Gonzalez
Title: Chief Financial Officer
47
<PAGE>
EXHIBIT 10.104
TRIMARK HOLDINGS, INC.
Non-qualified Stock Option Granted Under
The Trimark Holdings, Inc. 1999 Directors' Option Plan
Certificate No. 4
Option granted on January 8, 1999 (the "Date of Grant") by Trimark
Holdings, Inc., a Delaware corporation (the "Company"), to Roger Burlage (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 $3.00 per share. This
Option is granted pursuant to the Company's 1999 Directors' 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 8, 2009, 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 the Plan has been approved by
the shareholders of the Company. If the shareholders reject approval of the
Plan, the Option shall be deemed null and void and of no further force or
effect. 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 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.
<PAGE>
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.
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 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
(b) 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) above, the Option shall automatically terminate.
49
<PAGE>
SECTION 6. RECLASSIFICATION, CONSOLIDATION OR MERGER.
(a) 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.
(b) 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 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 ________________________________
Name: Jeff Gonzalez
Title: Chief Financial Officer
50
<PAGE>
EXHIBIT 10.105 (CONTINUED)
EXHIBIT 10.105
CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and are filed
separately with the Commission.
AGREEMENT
This Agreement (the "Agreement") is entered into by and between
broadcast.com inc., a Delaware corporation ("broadcast.com"), and Trimark
Pictures, Inc., a California corporation ("Pictures"), Trimark Holdings,
Inc., a Delaware corporation ("Holdings"), Trimark Television, Inc., a
Delaware corporation ("Television"), and Trimark Music ("Music")
(collectively, Pictures, Holdings, Television and Music will be referred to
as "Trimark" or "Parties") as of the date indicated on the signature pages.
The intent of the Agreement is for Trimark to provide certain video
product to broadcast.com, and for broadcast.com to act as the carrier of such
product and make it available to Internet users during the term hereof.
Broadcast.com shall provide all digitizing, storing and transmission services
as needed to enable delivery on the Internet (subject to the restrictions in
this Agreement), and Trimark will provide acquisition, licensing and
programming by utilizing its currently owned and/or controlled video product
as well as video product over which it subsequently gains ownership or
control.
In consideration of the mutual covenants and agreements of the Parties
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
1. DEFINITIONS:
a. "ACCESS FEE" is a fee paid by a User in order to access a
transmission, display or performance of a Video on the System.
b. "ACCESS PAGE" is a Web page on the broadcast.com Web site that is
designed by broadcast.com in accordance with the "look and feel" of
the broadcast.com site, subject to Trimark's reasonable approval and
through which the Videos will be accessible, and through which
consumers will be able to access, view, and/or order copies of the
Videos and Video-related Merchandise.
c. "BROADCAST INVENTORY" shall mean internal program breaks within the
transmission of the Videos to broadcast.com Users, similar in
character to traditional broadcast
<PAGE>
EXHIBIT 10.105 (CONTINUED)
television commercial breaks or theatrical film previews. The
term shall not include framing, messages, or any other material
visible or audible (at viewer's election) during the entire
length of the Video broadcast on any broadcast.com Web site or to
any User.
d. "BROADCAST.COM LICENSEE" is an on-line distributor or retailer of hard
copies of the Videos in videocassettes, DVDs, videodisks, or similar
format, as designated by broadcast.com.
e. "CONFIDENTIAL INFORMATION" is any information of a Disclosing Party
that the Receiving Party knows or reasonably should know to be
confidential or proprietary information of the Disclosing Party,
whether of a technical, business or other nature.
f. "DISCLOSING PARTY" is a party who discloses Confidential Information.
g. "MARKS" are a party's logos, trade names, trademarks and service
marks, collectively.
h. "MERCHANDISE" shall include selected merchandise, other than video
cassettes, video discs, DVD, and similar hard copies of the Videos,
that relates to the Videos to be offered for sale by Trimark through
an Order Now Button on the Access Page.
i. "ORDER NOW BUTTON" is a button or text link, directly to the Trimark
Web site, Web site designated by Trimark, or the Web site of a
broadcast.com Licensee, that appears in close proximity to a
description or other reference to the Videos and/or Merchandise and
which contains the words "Order Now," "Buy It" or words of similar
import, and/or permits users to purchase, or facilitates the purchase
of, the applicable Videos and/or Merchandise by clicking on such
button or link.
j. "RECEIVING PARTY" is the party who receives Confidential Information
from a Disclosing Party.
k. "REGISTRATION DATABASE" is a database of viewers who register to
access the video channel on the broadcast.com Web site.
1. "SYSTEM" is any wired network (including, without limitation, the
Internet, the Internet II, or any other online services network which
utilizes computer terminals, terminal servers, modems, cable modems,
HFC, coaxial cable, xDSL, routers, splitters, switches, multicasting
technology, power lines, or other high speed data connections and any
and all other wired networks) that distributes audio or video using
digital algorithms,
<PAGE>
EXHIBIT 10.105 (CONTINUED)
one and/or two-way digital services, or any wireless network that
provides access to such wired network (except AM/FM radio
broadcast stations and television broadcast stations, direct
broadcast satellite, pay cable and basic cable).
m. "USER" is a broadcast.com Access Page registered user.
n. "VIDEOS" are all motion pictures and other audiovisual works embodied
in videotapes, DVD and/or other video masters, including related
materials such as EPK, synopses, reviews and biographies of such
Videos, with respect to which Trimark holds or acquires Internet
broadcast/distribution rights and sales distribution, all of which are
listed on the attached EXHIBIT A. The Videos provided by Trimark may
be motion pictures owned by Trimark or licensed from third parties.
Videos will not include any video reasonably rejected by broadcast.com
as inconsistent with broadcast.com's general censorship standards
(e.g. pornographic material); provided that broadcast.com will not
reject any materials rated by the MPAA as "R" or less restrictive.
2. TRIMARK COVENANTS:
a. RIGHTS. Trimark shall own all rights to masters, source material, and
promotional material related to the Videos supplied by Trimark,
whether stored by broadcast.com or any other entity. Notwithstanding
the foregoing, Trimark hereby grants to broadcast.com a fully paid up
right and license to encode, store, publicly distribute, perform,
display, copy, transmit, broadcast, and market the Videos on the
System as necessary for the Internet broadcast of the Videos pursuant
to this Agreement for the term of this Agreement. Such rights will be
subject to the territory and Internet transmission dates, and third
party restrictions specified on the most recently delivered EXHIBIT A.
In addition, broadcast.com has the right to maintain a copy of the
Videos to be included and preserved in broadcast.com's archives at
broadcast.com's sole discretion and expense during the term of this
Agreement. After the expiration of this Agreement broadcast.com will
either provide to Trimark any physical embodiment or electronic copy
of any stored images encoded by broadcast.com under this Agreement for
a mutually agreed upon price, or destroy such archives at Trimark's
direction.
b. WEB SITE PROMOTION. Trimark hereby agrees to place the broadcast.com
Marks on the Trimark Web site in accordance with broadcast.com's
trademark usage guidelines, to provide a prominent hyperlink from the
Trimark Web site
<PAGE>
EXHIBIT 10.105 (CONTINUED)
to the Access Page(s), and to promote the transmission,
distribution, performance and display of the Videos by
broadcast.com on the Trimark Web site, in press materials and
publications, and in connection with the advertising and
packaging of the Videos, subject to Paragraph 4b. In addition,
Trimark will provide broadcast.com with promotional placement
time on or embodied within VHS and DVD copies of Trimark Videos
that will be broadcast by broadcast.com hereunder, and will use
good faith efforts to include broadcast.com's logo and URL in
connection with all promotions of the Videos that will be
broadcast hereunder, including movie posters.
c. FORMAT. Trimark agrees to provide broadcast.com with the Videos to be
encoded and transmitted on the System as provided herein, on or
embodied within 1/2 inch, VHS, DVD, or D2 or other mutually acceptable
format.
d. MARKS. Subject to third party contractual restrictions provided by
Trimark, Trimark hereby grants to broadcast.com the right to use
Trimark's Marks, and the marks, names, and likenesses of all third
parties associated with the Videos and merchandise, in print, audio,
on-line and other advertising for the promotion of the Videos, the
relationship of the Parties, and in other means in connection with
this Agreement, all consistent with broadcast.com's covenants set
forth herein. Unless stated otherwise in writing, all artwork
provided by Trimark to broadcast.com shall be deemed acceptable for
broadcast.com's promotional purposes (e.g. video boxes, one sheets).
e. EXHIBIT A AND REPLACEMENT EXHIBITS. For each Video identified on
EXHIBIT A, Trimark will include a description of the nature of the
rights held by Trimark with respect to such Video, including sales
distribution rights and/or Internet transmission rights, and all
applicable geographic and transmission limitations with respect to
which Trimark is contractually bound. Trimark agrees that it will
provide broadcast.com a replacement EXHIBIT A to update the Videos and
restrictions listed in the EXHIBIT A as such information may change
from time to time. All Videos supplied by Trimark shall be made
available by Trimark to broadcast.com for unlimited broadcast, subject
only to the restrictions set forth on EXHIBIT A.
f. MERCHANDISE SALES. Broadcast.com shall place Order Now Buttons on the
broadcast.com Web site at such locations as determined by
broadcast.com which shall link directly to the Trimark Web site to
enable Users to purchase Merchandise. As between broadcast.com and
Trimark, Trimark shall be solely responsible for processing all
<PAGE>
EXHIBIT 10.105 (CONTINUED)
orders for Merchandise through every aspect of each transaction,
including receiving, filling, shipping and handling, collecting
payment, tracking and transaction security ("Transaction
Responsibilities"). All orders for Merchandise shall be placed by
customers directly with Trimark. Trimark will pay broadcast.com
[*] derived from the sale of Merchandise to Users that accessed
Trimark's Web site through an Order Now Button.
g. VIDEO SALES. Broadcast.com shall place Order Now Buttons on the
broadcast.com Web site at such locations as determined by
broadcast.com which shall link directly to the Trimark Web site to
enable Users to purchase certain Videos. Trimark will be solely
responsible for processing all orders for the purchase of a hard copy
of the Videos hereunder and for all related Transaction
Responsibilities. Trimark will pay broadcast.com [*] as a result of
sales of Videos to Users that accessed Trimark's Web site through an
Order Now Button.
h. SALES TRACKING. Under the direction of broadcast.com, Trimark will
allow for the placement of a mechanism to track Users from the
broadcast.com site who purchase Videos and Merchandise from Trimark.
Trimark shall provide to broadcast.com on a quarterly basis an
accounting of all such revenue and costs, and shall pay all sums due
and owing to broadcast.com within thirty (30) days of the end of each
quarter. Upon written approval of Trimark, broadcast.com may make the
Videos available for sale on videocassette, videodisc, DVD, or similar
hard-copy media through a broadcast.com Licensee. In such case, the
Order Now Button on the Access Page would then link to such
broadcast.com Licensee's Web page, and the broadcast.com Licensee
shall be solely responsible for the Transaction Responsibilities. In
such event, Trimark shall have no further Transaction Responsibilities
with respect to the transactions of the broadcast.com Licensee.
3. BROADCAST.COM COVENANTS:
a. INFRASTRUCTURE. Broadcast.com will provide the communications
infrastructure supporting the access, transmission, display and
performance of Videos on the System to Users. Additionally,
broadcast.com will
- ---------------
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EXHIBIT 10.105 (CONTINUED)
maintain at its cost, any technical equipment necessary to
distribute the Videos over the System, along with providing the
audio and video streams licensing software for the System, which
audio/video streaming software, as may be upgraded from time to
time, shall at all times be and remain the exclusive property of
broadcast.com.
b. ENCODING. Broadcast.com will encode the Videos provided by Trimark
and shall make such Videos available on the broadcast.com video
channel on the broadcast.com Web site for on-demand access and viewing
by Users.
c. EMAIL AND TRANSMISSION PROBLEMS. Broadcast.com agrees that it will
provide Trimark access to emails from Users relating to the Videos.
Broadcast.com will also provide Trimark advance written notice of any
scheduled system maintenance that would preclude Users from accessing
the Videos.
d. REPORTING. Broadcast.com will provide Trimark access to a password
protected Web page that will include the statistics relating to
viewership of the Videos. Such information will be updated on a
regular basis, but not less than once per week.
e. PAY-PER-VIEW. The parties may mutually agree to make the Videos
available on a pay-per-view basis, in which case broadcast.com shall
require Users to pay an Access Fee in order to access the Videos. The
parties will mutually agree upon the prices to be charged for Access
Fees for each Video. [*]
f. DOWNLOADING PREVENTION. Broadcast.com shall select the option on the
relevant streaming software intended to prevent downloading and
storage by the viewer. Broadcast.com agrees to notify Trimark of any
unauthorized downloading of the Videos of which it becomes aware.
g. ACCESS PAGES. Broadcast.com will host the Access Page(s) on the
broadcast.com domain. The Videos will be accessible for viewing from
such locations on the System designated by broadcast.com, including,
but not limited to, the Access Page. At Trimark's request,
broadcast.com shall prepare separate Access Pages for each Video.
Broadcast.com will allow Trimark to link directly to the Access Pages.
However, Trimark will not allow any third
- ---------------
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EXHIBIT 10.105 (CONTINUED)
party to link directly to the access page. [*]
h. BANNER PROMOTIONS. Broadcast.com shall (i) actively promote the
Videos within the broadcast.com Web site, (ii) promote any premiered
Trimark Videos on the broadcast.com video homepage, (iii) provide
Trimark with a monthly listing within the broadcast.com general
newsletter, (iv) designate Trimark as a preferred content provider,
(v) use its reasonable efforts to enable Trimark to work with
broadcast.com partners, (vi) [*], (vii) provide a hyperlink to
Trimark's Web site from the Access Page. Broadcast.com will also
promote the video channel in a manner consistent with the promotions
of its other channels, and (viii) [*].
i. BROADCAST INVENTORY. Trimark and broadcast.com will have the right to
sell Broadcast Inventory of the Videos [*]. [*] Trimark
agrees that it will not select placement of Broadcast Inventory sold
by Trimark over that sold by broadcast.com other than in cases in
which both parties have sold the same Broadcast Inventory at the same
time. Trimark will be solely responsible for inserting the Broadcast
Inventory advertising into the Videos prior to delivery to
broadcast.com. Trimark acknowledges and agrees that the Broadcast
Inventory shall comprise no more than ten (10) minutes per hour of any
Video. Notwithstanding any other provision of this Agreement,
broadcast.com shall have the right, in its sole discretion, to refuse
to display any portion of the Broadcast Inventory if it would conflict
with the exclusive advertising rights granted by broadcast.com to any
third party, if it would violate the rights of any person, if it would
violate the laws of any jurisdiction, or would be likely to cause
commercial or reputational harm to broadcast.com as determined by
broadcast.com in its sole discretion; provided that broadcast.com
notify Trimark in advance of its decision not to display such
Broadcast Inventory.
j. ADVERTISING. Notwithstanding any other provision of this Agreement,
Trimark acknowledges that broadcast.com shall retain the exclusive
right to sell all advertising, and all revenue derived therefrom,
including sponsorships of the Videos and Access Pages, audio/video
gateway advertising, and all other advertising that appears on the
Access Pages, and shall accept or refuse any such
- ---------------
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EXHIBIT 10.105 (CONTINUED)
advertising in its sole discretion. However, broadcast.com will
not run advertisements on the Access Pages for any video
specified by Trimark for alcohol, tobacco, gambling, pornography,
or political endorsements. Broadcast.com further agrees that it
will remove any other advertising from the Access Pages with
respect to which Trimark provides written notice stating its
reasonable objections to such advertising.
k. REGISTRATION DATABASE. Broadcast.com intends to maintain a
Registration Database. [*] Trimark acknowledges that
broadcast.com does not make any representations or warranties
regarding the reliability or accuracy of the Registration Database for
these purposes. Trimark shall treat the Registration Database as
broadcast.com's Confidential Information, and Trimark shall not have
the right to sell or license the contents of the Registration Database
or any portion thereof to any third parties, or to make any other use
thereof, without broadcast.com's express, written consent.
l. NO REPRESENTATIONS. Trimark acknowledges that broadcast.com does not
make any representations or warranties regarding the ability or
exposure of the System, amount of revenue to be realized from the
System or associated advertising, and that there are no guarantees
regarding same.
m. WEB SITE PROMOTION. Broadcast.com hereby agrees to place the Trimark
Marks on the broadcast.com Web site in accordance with Trimark's
trademark usage guidelines, to provide a prominent hyperlink from the
broadcast.com web site to the Access Page(s), and to promote the
transmission, distribution, performance and display of the Videos by
broadcast.com on the broadcast.com web site, in press materials and
publications, and in connection with the advertising of the Videos,
subject to Paragraph 4(b).
n. NO MODIFICATIONS. Broadcast.com agrees that it will not edit or
modify the Videos except as otherwise expressly provided herein.
o. MARKS. Subject to third party contractual restrictions provided by
broadcast.com, broadcast.com hereby grants to Trimark the right to use
broadcast.com's Marks in print, audio, on-line and other advertising
for the promotion of the Videos, the relationship of the Parties, and
in other means in connection with this Agreement, all consistent
- ---------------
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EXHIBIT 10.105 (CONTINUED)
with Trimark's covenants set forth herein.
4. CONFIDENTIALITY:
a. Each party shall maintain in strict confidence, and not disclose or
distribute to any third person any Confidential Information of the
other party. Confidential Information does not include any
information that: (a) entered the public domain through no fault of
the Receiving Party; (b) is rightfully received by the Receiving Party
from a third party legally entitled to make such disclosure; (c) is
already known to the Receiving Party prior to Disclosure by the
Disclosing Party; (d) is required to be disclosed pursuant to
subpoena, applicable law, or rules or regulations; (e) is
independently developed by the Receiving Party without reference to
any confidential or proprietary information of the Disclosing Party;
or (f) the existence of this Agreement so long as the terms of the
Agreement are not disclosed.
b. Neither party shall issue a press release or make a public
announcement or any disclosure to any third party related to the
transactions contemplated by this Agreement without the prior approval
of such release by the other party.
c. This Agreement shall be deemed Confidential Information. The parties
agree that prior to the disclosure of this agreement or any of its
terms pursuant to the requirements of any applicable law or otherwise,
that they shall cooperate in good faith to seek confidential treatment
of the terms hereof and otherwise take such other reasonable steps to
safeguard the confidential nature of this Agreement.
5. SALE AND ISSUANCE OF STOCK:
a. SALE AND ISSUANCE OF BROADCAST.COM STOCK. Subject to the terms and
conditions set forth in this Agreement, on the Closing Date (as
defined in Paragraph 10(k)) broadcast.com shall sell and issue to
Trimark, and Trimark shall purchase from broadcast.com 45,858 shares
of broadcast.com's common stock, par value $0.01 per share (the
"Broadcast.com Stock"), in exchange for the number and kind of shares
described in Section 5b below and the license and other rights granted
to broadcast.com under this Agreement. On the Closing Date,
broadcast.com will acknowledge receipt of the consideration provided
in Section 5(b) below representing the purchase price for the
Broadcast.com Stock and Trimark will acknowledge receipt of
broadcast.com's stock certificate representing
<PAGE>
EXHIBIT 10.105 (CONTINUED)
the Broadcast.com Stock.
b. SALE AND ISSUANCE OF HOLDINGS STOCK. Subject to the terms and
conditions set forth in this Agreement on the Closing Date, Holdings
shall sell and issue to broadcast.com, and broadcast.com shall
purchase from Holdings 412,363 shares of Holding's common stock, par
value $0.01 per share (the "Trimark Stock"), in exchange for the
number and kind of shares described in Section 5a above. On the
Closing Date, Trimark will acknowledge receipt of the consideration
provided in Section 5a above representing payment in full for the
Trimark Stock and the license and other rights granted to
broadcast.com under this Agreement and broadcast.com will acknowledge
receipt of Holdings stock certificate representing the Trimark Stock.
c. REPRESENTATIONS AND WARRANTIES OF ISSUER.
(a) REPRESENTATIONS AND WARRANTIES OF BROADCAST.COM AS ISSUER.
Broadcast.com represents and warrants to Trimark in connection
with the sale and issuance of the Broadcast.com Stock as follows:
i. ORGANIZATION AND STANDING. Broadcast.com is a corporation
duly organized, validly existing under and by virtue of
the laws of the State of Delaware and is in good standing
under such laws.
ii. AUTHORIZATION. On the Closing Date, the shares of the
Broadcast Stock will be duly authorized and, when
delivered, will be duly and validly issued and
outstanding, fully paid and nonassessable, and are free to
the holders thereof of any liens, encumbrances and
restrictions. No person has any right of first refusal or
any preemptive rights in connection with the issuance of
the shares of the Broadcast Stock.
iii. COMPLIANCE WITH OTHER INSTRUMENTS. Broadcast.com is not
in violation of any term of its Certificate of
Incorporation or Bylaws, or any material agreement,
mortgage, indenture, debenture, trust, instrument,
judgment, decree, order, statute, rule or governmental
regulation to which it is subject (the "Other
Instruments") except for such failures as individually or
in the aggregate would not have a material adverse effect
on the results of operations or financial condition (a
"Material
<PAGE>
EXHIBIT 10.105 (CONTINUED)
Adverse Effect") of broadcast.com. The execution, delivery
and performance of this Agreement and the issuance and sale
of the Broadcast Stock, or the taking of any other action
contemplated by this Agreement will not result in any
material violation of or be in conflict with or constitute
a material default (with or without notice, lapse of time
or both) under any of the Other Instruments, except for
such violations or conflicts which would not have a
Material Adverse Effect.
iv. SEC REPORTS. Broadcast.com has delivered or made
available to Trimark copies of the following reports of
broadcast.com (the "SEC REPORTS") heretofore filed with
the SEC: Registration Statement on Form S-1 (Reg.
No. 333.52877) in the form declared effective by the SEC,
Form 10-Q for the fiscal quarters ended September 30, 1998
and June 30, 1998. Except as disclosed therein, none of
the SEC Reports as of their respective dates of filing
contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to
make the statements made therein, in light of the
circumstances under which they were made, not misleading.
The financial statements of broadcast.com included in the
SEC Reports, with the notes thereto, are in accordance
with the books and records of broadcast.com, have been
prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be
stated in the notes to such statements and, in the case of
unaudited statements, as permitted by Form 10-Q)
throughout the periods covered by such statements and
present fairly (subject, in the case of unaudited
statements, to normal year-end adjustments) in all
material respects the financial condition of broadcast.com
and the results of its operations and cash flows for the
periods indicated.
v. ABSENCE OF CHANGES. Since the December 31, 1997, there
has been no event or condition of any character
specifically relating to broadcast.com which is likely to
have a Material Adverse Effect.
vi. LITIGATION. Except as set forth in the SEC Reports, there
are no litigation, claims, actions, proceedings or
investigations pending or, to the knowledge of the
broadcast.com,
<PAGE>
EXHIBIT 10.105 (CONTINUED)
threatened against broadcast.com, which might have a
Material Adverse Effect.
vii. OFFERING. Subject to the accuracy of the Trimark's
representations in Section 5 c(b) and 5 d(b) of this
Agreement, the offer, issuance and sale of the
Broadcast.com Stock constitute transactions exempt from
the registration and prospectus delivery requirements of
Section 5 of the Securities Act and broadcast.com has
obtained (or is exempt from the requirement to obtain) all
qualifications, permits, and other consents required by
all applicable state laws governing the offer, sale or
issuance of securities.
viii. GOVERNMENTAL CONSENTS. On the Closing Date, no permit,
consent, approval or authorization of, or declaration to
or filing with, any governmental authority is required on
behalf of broadcast.com in connection with the execution,
delivery or performance of this Agreement or the
consummation of any transaction contemplated hereby,
except as have been obtained or accomplished or as would
not have a Material Adverse Effect.
ix. COMPLIANCE WITH LAWS. Broadcast.com is not in violation
of any law, regulation or requirement (including, but not
limited to, any law, regulation or requirement governing
the quality of the environment) which might have Material
Adverse Effect, and broadcast.com has not received notice
of any such violation.
x. BROKERS. No finder, broker, agent, financial advisor or
other intermediary has acted on behalf of broadcast.com in
connection with the offering of the Broadcast.com Stock or
the negotiation or consummation of this Agreement or any
of the transactions contemplated hereby.
(b) REPRESENTATIONS AND WARRANTIES OF TRIMARK AS ISSUER. Trimark
represents and warrants to broadcast.com in connection with the
sale and issuance of the Trimark Stock as follows:
i. ORGANIZATION AND STANDING. Holdings is a corporation duly
organized, validly existing under and by virtue of the
laws of the State of Delaware and is in good standing
under such laws.
<PAGE>
EXHIBIT 10.105 (CONTINUED)
ii. AUTHORIZATION. On the Closing Date, the shares of the
Trimark Stock will be duly authorized and, when delivered,
will be duly and validly issued and outstanding, fully
paid and nonassessable, and are free to the holders
thereof of any liens, encumbrances and restrictions. No
person has any right of first refusal or any preemptive
rights in connection with the issuance of the shares of
the Trimark Stock.
iii. COMPLIANCE WITH OTHER INSTRUMENTS. Each of Pictures,
Holdings, Television, and Music are not in violation of
any term of their respective Charter, or any material
agreement, mortgage, indenture, debenture, trust,
instrument, judgment, decree, order, statute, rule or
governmental regulation to which each are subject (the
"Other Instruments") except for such failures as
individually or in the aggregate would not have a material
adverse effect on the results of operations or financial
condition (a "Material Adverse Effect") of each of
Pictures, Holdings, Television and Music. The execution,
delivery and performance of this Agreement and the
issuance and sale of the Trimark Stock, or the taking of
any other action contemplated by this Agreement will not
result in any material violation of or be in conflict with
or constitute a material default (with or without notice,
lapse of time or both) under any of the Other Instruments,
except for such violations or conflicts which would not
have a Material Adverse Effect.
iv. SEC REPORTS. Holdings has delivered or made available to
broadcast.com copies of the following reports of
broadcast.com (the "SEC REPORTS") heretofore filed with
the SEC: Form 10-K for the fiscal year ended June 30,
1998, and Form 10-Q for the fiscal quarter ending
September 30, 1998, and December 31, 1998. Except as
disclosed therein, none of the SEC Reports as of their
respective dates of filing contained any untrue statement
of a material fact or omitted to state a material fact
necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not
misleading. The financial statements of Holdings included
in the SEC Reports, with the notes thereto, are in
accordance with the books and records of
<PAGE>
EXHIBIT 10.105 (CONTINUED)
Holdings have been prepared in accordance with generally
accepted accounting principles applied on a consistent
basis (except as may be stated in the notes to such
statements and, in the case of unaudited statements, as
permitted by Form 10-Q) throughout the periods covered by
such statements and present fairly (subject, in the case of
unaudited statements, to normal year-end adjustments) in
all material respects the financial condition of Trimark
and the results of its operations and cash flows for the
periods indicated.
v. ABSENCE OF CHANGES. Since June 30, 1998, there has been
no event or condition of any character specifically
relating to Pictures, Holdings, Television or Music which
is likely to have a Material Adverse Effect.
vi. LITIGATION. Except as set forth in the SEC Reports, there
are no litigation, claims, actions, proceedings or
investigations pending or, to the knowledge of Trimark,
threatened against Trimark which might have a Material
Adverse Effect.
vii. OFFERING. Subject to the accuracy of the broadcast.com's
representations in Section 5 c(a) and 5 d(a) of this
Agreement, the offer, issuance and sale of the Trimark
Stock constitute transactions exempt from the registration
and prospectus delivery requirements of Section 5 of the
Securities Act and Holdings has obtained (or is exempt
from the requirement to obtain) all qualifications,
permits, and other consents required by all applicable
state laws governing the offer, sale or issuance of
securities.
viii. GOVERNMENTAL CONSENTS. On the Closing Date, no permit,
consent, approval or authorization of, or declaration to
or filing with, any governmental authority is required on
behalf of Trimark in connection with the execution,
delivery or performance of this Agreement or the
consummation of any transaction contemplated hereby,
except as have been obtained or accomplished or as would
not have a Material Adverse Effect.
ix. COMPLIANCE WITH LAWS. Trimark is not in violation of any
law, regulation or requirement (including, but not limited
to, any law,
<PAGE>
EXHIBIT 10.105 (CONTINUED)
regulation or requirement governing the quality of the
environment) which might have Material Adverse Effect, and
Pictures, Holdings, Television or Music have not received
notice of any such violation.
x. BROKERS. Other than as specified on Exhibit B, no finder,
broker, agent, financial advisor or other intermediary has
acted on behalf of Pictures, Holdings, Television or Music
in connection with the offering of the Trimark Stock or
the negotiation or consummation of this Agreement or any
of the transactions contemplated hereby.
d. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
(a) REPRESENTATIONS AND WARRANTIES OF BROADCAST.COM AS PURCHASER.
Broadcast.com represents and warrants to Holdings in connection
with its purchase of the Trimark Stock as follows:
i. PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with broadcast.com in reliance upon its representation to
Holdings, which by broadcast.com's execution of this
Agreement broadcast.com hereby confirms, that the Trimark
Stock to be received by it will be acquired for investment
for broadcast.com's own account, not as a nominee or
agent, and not with a view to the resale or distribution
of any part thereof, and that broadcast.com has no
present intention of selling, granting any participation
in, or otherwise distributing the same. By executing this
Agreement, broadcast.com further represents that it does
not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with
respect to any of the Trimark Stock.
ii. DISCLOSURE OF INFORMATION. Broadcast.com has received all
of the information it considers necessary or appropriate
for deciding whether to purchase the Trimark Stock.
Broadcast.com has had an opportunity to ask questions and
receive answers from Holdings regarding the terms and
conditions of the offering of the Trimark Stock. The
foregoing, however, does not limit or modify the
representations and warranties of Trimark in Section 5
c(b) or 5 d(b) of this Agreement.
<PAGE>
EXHIBIT 10.105 (CONTINUED)
iii. INVESTMENT EXPERIENCE. Broadcast.com acknowledges that it
is able to fend for itself, can bear the economic risk of
its investment and has such knowledge and experience in
financial or business matters that it is capable of
evaluating the merits and risks of the investment in the
Trimark Stock.
iv. RESTRICTED SECURITIES. Broadcast.com understands that the
Trimark Stock it is purchasing is characterized as
"restricted securities" under the federal securities laws
inasmuch as they are being acquired from Holdings in a
transaction not involving a public offering and that under
such laws and applicable regulations such securities may
be resold without registration under the Securities Act,
only in certain limited circumstances. In this
connection, broadcast.com represents that it is familiar
with Rule 144, as presently in effect, and understands the
resale limitations imposed thereby and by the Securities
Act.
v. ACCREDITED INVESTOR. Broadcast.com is an accredited
investor as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.
(b) REPRESENTATIONS AND WARRANTIES OF PICTURES AS PURCHASER.
Pictures represents and warrants to broadcast.com in connection
with its purchase of the Broadcast.com Stock as follows:
i. PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with Pictures in reliance upon its representation to
broadcast.com, which by Pictures' execution of this
Agreement Pictures hereby confirms, that the Broadcast.com
Stock to be received by it will be acquired for investment
for Picture's own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part
thereof, and that Pictures has no present intention of
selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement,
Pictures further represents that it does not have any
contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the
Broadcast.com Stock.
<PAGE>
EXHIBIT 10.105 (CONTINUED)
ii. DISCLOSURE OF INFORMATION. Pictures has received all of
the information it considers necessary or appropriate for
deciding whether to purchase the Broadcast.com Stock.
Pictures has had an opportunity to ask questions and
receive answers from broadcast.com regarding the terms and
conditions of the offering of the Broadcast.com Stock.
The foregoing, however, does not limit or modify the
representations and warranties of broadcast.com in Section
5 c(a) or 5 d(a) of this Agreement.
iii. INVESTMENT EXPERIENCE. Pictures acknowledges that it is
able to fend for itself, can bear the economic risk of its
investment and has such knowledge and experience in
financial or business matters that it is capable of
evaluating the merits and risks of the investment in the
Broadcast.com Stock.
iv. RESTRICTED SECURITIES. Pictures understands that the
Broadcast.com Stock it is purchasing is characterized as
"restricted securities" under the federal securities laws
inasmuch as they are being acquired from broadcast.com in
a transaction not involving a public offering and that
under such laws and applicable regulations such securities
may be resold without registration under the Securities
Act, only in certain limited circumstances. In this
connection, Pictures represents that it is familiar with
Rule 144, as presently in effect, and understands the
resale limitations imposed thereby and by the Securities
Act.
v. ACCREDITED INVESTOR. Pictures is an accredited investor
as defined in Rule 501(a) of Regulation D promulgated
under the Securities Act.
f. RULE 144 COMPLIANCE. At all times after the date hereof, each of
broadcast.com and Holdings agrees to take such action as may be
necessary to enable a holder of its shares to complete the public sale
of such shares in accordance with Rule 144.
g. DELIVERY OF CERTIFICATES. Each party will deliver certificates
representing the purchase of the stock by each party pursuant to this
paragraph by no later than thirty days after the Closing Date.
h. LEGEND. The parties hereto further agree that any certificate
evidencing the Broadcast.com Stock or the
<PAGE>
EXHIBIT 10.105 (CONTINUED)
Trimark Stock Securities shall bear one or more of the following
legends:
(a) THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, HAVE BEEN TAKEN FOR
INVESTMENT, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID SECURITIES ACT
COVERING THE SALE OR OTHER TRANSFER OR AN OPINION OF COUNSEL,
WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE
ISSUER, THAT REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS IS NOT REQUIRED.
(b) Any legend required by the laws of any state or other
jurisdiction.
6. TRIMARK REPRESENTATIONS AND WARRANTIES:
a. Trimark has all requisite corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. Subject to the
approval of its Board of Directors, this Agreement has been duly
authorized, executed and delivered by Trimark, constitutes the valid
and binding agreement of Trimark, and is enforceable against Trimark
in accordance with its terms.
b. Trimark hereby represents and warrants to broadcast.com that (i) the
Videos are owned by or licensed to Trimark, (ii) Trimark has all
necessary rights and licenses to sell and distribute the Videos as
provided herein, (iii) Trimark holds all rights material to this
Agreement throughout the territories and license period set forth of
the applicable Exhibit A or replacement Exhibit A, including the
encoding, transmission, retransmission, distribution, performance,
display and broadcast of the Videos and the Broadcast Inventory by
broadcast.com, (iv) broadcast.com's copying of the Videos contemplated
by this Agreement and broadcast.com's exercise of any rights granted
by Trimark herein, will not violate or infringe any right of privacy
or publicity, any copyright, trademark, moral right or other
intellectual property right, or, to the best of Trimark's knowledge,
any other right of any third party, and (v) the Videos and Broadcast
Inventory as provided by Trimark to broadcast.com to the best of
Trimark's knowledge do not contain any libelous, defamatory, obscene
or unlawful material.
<PAGE>
EXHIBIT 10.105 (CONTINUED)
c. Trimark will be solely responsible for the acquisition of any and all
third party clearances, permissions and licenses which are necessary
in connection with the broadcast by broadcast.com of the Videos in
accordance with this Agreement and Broadcast Inventory sold by Trimark
throughout the territories specified on Exhibit A or applicable
replacement Exhibit A, including, without limitation, with respect to
the use of any copyrighted and/or trademarked materials and the use of
the name, likeness and/or biographical materials, and for the payment
of all applicable guild fees, and/or any music licensing fees relating
to or arising from broadcast.com's activities under this agreement.
d. Trimark warrants, represents and agrees that, to the extent required,
Trimark will obtain all requisite consents and permissions of labor
organizations and pay any and all residuals, payments, fees or
royalties, if any, payable under any collective bargaining agreement
or otherwise, in connection with broadcast.com's exercise of the
rights granted under this agreement. By way of example, and not
limitation or obligation, as between broadcast.com and Trimark,
Trimark would be liable to pay any residuals required to be paid under
any "Basic Agreement" of the Director's Guild of America, the Writer's
Guild of America, or the Screen Actor's Guild for "Supplemental
Market" showings of the licensed Videos. Broadcast.com shall provide
to Trimark all information concerning the transmission and
distribution of the Videos as is reasonably necessary for Trimark to
comply with the obligations of this subparagraph.
e. Trimark warrants, represents, and agrees that Trimark shall comply
with all legal restrictions on its use of the Registration Database.
f. Trimark warrants that it has obtained professional media insurance in
the amount of $1,000,000 per occurrence and $3,000,000 in the
aggregate to cover all risks relevant to this Agreement and that
broadcast.com is an additional insured party.
g. Trimark warrants that all applicable territory and period limitations
will be provided by Trimark on Exhibit A and any replacement Exhibit A
and that such limitations will be no greater for any Video than the
contractual limitations to which Trimark is bound pursuant to its
third party agreements relating to such Video.
h. Trimark warrants that it shall use its best efforts, with regard to
any new Videos to be distributed by Trimark
<PAGE>
EXHIBIT 10.105 (CONTINUED)
after the effective date of this Agreement, to secure for the term
of this Agreement the worldwide right to broadcast/distribute such
Videos on the Internet in all manners contemplated in this
Agreement, along with the right to grant all necessary sublicenses
to broadcast.com to exercise those rights. Notwithstanding the
foregoing, Trimark shall be entitled to license certain videos to
other Internet broadcasters on an exclusive basis; provided that
Trimark offers broadcast.com the right of first refusal with
respect to the acquisition of the exclusive rights to such videos
under the same terms and conditions. Broadcast.com will notify
Trimark within two business days of receipt of such offer as to
whether broadcast.com will enter into an agreement with Trimark
upon the same terms and conditions. If broadcast.com does not
provide Trimark such notification within the requisite time period,
it will be deemed to have rejected the offer.
7. BROADCAST.COM REPRESENTATIONS AND WARRANTIES:
a. Broadcast.com has all requisite corporate power and authority
to execute and deliver this Agreement, to perform its
obligations hereunder, and to consummate the transactions
contemplated hereby. Subject to the approval of its Board of
Directors, this Agreement has been duly authorized, executed
and delivered by broadcast.com, constitutes the valid and
binding agreement of broadcast.com, and enforceable against
broadcast.com in accordance with its terms.
b. Trimark shall not be required to pay any expense related to the
transmission and/or distribution of the Videos by
broadcast.com, except as otherwise specified in this Agreement.
c. Broadcast.com warrants that it has obtained professional media
insurance in the amount of $1,000,000 per occurrence and
$3,000,000 in the aggregate to cover all risks relevant to this
Agreement and that broadcast.com is an additional insured
party.
d. Broadcast.com warrants that it will comply with the period
restrictions specified on the most recently received
replacement Exhibit A and such other contractual restrictions
provided to broadcast.com in advance of the broadcast and in
writing by Trimark. Broadcast.com warrants that it will also
comply with the territorial restrictions specified on such
Exhibit A by requiring Users to enter in their zip code and
limiting access to the Videos to such Users that do not enter
in a zip code within the unrestricted territories.
<PAGE>
EXHIBIT 10.105 (CONTINUED)
e. Broadcast.com warrants that at all times, the Videos are and
shall continue to be the property of Trimark, and nothing
herein shall be deemed to transfer ownership or control of any
kind to broadcast.com or any third party.
8. INDEMNIFICATION:
a. Trimark agrees to indemnify and hold harmless broadcast.com and
its officers, directors, employees and agents from and against
any and all losses, claims, damages, liabilities, obligations,
penalties, judgments, awards, costs, expenses and
disbursements, including without limitation, the costs,
expenses and disbursements, as and when incurred, of
investigating, preparing or defending any action, suit,
proceeding or investigation, caused by, relating to, based
upon, arising out of or in connection with any breach by
Trimark of the representations, warranties or agreements made
by it under this Agreement.
b. Broadcast.com agrees to indemnify and hold harmless Trimark and
its officers, directors, employees and agents from and against
any and all losses, claims, damages, liabilities, obligations,
penalties, judgments, awards, costs, expenses and
disbursements, including without limitation, the costs,
expenses and disbursements, as and when incurred, of
investigating, preparing or defending any action, suit,
proceeding or investigation, caused by, relating to, based
upon, arising out of or in connection with any breach by
broadcast.com of the representations, warranties or agreements
made by it under this Agreement.
9. TERM:
a. This Agreement shall be effective on the later of the Closing
Date or March 15, 1999 and shall terminate on January 31, 2001.
The parties agree that within 180 days prior to the expiration
of the term of this Agreement they will enter into good faith
negotiations for a period of not less than thirty days to
extend this Agreement. After the expiration of this Agreement,
broadcast.com shall cease any advertising or broadcast of the
Videos, except as otherwise expressly approved in writing by
Trimark and agreed to by broadcast.com.
b. Notwithstanding the foregoing, either party
shall have the right at any time to terminate this Agreement,
effective upon the other party's receipt of termination
notice, without prejudice to any other legal rights to which
such terminating party may be entitled, upon the occurrence
of any one or more of the other party's
<PAGE>
EXHIBIT 10.105 (CONTINUED)
failure to comply in any respect with its material obligations,
representations or warranties contained in this Agreement, and
such party's failure to cure the same within thirty (30) days
of receipt of notice of such failure.
10. GENERAL:
a. This Agreement shall constitute the entire
understanding between the Parties, and supersedes all prior
negotiations or understandings between the Parties concerning
the subject matter contained herein.
b. Each party acknowledges and agrees that: (i)
the other party's Marks are and shall remain the sole
property of the other party, (ii) nothing in this Agreement
shall confer in the party any right of ownership in the other
party's Marks, and (iii) the party shall not now or in the
future contest the validity of the other party's Marks.
c. All provisions hereof regarding amounts payable by Trimark to
broadcast.com and by broadcast.com to Trimark (as applicable)
shall survive the expiration or earlier termination of this
Agreement until such amounts are paid in full to the payee;
further provided, Paragraphs 4, 5, 6, 7, 8 and 9, and all
portions of this Agreement limiting the use of any Confidential
Information, shall survive termination or expiration of this
Agreement.
d. This Agreement shall be governed by the laws
of the State of Delaware applicable to contracts entered into
and to be performed entirely within the State of Delaware.
The parties agree to submit to binding arbitration in
accordance with the provisions of the American Arbitration
Association.
e. BROADCAST.COM HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS, IMPLIED
OR STATUTORY, WITH RESPECT TO THE SERVICES PROVIDED HEREUNDER,
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT.
f. BROADCAST.COM SHALL NOT BE LIABLE FOR ANY LOSS OF DATA, OR ANY
INTERRUPTION OF SERVICE, DUE TO ANY CAUSE, DUE TO ANY FACTORS
NOT WITHIN BROADCAST.COM'S CONTROL.
g. The parties hereto are independent parties, and no partnership,
joint venture, enterprise or employment relationship shall be
created or inferred by the existence or performance of this
Agreement.
h. Should any part of this Agreement be found to be illegal
<PAGE>
EXHIBIT 10.105 (CONTINUED)
or otherwise unenforceable, both Parties shall continue to be
bound under the remaining parts of the Agreement, if the
purpose and intent of the Parties can be carried out under the
remaining parts of the Agreement. A facsimile signature shall
be deemed an original for purposes of this Agreement. The
headings of this Agreement are for convenience of reference
only, and do not limit or alter the Parties' respective rights
and obligations under this Agreement.
i. This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their
respective successors, assigns or purchaser of the respective
companies. Neither party may assign this Agreement without
the consent of the other party, provided, however, no such
consent shall be required for any assignment to any person in
connection with a transaction with such person, or any
affiliate of such person, involving the merger,
consolidation, recapitalization or other reorganization, or
the sale or transfer to such person, or any affiliate of such
person, of all or substantially all of such party's assets.
j. Any and all notices, communications and
demands required herein by either party hereto shall be in
writing and shall deemed to have been given when: (a) served
personally to the addresses listed below; (b) served by a
recognized overnight delivery service such as Federal
Express, UPS or Express Mail to the addresses listed below;
(c) served by United States Mail, certified, postage prepaid,
return receipt requested to the addresses listed below, or
(d) received by facsimile (as evidenced by the transmission
report of the facsimile machine of the transmitting party
acknowledging a good transmission) if sent by facsimile to
the numbers listed below:
IF TO TRIMARK, TO: IF TO BROADCAST.COM, TO:
C/o Trimark Pictures, Inc broadcast.com inc.
2644 30th Street 2914 Taylor Street
Santa Monica, CA 90405 Dallas, TX 75226
Telephone: 310/314-2000 Telephone: 214/748-6660
Facsimile: 310/452-8934 Facsimile: 214/748-6657
att'n: Senior VP, att'n: Belinda Johnson,
Business Affairs General Counsel
k. CLOSING.
(a) The obligations of broadcast.com to consummate the
transactions contemplated by this Agreement shall, at its
option, be subject to the satisfaction at or
<PAGE>
EXHIBIT 10.105 (CONTINUED)
prior to March 15, 1999, of the
following conditions: (i) there shall have been no
material breach by Trimark of any its obligations
hereunder and Trimark's representations and warranties
shall be true and correct in all material respects as
though made on the Closing Date; (ii) Trimark shall have
qualified the Trimark Stock for listing on the principal
exchange or trading system on which shares of Holdings
Common Stock are listed or quoted; (iii) Trimark shall
have secured all third party consents required for
consummation of the transactions contemplated hereby;
(iv) broadcast.com's board of directors shall have
approved this Agreement and the consummation of the
transactions contemplated hereby.
(b) The obligations of Trimark to
consummate the transactions contemplated by this
Agreement shall, at its option, be subject to the
satisfaction at or prior to March 15, 1999, of the
following conditions: (i) there shall have been no
material breach by broadcast.com of any its obligations
hereunder and broadcast.com's representations and
warranties shall be true and correct in all material
respects as though made on the Closing Date; (ii)
broadcast.com shall have qualified the Broadcast.com
Stock for quotation on the Nasdaq National Market; (iii)
broadcast.com shall have secured all third party
consents required for consummation of the transactions
contemplated hereby; (iv) Trimark's board of directors
shall have approved this Agreement and the consummation
of the transactions contemplated hereby.
(c) The parties hereto agree to use
their reasonable best efforts to cause the satisfaction
of the conditions set forth herein as soon as reasonably
practicable and in any event prior to March 15, 1999.
In the event that a party learns that any such condition
will not be able to be satisfied prior to March 15,
1999, or at all, such party will promptly notify the
other parties hereto. The closing of the transactions
contemplated hereby shall occur two business days after
the satisfaction or waiver of satisfaction of the
conditions set forth above. The date of the closing is
referred to herein as the "Closing Date." The parties
agree to solicit board approval and all other necessary
consents by no later than February 28, 1999.
<PAGE>
EXHIBIT 10.105 (CONTINUED)
[PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXHIBIT 10.105 (CONTINUED)
IN WITNESS WHEREOF, the Parties hereto have caused the foregoing agreement to
be signed by a duly authorized agent of each party, the day and year first
above written.
TRIMARK HOLDINGS, INC: BROADCAST COM INC.:
By: /S/ By: /S/
Name: Mark Amin Mark Cuban, President
Title: Chairman & CEO
DATE: DATE:
TRIMARK PICTURES, INC:
By: /S/
Name: Mark Amin
Title: Chairman & CEO
DATE:
TRIMARK TELEVISION, INC:
By: /S/
Name: Mark Amin
Title: Chairman & CEO
DATE:
TRIMARK MUSIC:
By: /S/
Name: Mark Amin
Title: Chairman & CEO
DATE:
<PAGE>
EXHIBIT 10.105 (CONTINUED)
EXHIBIT A
VIDEOS
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
Leprechaun [*]
[*] Warlock
[*] [*]
[*] [*]
[*] [*]
- ---------------
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EXHIBIT 10.105 (CONTINUED)
EXHIBIT B [*]
TRIMARK BROKERS FEES
- ---------------
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EXHIBIT 10.105 (CONTINUED)
[Trimark Pictures Letterhead]
February 19, 1999
VIA FACSIMILE TRANSMISSION
(310) 859-2788
Ray Manzella
c/o Leigh Brecheen
Bloom, Hergott, Cook,
Diemer and Klein, LLP
150 South Rodeo Drive
Third Floor
Beverly Hills, CA 90212
RE: RAY MANZELLA/ TRIMARK PICTURES/ BROADCAST.COM
Dear Leigh:
This letter shall confirm our conversation regarding the above
referenced matter. The parties have agreed that in the event that Trimark
and Broadcast.com execute an agreement within the next ninety (90) days
(subject to reasonable extension to accommodate same negotiations) which
embodies an investment in Trimark Pictures by Broadcast.com (whether in the
form of cash or stock including a stock swap), Manzella Personal Management
shall receive a finder's fee (payable within 10 business days of Trimark's
receipt (from time to time as the same may occur as a result of the same
transaction) of the investment by Broadcast.com) as follows:
1. [*] percent ([*]%) of the initial One Million Dollars
($1,000,000) (or part thereof) invested in Trimark Pictures by
Broadcast.com; plus
2. [*] percent ([*]%) of the next One Million Dollars ($1,000,000)
(or part thereof) invested in Trimark Pictures by
Broadcast.com; plus
3. [*] percent ([*]%) of the next One Million Dollars ($1,000,000)
(or part thereof) invested in Trimark Pictures by
Broadcast.com; plus
4. [*] percent ([*]%) of any amount thereafter invested in Trimark
Pictures by Broadcast.com.
- ---------------
[*] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EXHIBIT 10.105 (CONTINUED)
Notwithstanding the foregoing, the parties agree that the finder's fee
payable to Ray Manzella shall not exceed Five Hundred Thousand Dollars
($500,000) in the aggregate.
At Trimark's election the finder's fee may be paid in cash or common
stock, or a combination thereof.
Both parties shall keep the nature of this agreement confidential except
as required by law.
If your understanding is in agreement with the foregoing, please so
indicate by signing below. Subsequently we can prepare a more formal
document which shall supercede.
Thank you for your assistance in this matter by accommodating both of
our travel schedules.
Very truly yours,
/S/
Peter Block
Senior Vice President
Acquisitions & Business Affairs
Dictated by not read
AGREED AND ACCEPTED
Manzella Personal Management
By: /S/
Ray Manzella
Date: 2/21/99
<PAGE>
EXHIBIT 10.105 (CONTINUED)
TRIMARK PICTURES, INC. TRIMARK HOLDINGS, INC.
TRIMARK TELEVISION, INC. TRIMARK MUSIC
2644 30TH Street
Santa Monica, CA 90405
March 15, 1999
broadcast.com inc.
Attn: Todd Wagner
2914 Taylor Street
Dallas, Texas 75226
Dear Mr. Wagner:
Reference is made to the agreement entered into by and between
broadcast.com inc., Trimark Pictures, Inc., Trimark Holdings, Inc. Trimark
Television, Inc., and Trimark Music dated as of February 22, 1999 (the
"Agreement").
You are hereby notified and you agree that you hereby notify us
that qualification of stock described and required under Section
10(k)(a)(iii) and 10(k)(b)(ii) of the Agreement will not be satisfied or
waived on or prior to March 15, 1999.
We acknowledge and you are hereby requested to agree that the
references to March 15, 1999 in Section 10(k) of the Agreement are amended to
refer to March 30, 1999.
Please indicate your agreement, on behalf of broadcast.com inc.,
to the foregoing by signing the below and returning a copy of this letter to
me.
Very truly yours,
/S/
Mark Amin
Chairman and CEO
BROADCAST.COM INC.
By: /S/
Name: Todd Wagner
Title: Chief Executive Officer
<PAGE>
EXHIBIT 10.106
As of March 15, 1999
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 20,1996 (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 term used herein and not
otherwise defined are used herein as defined in the Credit Agreement.
The Borrowers have informed the Lenders that the Borrowers, Trimark
Holdings, Inc. and Trimark Music (collectively, "Trimark") have entered into
an Agreement with broadcast.com inc. (the "Internet Distribution Agreement")
regarding Internet delivery of certain Trimark Product. Pursuant to the
Internet Distribution Agreement, Trimark will acquire 45,858 newly issued
shares of broadcast.com inc. common stock in consideration of the rights
granted to boadcast.com inc. and the issuance to broadcast.com inc. by
Trimark Holdings, Inc. of 412,363 shares of its common stock. The Internet
Distribution Agreement also provides that its effectiveness shall be
conditioned upon, among other things, obtaining all required third party
consents at or prior to March 15, 1999. Accordingly, the Borrowers have
requested that the Lenders grant the within waiver.
Each of the undersigned hereby waives compliance by Trimark with Section
6.4 (LIMITATION on INVESTMENTS) of the Credit Agreement to the extent
necessary to permit the non-cash investment in broadcast.com inc. common
stock contemplated by the Internet Distribution Agreement.
By execution hereof, the Borrowers hereby represent and warrant that (i)
as of the date hereof, there exists no Default or Event of Default and (ii)
the copy of the Internet Distribution Agreement previously delivered to the
Administration Agent is true, complete and correct in all respects.
<PAGE>
EXHIBIT 10.106 (CONTINUED)
This waiver 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.
This waiver shall become effective when the Administrative Agent shall
have received executed counterparts of this waiver which, when taken
together, bear the signatures of the Required Lenders and all the Credit
Parties.
This waiver 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 Administrative Agent or the Lenders. Except as expressly modified
herein, all terms of the Credit Agreement remain in full force and effect.
THIS WAIVER 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: /S/
------------------------------------
Name:
Title:
CITY NATIONAL BANK
By: /S/
------------------------------------
Name:
Title:
COMERICA BANK-CALIFORNIA
By: /S/
------------------------------------
Name:
Title:
FIRST HAWAIIAN BANK
By: /S/
------------------------------------
Name:
Title:
83
<PAGE>
EXHIBIT 10.106 (CONTINUED)
IMPERIAL BANK
By: /S/
------------------------------------
Name:
Title:
SILICON VALLEY BANK
By: /S/
------------------------------------
Name:
Title:
THE SUMITOMO TRUST & BANKING CO., LTD., NEW
YORK BRANCH
By: /S/
------------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By: /S/
------------------------------------
Name:
Title:
DE NATIONALE INVESTERINGSBANK N.V.
By: /S/
------------------------------------
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: /S/
------------------------------------
Name:
Title: Authorized Signatory for each
of the foregoing
84
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1999 AND THE
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED MARCH 31, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERECNE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,442
<SECURITIES> 5,420
<RECEIVABLES> 24,710
<ALLOWANCES> 5,938
<INVENTORY> 1,521
<CURRENT-ASSETS> 0<F1>
<PP&E> 3,361
<DEPRECIATION> 2,759
<TOTAL-ASSETS> 93,630
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 53,330
0
0
<COMMON> 6
<OTHER-SE> 18,038
<TOTAL-LIABILITY-AND-EQUITY> 93,630
<SALES> 66,270
<TOTAL-REVENUES> 66,270
<CGS> 56,611
<TOTAL-COSTS> 56,611
<OTHER-EXPENSES> 9,661
<LOSS-PROVISION> (162)
<INTEREST-EXPENSE> 3,023
<INCOME-PRETAX> (2,806)
<INCOME-TAX> (240)
<INCOME-CONTINUING> (2,566)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,566)
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.59
<FN>
<F1>IN ACCORDANCE WITH INDUSTRY PRACTICE THE COMPANY PREPARES AN UNCLASSIFIED
BALANCE SHEET
</FN>
</TABLE>
