SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
TRIMARK HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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TRIMARK HOLDINGS, INC.
4553 GLENCOE AVENUE, SUITE 200
MARINA DEL REY, CALIFORNIA 90292
(310) 314-2000
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 17, 1999
------------------------
TO THE STOCKHOLDERS OF TRIMARK HOLDINGS, INC.:
NOTICE IS HEREBY GIVEN that the annual meeting of the stockholders (the
"Meeting") of Trimark Holdings, Inc., a Delaware corporation (the "Company")
will be held at the Park Hyatt Los Angeles, Chateau 2, 2151 Avenue of the Stars,
Los Angeles, California on Wednesday, November 17, 1999 at 9:00 a.m., for the
following purposes, all as set forth in the attached Proxy Statement.
(1) ELECTION OF DIRECTORS. To elect five persons to the Board of Directors
to serve until the next annual meeting of stockholders and until their
successors are elected and qualified or until their earlier resignation
or removal.
(2) 1999 STOCK OPTION PLAN. To approve the Company's 1999 Stock Option
Plan.
(3) 1999 DIRECTORS' OPTION PLAN. To approve the Company's 1999 Directors'
Option Plan.
(4) RATIFICATION OF APPOINTMENT OF ACCOUNTANTS. To ratify the appointment
of PricewaterhouseCoopers LLP as the independent accountants of the
Company for the fiscal year ending June 30, 2000.
(5) OTHER BUSINESS. To transact such other business as properly may come
before the Meeting and at any and all adjournments thereof.
Stockholders of record at the close of business on October 8, 1999 are entitled
to notice of and to vote at the Meeting. In compliance with Section 219 of the
General Corporation Law of the State of Delaware, a list of the stockholders
entitled to vote at the Meeting will be open for examination by any stockholder
for any purpose germane to the Meeting during ordinary business hours for a
period of ten days prior to the Meeting at the offices of the Company. The list
of stockholders will be available for examination at the site of the Meeting on
the Meeting date from 8:30 o'clock a.m. until adjournment of the Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO MARK,
SIGN AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS
REQUIRED FOR MAILING IN THE UNITED STATES.
By Order of the Board of Directors
/s/ Mark Amin
--------------------------------------
Mark Amin
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
Date: October 15, 1999
TRIMARK HOLDINGS, INC.
4553 GLENCOE AVENUE, SUITE 200
MARINA DEL REY, CALIFORNIA 90292
(310) 314-2000
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 17, 1999
------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Trimark Holdings, Inc., a Delaware
corporation (the "Company"), for use at its annual meeting of stockholders (the
"Meeting") to be held at the Park Hyatt Los Angeles, Chateau 2, 2151 Avenue of
the Stars, Los Angeles, California, on Wednesday, November 17, 1999 at
9:00 a.m. and at any and all adjournments thereof. It is expected that this
Proxy Statement and the accompanying Notice of Annual Meeting of Stockholders
and Proxy will be mailed to stockholders on or about October 22, 1999.
MATTERS TO BE CONSIDERED
The matters to be considered and voted upon at the Meeting will be:
(1) ELECTION OF DIRECTORS. To elect five persons to the Board of Directors
to serve until the next annual meeting of the stockholders and until
their successors are elected and qualified or until their earlier
resignation or removal.
(2) 1999 STOCK OPTION PLAN. To approve the Company's 1999 Stock
Option Plan.
(3) 1999 DIRECTORS' OPTION PLAN. To approve the Company's 1999 Directors'
Option Plan.
(4) RATIFICATION OF APPOINTMENT OF ACCOUNTANTS. To ratify the appointment
of PricewaterhouseCoopers LLP as the independent accountants of the
Company for the fiscal year ending June 30, 2000.
(5) OTHER BUSINESS. To transact such other business as properly may come
before the Meeting and at any and all adjournments thereof.
REVOCABILITY OF PROXIES
A Proxy for use at the Meeting is enclosed. Any stockholder who executes and
delivers such Proxy has the right to revoke it at any time before it is voted by
filing with the Secretary of the Company an instrument revoking it or a duly
executed Proxy bearing a later date. It also may be revoked by attendance at the
Meeting and an election to vote in person. Subject to such revocation, all
shares represented by a properly executed Proxy received prior to or at the
Meeting will be voted by the proxy holders whose names are set forth in the
accompanying Proxy (the "Proxy Holders") in accordance with the instructions on
the Proxy. If no instruction is specified with respect to a matter to be acted
upon, the shares represented by the Proxy will be voted (i) "FOR" the election
of the nominees for director set forth herein; (ii) "FOR" the proposal to
approve the Company's 1999 Stock Option Plan; (iii) "FOR" the proposal to
approve the Company's 1999 Directors' Option Plan; and (iv) "FOR" the proposal
to ratify the appointment of PricewaterhouseCoopers LLP as the independent
accountants of the Company for the fiscal year ending June 30, 2000. It is not
anticipated that any matters will be
presented at the Meeting other than as set forth in the accompanying Notice of
Annual Meeting of Stockholders. If, however, any other matters properly are
presented at the Meeting, the Proxy will be voted in accordance with the best
judgment and in the discretion of the Proxy Holders.
COSTS OF SOLICITATION OF PROXIES
This solicitation of Proxies is made by the Board of Directors of the
Company, and the Company will bear the costs of this solicitation, including the
expense of preparing, assembling, printing and mailing this Proxy Statement and
the material used in the solicitation of Proxies. It is contemplated that
Proxies will be solicited principally through the mails, but directors, officers
and regular employees of the Company may solicit Proxies personally or by
telephone. Although there is no formal agreement to do so, the Company will
reimburse banks, brokerage houses and other custodians, nominees and fiduciaries
for their reasonable expenses in forwarding these proxy materials to their
principals.
OUTSTANDING SECURITIES AND VOTING RIGHTS
Only stockholders of record at the close of business on October 8, 1999 (the
"Record Date") are entitled to notice of and to vote at the Meeting. As of the
Record Date, there were 4,604,677 shares of the Company's Common Stock, $.001
par value (the "Common Stock"), outstanding, excluding shares held by the
Company as treasury stock. There was no beneficial owner (as defined under the
rules of the Securities and Exchange Commission) of more than 5% of the Common
Stock known to the Company at September 1, 1999, other than as set forth under
the caption "Security Ownership of Certain Beneficial Owners and Management"
below. A quorum at the meeting is a majority of the outstanding shares of Common
Stock, and each stockholder shall have one vote for each share registered in
such stockholder's name on the books of the Company except that, as the result
of the application of certain provisions of the California Corporations Code, in
the election of Directors addressed by Proposal No. 1, each stockholder has
cumulative voting rights and is entitled to as many votes as equal the number of
shares held multiplied by the number of directors to be elected (five). All such
votes may be cast for a single candidate or distributed among any or all the
candidates as the stockholder sees fit. However, no stockholder shall be
entitled to cumulate votes unless the candidate's name has been placed in
nomination prior to the voting and the stockholder, or any other stockholder,
has given notice at the Meeting prior to the voting of their intention to
cumulate their votes. The Company is soliciting authority to cumulate votes in
the election of directors, and the enclosed Proxy grants discretionary authority
for such purpose. The election of directors requires the affirmative vote for
each candidate of a plurality of the votes cast. The affirmative vote of a
majority of all shares represented and voting at the Meeting is required for
approval of Proposal No. 2, Proposal No. 3 and Proposal No. 4.
Under the General Corporation Law of the State of Delaware, the state in
which the Company is incorporated, an abstaining vote is not deemed to be a
"vote cast." As a result, abstentions and broker "non-votes" are not included in
the tabulation of the voting results on the election of directors or issues
requiring approval of a majority of the votes cast and, therefore, do not have
the effect of votes in opposition. A broker "non-vote" occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power with respect to
that item and has not received instructions from the beneficial owner. Broker
"non-votes" and the shares as to which a stockholder abstains are included for
purposes of determining whether a quorum of shares is present at a meeting.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to the shares of Common Stock
owned as of September 1, 1999 by (i) each person known to the Company to be the
beneficial owner of more than
2
5% of the Common Stock; (ii) each director (and nominee for director);
(iii) each executive officer named in the Summary Compensation Table herein; and
(iv) all directors and executive officers of the Company as a group. Unless
otherwise indicated in the footnotes following the table, the persons as to whom
the information is given had sole voting and investment power over the shares of
Common Stock shown as beneficially owned by them, subject to community property
laws where applicable.
NUMBER OF SHARES PERCENT
NAME BENEFICIALLY OWNED OF CLASS
- ---- ------------------ ---------
Directors and Executive Officers
Mark Amin(1).............................................. 1,666,375 (2) 34.7%
Gordon Stulberg........................................... 17,800 (3) *
Matthew H. Saver.......................................... 11,000 (4) *
Tofigh Shirazi............................................ 32,762 (5) *
Peter J. Dekom............................................ 0 0%
Tim Swain................................................. 87,100 (6) 1.8%
Cami Winikoff............................................. 39,000 (7) *
Peter Block............................................... 21,000 (8) *
Andrew Reimer............................................. 5,000 (9) *
Directors and Executive Officers as a group
(11 persons)............................................ 1,891,787(10) 37.8%
Beneficial Owners
Reza Amin(1)(11).......................................... 571,316(12) 12.4%
Yahoo! Broadcast Services(13)............................. 412,363(14) 8.9%
- ------------------------
* Represents less than 1% of the 4,604,677 shares of Common Stock outstanding
on September 1, 1999.
(1) Mark Amin and Reza Amin are brothers.
(2) Mark Amin disclaims beneficial ownership of 66,390 of these shares which he
holds as trustee of a trust for the benefit of certain family members.
Includes options to purchase 200,000 shares which are exercisable as of
September 1, 1999 or will become exercisable by November 1, 1999.
(3) Includes options to purchase 16,000 shares which are exercisable as of
September 1, 1999 or will become exercisable by November 1, 1999, subject to
shareholder approval as to options to purchase 12,000 shares. See
"Proposal 3--Approval of the Company's 1999 Directors' Option Plan."
(4) Includes options to purchase 10,000 shares which are exercisable as of
September 1, 1999 or will become exercisable by November 1, 1999, subject to
shareholder approval. See "Proposal 3--Approval of the Company's 1999
Directors' Option Plan."
(5) Includes 22,000 shares held by a family limited partnership and options to
purchase 10,000 shares which are exercisable as of September 1, 1999 or will
become exercisable by November 1, 1999, subject to shareholder approval. See
"Proposal 3--Approval of the Company's 1999 Directors' Option Plan."
(6) Includes options to purchase 82,900 shares which are exercisable as of
September 1, 1999 or will become exercisable by November 1, 1999. Mr. Swain
is no longer employed by the Company.
(7) Reflects options to purchase 39,000 shares which are exercisable as of
September 1, 1999 or will become exercisable by November 1, 1999.
(8) Reflects options to purchase 21,000 shares which are exercisable as of
September 1, 1999 or will become exercisable by November 1, 1999.
3
(9) Reflects options to purchase 5,000 shares which are exercisable as of
September 1, 1999 or will become exercisable by November 1, 1999.
(10) Includes options to purchase 395,650 shares which are exercisable as of
September 1, 1999 or will become exercisable by November 1, 1999.
(11) The address of Reza Amin is c/o the Company, 4553 Glencoe Avenue,
Suite 200, Marina del Rey, California, 90292.
(12) Reza Amin disclaims beneficial ownership of 132,780 of these shares which
he holds as trustee of a trust for the benefit of certain family members.
(13) The address of Yahoo! Broadcast Services (formerly known as
broadcast.com.inc.) is 2914 Taylor Street, Dallas, Texas 75226.
(14) As of March 29, 1999, as reported in Schedule 13G.
PROPOSAL 1
ELECTION OF DIRECTORS
BOARD OF DIRECTORS OF THE COMPANY
The By-Laws of the Company provide that the number of directors shall be not
less than three nor more than seven. Effective May 4, 1999, Roger A. Burlage
resigned as a director, and on May 26, 1999, Peter J. Dekom was elected as a
director by the Board of Directors. There are no vacancies on the Board.
The persons named below, each of whom is currently a member of the Board of
Directors of the Company, have been nominated for election by the Board of
Directors to serve until the next annual meeting of stockholders and until their
successors are elected and qualified or until their earlier resignation or
removal. In the event that any of the nominees should become unavailable for
election as a director it is intended that the Proxy Holders will vote for the
election of such substitute nominees, if any, as shall be designated by the
Board of Directors. The Board of Directors has no reason to believe that any
nominee will be unavailable to serve if elected to office.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES LISTED BELOW.
4
The following table sets forth certain information, as of October 1, 1999,
with respect to each person who has been nominated by the Board of Directors for
election as a director.
YEAR FIRST
ELECTED OR
POSITIONS WITH THE COMPANY AND APPOINTED A
NAME PRINCIPAL OCCUPATION FOR PAST FIVE YEARS(1) AGE DIRECTOR
- ---- ------------------------------------------- -------- -----------
Mark Amin Chairman of the Board since November 1988, and 49 1984(1)
Chief Executive Officer since January 1994
Gordon Stulberg Former Chairman of the Board of Philips 75 1991
Interactive Media International (an interactive
compact disc development venture of companies)
and was Chairman of the Board from 1986 to
September 1993; formerly, President of PolyGram
Pictures; and a consultant to Cox Enterprises
since 1985
Matthew H. Saver Of Counsel to the law firm of Myman, Abell, 46 1994(1)
Fineman & Greenspan since 1994
Tofigh Shirazi Founder and president of Intercontinental United 46 1994
Investors Corporation (a Houston-based real
estate development and investment firm)
since 1981
Peter J. Dekom Management and business consultant and advisor 52 1999
since 1996; senior partner at the law firm of
Bloom, Dekom, Hergott and Cook from 1973 to 1996
- ------------------------
(1) Includes service both with the Company and Trimark Pictures, Inc., a
California corporation ("Trimark") and a wholly-owned subsidiary of the
Company.
THE BOARD OF DIRECTORS AND COMMITTEES; DIRECTOR COMPENSATION
All directors are elected annually and serve until the next annual meeting
of stockholders or until their successors are elected and qualified or until
their earlier resignation or removal. Directors of the Company who are not
executive officers are entitled to receive a fee of $10,000 per year for serving
on the Board of Directors, options to purchase 2,000 shares of Common Stock per
year under the Company's Directors' Stock Option Plan or 1999 Directors' Option
Plan and $1,000 for attendance at each committee meeting.
During fiscal year 1999, the Board of Directors held four meetings and took
action by unanimous written consent on four occasions. During fiscal year 1999,
each director attended at least 75% of the total number of the meetings of the
Board and of the committees of the Board on which such member serves.
The Board of Directors has a standing Audit Committee presently comprised of
Gordon Stulberg, Matthew H. Saver and Tofigh Shirazi. The functions of the Audit
Committee are to review and approve the selection of, and all services performed
by, the Company's independent accountants; to meet and consult with and to
receive reports from, the Company's independent accountants and its financial
and accounting staff; and to review and act with respect to the scope of audit
procedures, accounting practices and internal accounting and financial controls
of the Company. During fiscal year 1999, the Audit Committee held one meeting.
The Board of Directors has a standing Stock Option Plan Committee presently
comprised of Matthew H. Saver and Tofigh Shirazi. The function of such committee
is to administer the Company's Stock Option and Stock Appreciation Rights Plan
and the 1999 Stock Option Plan of the Company
5
described herein. During fiscal year 1999, the Stock Option Plan Committee held
no meetings and took action by unanimous written consent on six occasions.
The Board of Directors has a standing Compensation Committee presently
comprised of Gordon Stulberg, Matthew H. Saver and Tofigh Shirazi. The function
of such committee is to review, approve and recommend to the Board compensation
for certain officers of the Company. During fiscal year 1999, the Compensation
Committee held one meeting. The Company has no Nominating Committee.
EXECUTIVE COMPENSATION AND RELATED MATTERS
The following table sets forth the cash compensation (including cash
bonuses) paid by the Company for its fiscal years ended June 30, 1999, 1998 and
1997 to its Chief Executive Officer and its four most highly compensated
executive officers other than the Chief Executive Officer at June 30, 1999.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION(1) AWARDS
---------------------------------- ---------------
SECURITIES
NAME AND UNDERLYING ALL OTHER
PRINCIPAL POSITION FISCAL YEAR SALARY($) BONUS($) OPTIONS/SARS(#) COMPENSATION($)(7)
- ------------------ ----------- --------- -------- --------------- ------------------
Mark Amin 1999 $380,000 $ -- -- $--
Chairman of the Board and Chief 1998 $380,000 $ -- -- $--
Executive Officer(2) 1997 $380,000 $ -- -- $--
Andrew Reimer 1999 $127,049 $135,051 -- $--
Senior V.P., Worldwide 1998 $155,000 $ -- -- $--
Television of Trimark(3) 1997 $134,771 $ -- -- $--
Tim Swain 1999 $204,133 $ -- 88,500 $--
Executive V.P., Domestic 1998 $213,471 $ -- -- $--
Distribution of Trimark(4) 1997 $217,949 $ -- 42,000 $--
Cami Winikoff 1999 $119,063 $ 90,000 85,000 $--
Executive V.P. and Chief 1998 $107,048 $ 50,000 -- $--
Administrative Officer of 1997 $155,222 $ -- 30,000 $--
Trimark(5)
Peter Block 1999 $151,357 $ 20,500 85,000 $--
Executive V.P. of Trimark(6) 1998 $119,792 $ -- -- $--
1997 $ 75,000 $ -- -- $--
- ------------------------
(1) The compensation described in this table does not include medical, group
life insurance or other benefits received by the named executive officers
which are available generally to all employees of the Company and certain
perquisites and other personal benefits received by the named executive
officers of the Company, the value of which did not exceed the lesser of
$50,000 or ten percent of the executive officer's cash compensation in the
table.
(2) Mr. Amin has been Chairman of the Board of the Company since November 1988
and Chief Executive Officer of the Company since January 15, 1994. Mr. Amin
is not operating under an employment agreement with the Company. Mr. Amin is
being paid a salary at an annual rate of $380,000.
(3) Trimark entered into a two-year employment agreement with Andrew Reimer
effective August 6, 1998. Mr. Reimer is entitled to receive an annual base
salary of $165,000 during the first year and
6
$175,000 during the second year of the agreement. The agreement provides
that Mr. Reimer will be eligible for a year-end bonus, for each year of the
employment term in which Trimark's "Video Revenue" and "Theatrical Revenue"
(as defined in the agreement) exceed certain levels. The agreement generally
provides that the aggregate of any bonus payments relating to any applicable
year will not exceed $90,000. If Mr. Reimer's employment is terminated other
than for reasons of cause, he will be entitled to be paid the remaining
balance of his salary and receive employee benefits in accordance with their
terms until such time as he shall become employed in a job of equal or
greater compensation.
(4) Mr. Swain resigned from Trimark effective August 6, 1999.
(5) Trimark entered into a three-year employment agreement with Cami Winikoff
effective January 13, 1997. Ms. Winikoff is entitled to receive an annual
base salary of $100,000 during the first year, $115,000 during the second
year and $125,000 during the third year of the agreement, plus a $50,000
bonus each year. Ms. Winikoff is also eligible to receive an additional
yearly bonus based on Trimark's profitability and at management's
discretion. If Ms. Winikoff's employment is terminated other than for cause,
she will be entitled to be paid 50% of the remaining balance of her contract
(100% in the event of a change of control of the Company). Effective as of
February 1, 1999, Trimark entered into an employment agreement with
Ms. Winikoff for a two-year term commencing January 13, 2000. Ms. Winikoff
was paid a signing bonus of $40,000 and is entitled to an annual salary
thereunder of $175,000. If her employment is terminated other than for
breach, she will be entitled to be paid the greater of (i) 50% of the
remaining balance of her contract (100% in the event of a change of control
of the Company), plus vesting of all unvested stock options to purchase
36,000 shares, or (ii) the difference between $500,000 less the aggregate of
the value of such stock options plus the value of all other Company stock
options held by her at the date of the contract plus 50% (100% in the event
of a change of control of the Company) of the remaining balance of her
salary under the contract. In certain circumstances following a change of
control, Ms. Winikoff's base salary will increase to $250,000 and the
foregoing stock options shall vest.
(6) Trimark entered into a two-year employment agreement with Peter Block
effective February 1, 1999. Mr. Block is entitled to receive an annual base
salary of approximately $175,000 during the agreement, plus a one-time
$20,000 signing bonus and $40,000 in reimbursable expenses during the term
of the agreement. If his employment is terminated other than for breach, he
will be entitled to be paid the greater of (i) 50% of the remaining balance
of his contract (100% in the event of a change of control of the Company),
plus vesting of all unvested stock options to purchase 70,000 shares that
are scheduled to vest by June 1, 2001; or (ii) the difference between
$500,000 less the aggregate of the value of such stock options plus the
value of certain other Company stock options held by him at the date of the
contract plus 50% (100% in the event of a change of control of the Company)
of the remaining balance of his salary under the contract. In certain
circumstances following a change of control, Mr. Block's base salary will
increase to $250,000 and the foregoing stock options to purchase
70,000 shares shall vest.
(7) Represents cash contributions by the Company to its 401(k) Plan for the
account of the named individuals.
OTHER COMPENSATION ARRANGEMENTS
Effective March 15, 1998, Trimark entered into a consulting agreement with
Burlage/Edell Productions, Inc., a corporation controlled by Roger Burlage, a
director of the Company from March 27, 1998 to May 4, 1999, pursuant to which
Mr. Burlage would provide non-exclusive consulting services to Trimark regarding
theatrical distribution of its product, its DVD business, strategic planning,
its acquisition of product and/or libraries and its television business.
Pursuant to such agreement,
7
Trimark paid Burlage/Edell Productions, Inc. a consulting fee of $8,334 per
month. The agreement was terminated on May 4, 1999.
STOCK OPTIONS
The following table sets forth information with respect to grants of options
("Options") to purchase Common Stock under the Company's Stock Option and Stock
Appreciation Rights Plan to the executive officers named in the Summary
Compensation Table during the fiscal year ended June 30, 1999. The Company did
not grant any stock appreciation rights during such fiscal year.
OPTION GRANTS IN THE FISCAL YEAR ENDED JUNE 30, 1999
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERMS(4)
---------------------------------------------------- -----------------------
% OF TOTAL
OPTIONS
OPTIONS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES BASE PRICE EXPIRATION
NAME (#)(2) IN FISCAL YEAR ($/SH)(3) DATE 5%($) 10%($)
- ---- -------- -------------- ----------- ---------- ---------- ----------
Mark Amin....................... -- -- -- -- --
Andrew Reimer................... -- -- -- -- -- --
Tim Swain(1).................... 8,000 2.8 $3.00 8/8/02 -- $ 156
16,000 5.6 $3.00 1/14/02 -- $ 312
22,500 7.9 $3.00 3/31/04 $ 1,050 $ 14,704
42,000 14.7 $3.00 7/2/06 $ 59,665
Cami Winikoff(1)................ 1,000 .3 $3.00 1/20/03 -- $ 321
18,000 6.3 $3.00 1/30/06 $ 720 $ 25,560
30,000 10.5 $3.00 2/27/07 $ 5,970 $ 55,878
36,000 12.6 $4.50 2/2/09 -- $ 49,680
Peter Block(1).................. 85,000 29.8 $5.50 2/14/09 $190,120 $579,675
- ------------------------
(1) Ms. Winikoff, Mr. Block and Mr. Swain received their Options pursuant to the
Stock Option and Stock Appreciation Rights Plan. The Options generally vest
and become exercisable with respect to 33 1/3% of the shares on or about the
first anniversary of the grant date, and an additional 33 1/3% of the
Options vest on each of the second and third anniversary of the initial
grant date if the optionee has remained employed by the Company until such
date; in certain circumstances the options will vest upon a change of
control of the Company. See "Stock Option and Stock Appreciation Rights
Plan." 49,000 of the Options granted to Ms. Winikoff and all of the Options
granted to Mr. Swain represent amended Options. See "Ten-Year Option
Repricings."
(2) The Options granted shall terminate three months after the termination of
employment unless (i) such termination was by reason of death, in which case
the Options shall be exercisable for one year after the date of termination
of employment or (ii) such termination was for cause, in which case the
Options shall terminate on the date of termination of employment. However,
in no event will such Options be exercisable after ten years from the date
of grant. The Options are non-transferable.
(3) All Options were granted at or above market value on the date of grant. The
exercise price and tax withholding obligations related to exercise may be
paid by cash, by delivery of already owned shares or by offset of the
underlying shares, subject to certain conditions.
8
(4) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on the future
performance of the Common Stock, overall stock conditions, as well as the
optionholders' continued employment through the vesting period. The amounts
reflected in this table may not necessarily be achieved.
The following table sets forth information with respect to the exercise of
Options, ownership of Options and Option values as of June 30, 1999. The Company
has no outstanding stock appreciation rights, either freestanding or in tandem
with Options.
AGGREGATED OPTION EXERCISES DURING FISCAL 1999
AND FISCAL YEAR END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR-END(#) FISCAL YEAR-END($)*
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
Mark Amin................. -- -- 200,000 -- -- --
Andrew Reimer............. -- -- 5,000 -- -- --
Tim Swain................. 5,600 $22,974 54,900 14,000 $92,644 $23,625
Peter Block............... -- -- 21,000 70,000 -- --
Cami Winikoff............. -- -- 39,000 46,000 $65,812 $23,625
- ------------------------
* Represents the difference between the closing price of the Common Stock on
June 30, 1999 ($4.6875) and the exercise price of the Options, multiplied by
the applicable number of Options.
The following table provides information regarding all repricings of Options
to purchase Common Stock held by any executive officer of the Company since June
1990, the date the Company became a public reporting company.
9
TEN YEAR OPTION REPRICINGS
LENGTH OF
NUMBER OF ORIGINAL OPTION
SECURITIES TERM
UNDERLYING MARKET PRICE OF EXERCISE PRICE REMAINING
OPTIONS/SARS STOCK AT TIME OF AT TIME OF AT DATE OF
REPRICED OR REPRICING OR REPRICING OR NEW EXERCISE REPRICING OR
NAME DATE AMENDED(#) AMENDMENT($) AMENDMENT($) PRICE($) AMENDMENT(1)
- ---- ---- ------------ ------------------- -------------- ------------ ---------------
Cami Winikoff 11/20/98 1,000 2.06 5.00 3.00 50 months
Exec. V.P., Chief 11/20/98 18,000 2.06 5.00 3.00 86 months
Admin. Officer of 11/20/98 30,000 2.06 5.00 3.00 86 months
Trimark
Peter Block 1/30/96 1,000 5.00 6.75 5.00 105 months
Exec. V.P. of Trimark
Sergei Yershov 11/20/98 3,000 2.06 5.00 3.00 86 months
Sr. V.P. of Trimark
Tim Swain 1/14/92 16,000 6.00 9.25 6.00 102 months
Former Exec. V.P., 1/20/93 16,000 5.00 6.00 5.00 90 months
Domestic 1/30/96 22,500 5.00 9.25 5.00 90 months
Distribution of 11/20/98 8,000 2.06 4.00 5.00 45 months
Trimark 11/20/98 16,000 2.06 5.00 3.00 38 months
11/20/98 22,500 2.06 5.00 3.00 65 months
11/20/98 24,000 2.06 5.38 3.00 92 months
11/20/98 18,000 2.06 8.00 3.00 92 months
3.00
James E. Keegan 1/14/92 30,000 6.00 9.25 6.00 102 months
Former Sr. V.P., 1/20/93 30,000 5.00 6.00 5.00 90 months
Finance and Chief 5/5/95 27,000 6.75 9.25 6.75 107 months
Financial Officer
Sergio Aguero 8/10/95 15,000 6.875 9.25 6.875 102 months
Former Exec. V.P.,
Int'l Sales of
Trimark
Roger A. Burlage 1/14/92 88,538 6.00 7.06 6.00 84 months
Former President
Barry M. Barnholtz 1/30/96 10,000 5.00 7.625 5.00 105 months
Former Sr. V.P.
Don Gold 4/16/96 7,500 5.50 9.25 5.50 96 months
Former Sr. V.P. of
Trimark
- ------------------------
(1) See "Report of the Stock Option and Stock Appreciation Rights Plan Committee
on Repricing of Options" and "Option Grants in the Fiscal Year Ended
June 30, 1999."
10
REPORT OF THE STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN COMMITTEE ON
REPRICING OF OPTIONS
During fiscal 1999, the Stock Option and Stock Appreciation Rights Plan
Committee considered the fact that a decline in the price of the Common Stock of
the Company had resulted in a substantial number of stock options granted
pursuant to the Company's Stock Option and Stock Appreciation Rights Plan to Tim
Swain, Cami Winikoff and Sergei Yershov, three of Trimark's executive officers,
having exercise prices well above the recent trading prices for the Common
Stock. The Committee was advised by senior management that management believed
that the Company's total compensation package for such officers, which included
substantial options with exercise prices well above the current trading price,
was less attractive than compensation offered by other entertainment companies
with which the Company competes for executive talent.
The Committee believed that (i) the Company's success in the future will
depend in large part on its ability to retain a number of its highly skilled
personnel, (ii) that competition for such personnel is intense, (iii) that the
loss of key officers and employees could have significant adverse impact on the
Company's business, and (iv) that it is important and cost-effective to provide
equity incentives to employees and officers of the Company to improve the
Company's performance and the value of the Company for its stockholders. On
balance, considering all of these factors, the Committee determined it to be in
the best interests of the Company and its stockholders to restore the incentive
for such officers to remain as employees of the Company and to exert their
maximum efforts on behalf of the Company by repricing certain outstanding
options under the plan to an exercise price that, though in all cases still
above the then current trading price, was considerably closer to such current
trading price. See "Ten-year Option Repricings" table for further information
concerning such repricing and the repricing to other officers since June 1990,
when the Company became a public reporting company.
Stock Option and Stock Appreciation
Rights Plan Committee
MATTHEW H. SAVER, CHAIRMAN
TOFIGH SHIRAZI
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended June 30, 1997, Trimark made a loan of $400,000
to Mark Amin, the Chairman of the Board and Chief Executive Officer of the
Company. In July 1997, Trimark loaned an additional $350,000 to Mr. Amin.
Mr. Amin's loan is evidenced by a promissory note, is secured by shares of the
Company's Common Stock and bears interest at Trimark's weighted average cost of
funds under its credit facility with its bank (which averaged 7.50% during the
fiscal year ended June 30, 1999), but in no event less than the applicable
federal rate set forth in Section 1274(d) of the Internal Revenue Code. Interest
payments are due quarterly until June 30, 2000, at which time the entire loan
balance is due. The largest aggregate amount of indebtedness outstanding during
the fiscal year ended June 30, 1999 was $795,233. As of September 30, 1999, the
aggregate amount outstanding was $763,904.
On March 29, 1999, pursuant to the terms of a February 22, 1999 agreement
between the Company and broadcast.com inc. (now known as Yahoo! Broadcast
Services) ("BCST") to jointly market certain of the Company's movies by
streaming them on the BCST web site, the Company issued and sold to BCST
412,363 shares of the Company's Common Stock (or 9% of its outstanding shares)
in exchange for 45,858 shares of common stock of BCST. As a result of this new
business venture, the Company and BCST will work together to distribute movies
on the internet under a variety of new
11
revenue models including pay-per-view, electronic commerce, integrated
advertising, personalized marketing and user 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 BCST streaming rights or in
certain circumstances rights of first refusal in connection therewith.
Reference is made to the "Summary Compensation Table" and "Other
Compensation Arrangements" for a description of employment arrangements and
other arrangements between the Company and certain of its directors and
officers.
STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
Since May 1990, the Company has maintained a Stock Option and Stock
Appreciation Rights Plan (the "1990 Plan"). The 1990 Plan currently provides for
the grant of options to purchase up to 820,000 shares of the Company's Common
Stock to officers, directors, key employees and consultants of the Company, and
its subsidiaries. As of June 30, 1999, 268,599 shares remained available for
grant under the 1990 Plan. In 1994 the Board of Directors and stockholders
approved an amendment to the 1990 Plan limiting the number of shares subject to
options and stock appreciation rights that may be granted annually to any
participant to 200,000. In view of the fact that no options may be granted under
the 1990 Plan beyond May 21, 2000, the Board of Directors has adopted, subject
to the approval of the stockholders, the 1999 Stock Option Plan of Trimark
Holdings, Inc. See "Proposal 2--Approval of the Company's 1999 Stock Option
Plan." The Company intends to grant options under the new option plan, and also
intends to continue to grant options under the 1990 Plan until May 21, 2000 as
long as there are sufficient remaining shares under the 1990 Plan.
The 1990 Plan is administered by the Stock Option Plan Committee (the
"Option Committee") of the Board of Directors. The Option Committee is comprised
of Messrs. Matthew H. Saver and Tofigh Shirazi. The Option Committee has the
authority to determine to whom, and the time or times at which options and
"stock appreciation rights" or "SARs" will be granted, the number of shares of
Common Stock that comprise each option, the number of SARs, and the time or
times at which each option or SAR granted under the 1990 Plan may be exercised,
provided, however, that no option or SAR may be exercised later than 10 years
after the date of grant.
The 1990 Plan provides for the grant of both "incentive stock options" or
"ISOs" and "non-qualified stock options" to acquire the Company's Common Stock.
ISOs may only be issued to the Company's employees and non-qualified stock
options may be issued to the Company's regular employees as well as its
consultants and certain of its executive officers and directors. ISO's must be
granted with an exercise price of no less than the fair market value of the
Company's Common Stock at the time of grant, but if granted to stockholders
owning at least 10% of the Common Stock outstanding, such options will be
granted at a price of at least 110% of the fair market value of such Common
Stock at the time of grant. The exercise price for non-qualified stock options
is determined by the Option Committee. The shares purchased upon the exercise of
an option granted under the 1990 Plan are to be paid for: (i) in cash or by
certified or cashier's check payable to the order of the Company, (ii) by
cancellation of indebtedness, (iii) through the delivery of other shares of the
Common Stock having an aggregate fair market value equal to the total exercise
price of the option being exercised, (iv) with the approval of the Option
Committee, by a promissory note made by the optionee in favor of the Company
upon terms and conditions to be determined by the Option Committee and secured
by the shares issuable upon exercise of such option, or (v) any combination
thereof.
SARs granted under the 1990 Plan may, at the discretion of the Option
Committee, enable the recipient upon exercise to receive payment in cash for
increases in the market value of the Common Stock from the date of grant (the
"Initial Value") to the date of exercise. SARs may be issued to the Company's
employees and certain of its executive officers and directors. A maximum of
820,000 SARs may be granted under the 1990 Plan, subject to reduction for any
options outstanding under the 1990
12
Plan. A payment that represents appreciation of a SAR may be made in cash or in
the Common Stock. SARs may be granted in tandem with options under the 1990
Plan, in which event the exercise of one will extinguish the other. The Initial
Value of SARs granted under the 1990 Plan may not be less than 100% of the fair
market value of the Common Stock on the date the SAR is granted.
Consideration for the options or SARs to be granted under the 1990 Plan is
provided by the recipient's past, present and expected future contributions to
the Company. No monetary consideration is provided by the recipient with respect
to the grant of options or SARs.
Except as otherwise provided by the Option Committee, no option or SAR
granted under the 1990 Plan is transferable, except in the event of a
recipient's death or permanent disability. ISOs may be exercised by the holder
(a) while he is an employee of the Company or (b) within three months after
termination of his employment if such termination is due to normal retirement or
voluntary resignation if the Company's Board of Directors consents. In the event
of a recipient's death or permanent disability, the recipient's ISOs may be
exercised at any time prior to expiration of the ISOs, but in any event not
later than one year after the date of his death or permanent disability. In the
event of the recipient's death, the ISOs may be exercised by the person entitled
to do so under the recipient's will or by the recipient's legal representative.
The 1990 Plan is not subject to the Employee Retirement Income Security Act of
1974. The 1990 Plan is not qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended.
Certain of the options granted by the Option Committee to date provide that
such options shall become fully exercisable upon a "change of control" of the
Company. A "change of control" is generally deemed to have occurred (i) upon
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 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) upon 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 (the "Exchange Act") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 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 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.
The Board of Directors or the Option Committee may at any time suspend or
terminate the 1990 Plan except that (i) no such action may impair the rights of
optionees under any option or stock appreciation right previously granted
pursuant to the 1990 Plan and (ii) shareholder approval is required to effect
any amendment to or change in the 1990 Plan that would: (a) increase the maximum
number of shares which may be acquired pursuant to options, and the maximum
number of stock appreciation rights, granted under the 1990 Plan (except as to
adjustments for stock splits through a reorganization, recapitalization, stock
dividend, stock split, reverse stock split or other similar transaction as
provided in the 1990 Plan); (b) change the minimum exercise price of an option
or the Initial Value of a stock appreciation right; (c) increase the maximum
number of options or stock
13
appreciation rights issuable under the 1990 Plan; or (d) change the designation
of persons eligible to receive options or stock appreciation rights under the
1990 Plan.
DIRECTORS' STOCK OPTION PLAN
The Directors' Stock Option Plan ("Directors' Plan") was adopted by the
Board of Directors of the Company in October 1993 and approved by the
stockholders of the Company in November 1993. In January 1999, the Board of
Directors terminated the Directors' Plan and with the optionholders' consent
canceled outstanding options thereunder. At the same time, the Board of
Directors adopted the 1999 Directors' Option Plan, subject to the approval of
the Company's shareholders. See "Proposal 3--Approval of the Company's 1999
Directors' Option Plan." The purposes of the Directors' Plan were to enable the
Company to attract and retain the services of non-employee and non-consultant
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. The Directors' Plan covered an aggregate of 40,000 shares
of Common Stock.
The Directors' Plan provided that each non-employee, non-consultant director
as of January 14, 1994 ("Effective Date") would receive an option to purchase
2,000 shares of Common Stock at an exercise price equal to the fair market value
as of such date. In addition, any person who was a non-employee/consultant
director on an annual anniversary date of the Effective Date (including and
terminating with the anniversary date in the year 2003) would receive an option
to purchase 2,000 shares at the fair market value on that date, subject to the
overall limit of the number of shares issuable under the Directors' Plan. The
maximum term of each option was ten years from the date the option is granted.
Each option vested fully upon the date of grant.
As of the date of termination of the Directors' Plan and cancellation of
options thereunder, Mr. Stulberg had received a grant, on January 14, 1994, to
purchase 2,000 shares at $11.50 per share and each of Messrs. Stulberg, Saver
and Shirazi received a grant, on January 14, 1995, to purchase 2,000 shares at
$8.44 per share, a grant, on January 14, 1996, to purchase 2,000 shares at $5.25
per share, a grant, on January 14, 1997, to purchase 2,000 shares at $5.25 per
share, and a grant, on January 14, 1998, to purchase 2,000 shares at $5.50
per share.
The Directors' Plan was not subject to ERISA and was not qualified under
Section 401(a) of the Code.
401(k) PLAN
Effective as of January 1, 1990, the Company adopted its 401(k) Plan (the
"Plan"), which includes a cash-or-deferred arrangement under Section 401(k) of
the Internal Revenue Code of 1986, as amended. The Plan, which has been amended
and restated as of July 1, 1997, was established to provide retirement and other
benefits to employees of the Company. Employees who have completed at least 6
months of service qualify for the Plan. Participants may designate up to 15% of
their compensation to be contributed to the Plan on a pre-tax basis ("Employee
Elective Contributions"). Participants will be 100% vested in their Employee
Elective Contributions (including earnings) at all times.
The Company does not make matching contributions to the Plan. The Company
may determine each plan year to make discretionary profit sharing contributions
on behalf of participants who meet certain eligibility requirements
(i.e. employed on the last day of the plan year or completion of at least
500 hours of service during such year). Participants will generally vest in the
Company's contributions (including earnings) at the rate of 40% after the first
year of service, 60% after the second year of service, 80% after the third year
of service and 100% after the fourth year of service.
14
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors, its
executive (and certain other) officers, and any persons holding more than ten
percent of the Common Stock are required to report their ownership of the Common
Stock and any changes in that ownership to the Securities and Exchange
Commission ("Commission"). Specific due dates for these reports have been
established and the Company is required to report in this Proxy Statement any
failure to file by these dates during the fiscal year July 1, 1998 through
June 30, 1999. All of these filing requirements were satisfied by its directors,
officers and ten percent holders, except that Tim Swain, former Executive Vice
President of Trimark, filed late one report on Form 4 relating to one
transaction involving a sale of Common Stock and filed late one report on
Form 4 relating to one transaction involving a purchase of Common Stock;
(ii) Peter Block, an Executive Vice President of Trimark, filed late his initial
ownership report on Form 3; (iii) Sergei Yershov, a Senior Vice President of
Trimark, filed late his initial ownership report on Form 3; (iv) Jeff Gonzalez,
Chief Financial Officer and Secretary of the Company, filed late his initial
ownership report on Form 3; and (v) Peter J. Dekom, a director of the Company,
filed late his initial ownership report on Form 3. In making these statements,
the Company has relied on the written representations of its directors, officers
and its ten percent holders and copies of the reports that they have filed with
the Commission.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Gordon Stulberg, Matthew H.
Saver and Tofigh Shirazi. The members of the Stock Option and Stock Appreciation
Rights Plan Committee are Matthew H. Saver and Tofigh Shirazi.
Messrs. Stulberg, Saver and Shirazi are directors of the Company. No member of
the Compensation Committee or Stock Option and Stock Appreciation Rights Plan
Committee has any interlocking relationship with any other corporation that
requires disclosure under this heading.
COMPENSATION COMMITTEE AND STOCK OPTION AND
STOCK APPRECIATION RIGHTS PLAN COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee reviews, approves and recommends to the Board of
Directors compensation for the Company's Chairman of the Board and Chief
Executive Officer and the Chief Financial Officer. The Stock Option and Stock
Appreciation Rights Plan Committee administers the Company's Stock Option and
Stock Appreciation Rights Plan and will administer the 1999 Stock Option Plan of
Trimark Holdings, Inc.
The Company's policies underlying compensation decisions are designed to
attract and retain the best possible executive talent, to motivate Company
executives to achieve the Company's goals, to link executive and stockholder
interests through equity based compensation plans and to formulate compensation
packages that recognize individual contributions. Certain of the Company's
executive officers are currently employed pursuant to employment agreements,
some of which are described under "Executive Compensation and Related Matters."
Two such employment agreements were entered into during fiscal 1999.
In establishing executive compensation, the Compensation Committee, based on
review and recommendation of executive performance by the Chief Executive
Officer, evaluates individual performance as it impacts overall Company
performance, with particular focus on an individual's contribution to the
realization of operating profits and achievement of strategic business goals.
The Compensation Committee attempts to rationalize a particular executive's
compensation with that of other executive officers of the Company in an effort
to distribute compensation fairly among the executive officers. No specific
weighting is assigned by the Compensation Committee to any of the
15
foregoing factors considered in determining compensation paid to the Chief
Executive Officer or other executive officers, although the principal factor in
setting compensation for persons other than the Chief Executive Officer is the
recommendation of the Chief Executive Officer, which recommendation may be based
on subjective factors, such as his perception of the particular executive's
overall performance.
In 1993, Congress enacted the Omnibus Reconciliation Act of 1993 (OBRA)
which, among other things, establishes certain requirements in order for
compensation exceeding $1,000,000 earned by certain senior executives to be
deductible. Although the Company's historical levels of executive compensation
have been substantially less than $1,000,000 per employee annually, the Company
currently intends to attempt to conform executive compensation programs and
payments to OBRA's deductibility requirements. Accordingly, the Board of
Directors has established certain restrictions on the granting of options or
other awards under the Company's Stock Option and Stock Appreciation Rights Plan
and the 1999 Stock Option Plan of Trimark Holdings, Inc. to assist in qualifying
such compensation for an exemption. See "Executive Compensation and Related
Matters--The Company's Stock Option and Stock Appreciation Rights Plan" and
"Proposal 2--Approval of the Company's 1999 Stock Option Plan." The Board of
Directors does not believe that other components of the Company's compensation
will be likely to exceed $1,000,000 for any executive officer in the foreseeable
future and therefore concluded that no further action with respect to qualifying
such compensation for deductibility was necessary at this time. The Board will
continue to evaluate the advisability of qualifying the deductibility of such
compensation in the future.
The key elements of an executive's compensation consist of base salary, and,
as to certain executives, a contractual bonus award and stock compensation, such
as stock options. These items are discussed in more detail in the following
sections of this Report.
(a) Base Salary
The Company compensates its executive officers primarily through salaries.
As described above, based on the factors described therein, the Compensation
Committee reviews certain officer's salaries, including Mr. Amin's (the Chief
Executive Officer), on an annual basis. Mr. Amin was paid an annual salary of
approximately $380,000 in fiscal 1999 which was the same salary paid during the
prior year. The Compensation Committee believed no increase was appropriate in
light of the net losses incurred by the Company in fiscal 1999. Neither
Mr. Amin nor the Compensation Committee believed an employment agreement was
necessary.
(b) Bonus
The Company's senior executives and employees are eligible to receive a cash
bonus. Subject to negotiated and fixed contractual bonus provisions contained in
certain executives' employment agreements, the amount of bonuses and their
distribution is discretionary, and the general practice is that such bonuses are
recommended by the Chief Executive Officer and reviewed by the Compensation
Committee. For fiscal 1999, three of the executive officers named in the Summary
Compensation Table received a bonus. Mr. Amin did not receive a bonus in light
of the Company's net loss in fiscal 1999.
(c) Stock Based Compensation
Under the Stock Option and Stock Appreciation Rights Plan which was approved
by the stockholders in 1990, and under the 1999 Stock Option Plan of Trimark
Holdings, Inc. to be voted on by stockholders at the Meeting, stock based
compensation in the form of stock options may be granted to directors, officers
and key employees of the Company. The purpose of equity participation is to
further align the interests between executive officers and the stockholders in
the Company's growth in real value over the long term.
16
STOCK OPTIONS
Stock options, which are exercisable for ten years from the date of grant,
have an exercise price equal to (or in some cases in excess of) the closing
market price (NASDAQ/SmallCap Market) of the Company's Common Stock on the date
of grant and vest in varying increments over periods ranging from the grant date
to (more typically) three years. This approach is designed to provide an
incentive to create stockholder value over the longer term, since the full
benefit of the stock option compensation package generally cannot be realized
unless stock appreciation occurs over several years.
The Stock Option and Stock Appreciation Rights Plan Committee determines the
number of options to be granted based principally upon the recommendation of the
Chief Executive Officer whose recommendation in turn is based on his subjective
analysis of individual performance, responsibility, the executive's other
compensation (including prior grants of options, if any) and the executive's
retention value to the Company. No specific weighting is assigned to these
factors.
In fiscal 1999, Mr. Amin was not granted options to purchase Common Stock.
Certain other executive officers, including three executive officers named in
the Summary Compensation Table, were granted options in fiscal 1999 or had
options repriced. See "Option Grants in the Fiscal Year Ended June 30, 1999,"
"Ten-Year Option Repricings" and "Report of the Stock Option and Stock
Appreciation Rights Plan Committee on Repricing of Options."
The foregoing report of the Compensation Committee and the Stock Option and
Stock Appreciation Rights Plan Committee shall not be deemed to be incorporated
by reference into any filing of the Company under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates such information by reference,
and shall not otherwise be deemed filed under such Acts.
Compensation Committee Stock Option and Stock Appreciation Rights Plan Committee
GORDON STULBERG, CHAIRMAN MATTHEW H. SAVER, CHAIRMAN
MATTHEW H. SAVER TOFIGH SHIRAZI
TOFIGH SHIRAZI
17
STOCK PERFORMANCE
Set forth below is a graph comparing, for the last five fiscal years, the
yearly cumulative total stockholder return on the Common Stock, with the yearly
cumulative total return on (a) the NASDAQ Stock Market (U.S.) Index, and (b) an
index comprised of the common stock of two independent companies in the motion
picture industry (the "Peer Group"): Kushner-Locke Company and Overseas Film
Group, Inc.
The comparisons in the graph below are based on historical data and are not
indicative of, or intended to forecast, the possible future performance of the
Common Stock.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* TRIMARK HOLDINGS, INC. PEER GROUP NASDAQ STOCK MARKET (U.S.)
AMONG TRIMARK HOLDINGS, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX AND A PEER GROUP
DOLLARS
6/30/94 100 100 100
6/30/95 88 55 133
6/30/96 63 87 171
6/30/97 60 29 208
6/30/98 36 36 274
6/30/99 55 71 392
* $100 INVESTED ON 6/30/994 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
18
PROPOSAL 2
APPROVAL OF THE COMPANY'S 1999 STOCK OPTION PLAN
In October 1999, the Board of Directors of the Company adopted, subject to
stockholder approval, the 1999 Stock Option Plan of Trimark Holdings, Inc. (the
"1999 Plan"), and reserved 250,000 shares for issuance under the 1999 Plan. A
copy of the 1999 Plan is attached hereto as Annex A. The Board adopted the 1999
Plan to ensure that the Company can continue to provide equity incentives to
employees and other participants at levels determined appropriate by the Board
following termination of the Company's Stock Option and Stock Appreciation
Rights Plan (the "1990 Plan"), which terminates on May 21, 2000. No stock
options may be granted under the 1990 Plan after it is terminated. The closing
price of the Company's Common Stock on the NASDAQ Stock Market on October 14,
1999 was $4.125.
No stock options have been granted or issued under the 1999 Plan. The size
of future awards and the identity of the recipients cannot be determined at this
time. It is expected that such determination will be made primarily upon the
recommendation of the Chief Executive Officer on the basis of an individual's
performance, responsibility, his or her other compensation, his or her retention
value to the Company and applicable legal requirements. During the last fiscal
year, under the 1990 Plan, the Company has granted to all executive officers as
a group, including repriced options, options to purchase 281,000 shares at
exercise prices of $3.00 to $5.50 per share; to all employees (excluding
executive officers) as a group, options to purchase 4,500 shares at an exercise
price of $5.25 per share; and to all current directors who are not officers as a
group, no options. Also see "Executive Compensation and Related Matters--Option
Grants in the Fiscal Year Ended June 30, 1999."
Stockholders are requested in this Proposal to approve the 1999 Plan and to
reserve for issuance 250,000 shares. The affirmative vote of the holders of a
majority of the shares present in person or represented by proxy and entitled to
vote at the Meeting will be required to approve the 1999 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE ABOVE PROPOSAL
The essential features of the 1999 Plan are outlined below:
The 1999 Plan provides for the grant of options to officers, directors, key
employees and consultants of the Company and its subsidiaries. Approximately 93
of the Company's employees, directors and consultants (if any) are eligible to
participate in the 1999 Plan. The 1999 Plan is administered by the Board of
Directors unless and until the Board delegates administration to a committee
(the "Option Committee") of two or more Board members, all of whom shall be non-
employee directors as defined under the Exchange Act, and may also be, if
practicable, outside directors as defined in the Internal Revenue Code. It is
expected that the Option Committee, comprised of Messrs. Saver and Shirazi, will
administer the 1999 Plan. The Board or Option Committee has the authority to
determine to whom, and the time or times at which options will be granted, the
number of shares of Common Stock that comprise each option, whether to amend or
reduce the exercise price of outstanding options, and the time or times at which
each option granted under the 1999 Plan may be exercised; provided, however,
that no option may be exercised later than 10 years after the date of grant. The
maximum number of shares subject to options that may be granted annually to any
participant is 200,000.
The 1999 Plan provides for the grant of both "incentive stock options" or
"ISOs" and "non-qualified stock options" to acquire the Company's Common Stock.
ISOs may only be issued to the Company's employees and non-qualified stock
options may be issued to the Company's regular employees as well as its
consultants and certain of its executive officers and directors. ISO's must be
granted with an exercise price of no less than the fair market value of Common
Stock at the time of grant, but if granted to stockholders owning at least 10%
of the Common Stock outstanding, such
19
options will be granted at a price of at least 110% of the fair market value of
such Common Stock at the time of grant. The exercise price for non-qualified
stock options is determined by the Option Committee. The shares purchased upon
the exercise of an option granted under the 1999 Plan are to be paid for:
(i) in cash or by certified or cashier's check payable to the order of the
Company, (ii) by cancellation of indebtedness, (iii) through the delivery of
other shares of Common Stock having an aggregate fair market value equal to the
total exercise price of the option being exercised, (iv) with the approval of
the Option Committee, by a promissory note made by the optionee in favor of the
Company upon terms and conditions to be determined by the Option Committee and
secured by the shares issuable upon exercise of such option, or (v) any
combination thereof. Options granted by the Board or Option Committee may
provide that such options shall become fully exercisable upon a "change of
control" of the Company in circumstances to be delineated by the Board or Option
Committee.
Consideration for the options to be granted under the Plan is provided by
the recipient's past, present and expected future contributions to the Company.
No monetary consideration is provided by the recipient with respect to the grant
of options.
Except as otherwise provided by the Board or Option Committee as to
non-qualified options, no option granted under the 1999 Plan is transferable,
except in the event of a recipient's death or permanent disability. ISOs may be
exercised by the holder (a) while he is an employee of the Company or (b) at
such time as designated in the individual option agreement but in no event later
than three months after termination of his employment, other than owing to death
or permanent disability. In the event of a recipient's death or permanent
disability, the recipient's ISOs may be exercised at any time prior to
expiration of the ISOs, but in any event no later than one year after the date
of his death or permanent disability. In the event of the recipient's death, the
ISOs may be exercised by the person entitled to do so under the recipient's will
or by the recipient's legal representative. Termination of employment or other
relationship with the Company by a holder of non-qualified stock options will
have the effect specified in the individual option agreement. The 1999 Plan is
not subject to the Employee Retirement Income Security Act of 1974. The 1999
Plan is not qualified under Section 401(a) of the Internal Revenue Code of 1986,
as amended.
The Board of Directors or the Option Committee may at any time suspend or
terminate the 1999 Plan except that (i) no such action may impair the rights of
optionees under any option previously granted pursuant to the 1999 Plan and
(ii) shareholder approval is required to effect any amendment to or change in
the 1999 Plan that would: (a) increase the maximum number of shares which may be
acquired pursuant to options granted under the 1999 Plan (except as to
adjustments for stock splits through a reorganization, recapitalization, stock
dividend, stock split, reverse stock split or other similar transaction as
provided in the 1999 Plan); (b) change the minimum exercise price of an option;
(c) increase the maximum number of options issuable under the 1999 Plan; or
(d) change the designation of persons eligible to receive options under the
1999 Plan.
FEDERAL INCOME TAX CONSIDERATIONS
The discussion which follows is a summary, based on current law, of some of
the significant federal income tax considerations relating to options under the
1999 Plan.
The following is based upon federal tax laws and regulations as presently in
effect and does not purport to be a complete description of the federal income
tax aspects of the 1999 Plan.
INCENTIVE STOCK OPTIONS
No taxable income is recognized by the optionee upon the grant of an
incentive stock option under the 1999 Plan. Further, no taxable income will be
recognized by the optionee upon exercise of an incentive stock option and no
expense deduction will be available to the Company, provided the
20
optionee holds the shares acquired upon such exercise for at least two years
from the date of grant of the option and for at least one year from the date of
exercise. Any gain on the subsequent sale of the shares will be considered
long-term capital gain provided the two-year and one-year holding periods are
met. The gain recognized upon the sale of the shares is equal to the excess of
the amount realized upon the sale (usually the selling price of the shares) over
the exercise price. Therefore, the net federal income tax effect on an optionee
fulfilling the foregoing holding requirements is to defer, until the shares are
sold, taxation of any increase in the value of the shares from the exercise
price and to treat such gain, at the time of sale, as capital gain rather than
ordinary income. However, in general, if the optionee sells the shares within
two years from the date of the option grant or within one year from the date of
exercise (referred to as a "disqualifying disposition,") the optionee will
recognize taxable income at ordinary tax rates in an amount equal to the lesser
of (i) the value of the shares on the date of exercise, less the exercise price,
and the Company will receive a corresponding business expense deduction. The
balance of any gain recognized on a disqualifying disposition will be long-term
or short-term capital gain depending upon the holding period of the optioned
shares. The special two-year and one-year holding periods for incentive options
do not apply to option shares which are disposed of by the optionee's estate or
a person who acquired such shares by reason of the death of optionee.
An employee may be subject to an alternative minimum tax upon exercise of an
incentive stock option since the excess of the fair market value of the shares
purchased at the date of exercise over the exercise price must be included in
alternative minimum taxable income, unless the shares are disposed of in the
same year that the option was exercised.
NON-INCENTIVE STOCK OPTIONS
As in the case of incentive stock options, the grant of a non-incentive
stock option will not result in any taxable income to the optionee. However, the
tax treatment upon exercise of non-incentive stock options is different.
Generally, the optionee will recognize ordinary income when the option is
exercised in the amount by which the fair market value of the shares acquired
upon exercise of the option on the date of exercise exceeds the exercise price
and the Company will be entitled to a corresponding business expense deduction.
The income recognized by the optionee is compensation income subject to income
tax withholding by the Company.
The fair market value of the shares on the date of exercise will constitute
the tax basis of the shares for computing gain or loss on any subsequent sale.
Any gain or loss recognized by the optionee upon the subsequent disposition of
the shares will be treated as capital gain or loss and will qualify as long-term
capital gain or loss if the shares have been held for the requisite holding
period (more than twelve months at the date of this Proxy Statement).
SECTION 162(m) OF THE CODE
Under Section 162(m) of the Internal Revenue Code, certain compensation
payments in excess of $1 million are subject to a limitation on deductibility
for the Company. The limitation on deductibility applies with respect to that
portion of a compensation payment for a taxable year in excess of $1 million to
either the Company's Chief Executive Officer or any one of its four other most
highly compensated executive officers. Certain performance-based compensation is
not subject to the limitation on deductibility. Options can qualify for this
performance-based exception, but only if they are granted at fair market value,
the total number of shares that can be granted to an executive for a specified
period is stated, and shareholder and Board approval of the plan is obtained.
Non-qualified stock options granted with an exercise price less than the fair
market value of common stock on the date of grant will not meet such
performance-based criteria and, accordingly, the compensation attributable to
such options will be subject to the deductibility limitations contained in
Section 162(m) of the Code.
21
At the date of this Proxy Statement, long-term capital gain is taxed to
individuals at a maximum preferential rate of 20% (10% for individuals in the
15% bracket), while items of ordinary income are currently taxed to individuals
at a maximum rate of 39.6%.
PROPOSAL 3
APPROVAL OF THE COMPANY'S 1999 DIRECTORS' OPTION PLAN
In January 1999, the Board of Directors of the Company adopted, subject to
stockholder approval, the Company's 1999 Directors' Option Plan (the "1999
Directors' Plan") which authorizes the issuance of up to 106,000 shares of
Common Stock to non-employee directors of the Company (currently four persons).
At the same time the Board terminated the Directors' Stock Option Plan that had
been adopted in 1993. See "Directors' Stock Option Plan." A copy of the 1999
Directors' Plan is attached hereto as Annex B. The 1999 Directors' Plan will
facilitate the alignment of interests between the directors and the stockholders
in the Company's growth.
Stockholders are requested in this Proposal to approve the 1999 Directors'
Plan and to reserve for issuance 106,000 shares. The affirmative vote of the
holders of a majority of the shares present in person or represented by proxy
and entitled to vote at the Meeting will be required to approve the 1999
Directors' Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ABOVE PROPOSAL.
The essential features of the 1999 Directors' Plan are outlined below:
The purposes of the 1999 Directors' 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. The
1999 Directors' Plan covers an aggregate of 106,000 shares of Common Stock and
no options may be granted after January 8, 2008.
The 1999 Directors' Plan provides that each non-employee director as of
January 8, 1999 ("Effective Date") would receive an option to purchase
2,000 shares of Common Stock at an exercise price equal to the fair market value
as of such date ($3.00). Furthermore, on the Effective Date, Messrs. Stulberg,
Saver and Shirazi received a one-time grant to purchase 10,000, 8,000 and
8,000 shares of Common Stock, respectively, at an exercise price of $3.00. In
addition, any person who is a non-employee director on an annual anniversary
date of the Effective Date (including and terminating with the anniversary date
in the year 2008) will receive an option to purchase 2,000 shares at the fair
market value on that date, subject to the overall limit of the number of shares
issuable under the 1999 Directors' Plan. The maximum term of each such option is
ten years from the date the option is granted. Each option vests fully upon the
date of grant, except that the options granted to date are subject to
stockholder approval of the 1999 Directors' Plan. The options are
nontransferable, except by will or the laws of descent and distribution and must
be exercised by the optionee during the optionee's lifetime only by such
optionee except that the optionee's estate may exercise the option immediately
within one year of the optionee's death. Any outstanding option may be exercised
within one year by an optionee who ceases to be a director by reason of
disability. In the event an optionee ceases to be a director otherwise than by
reason of death or disability, any outstanding option held by such optionee will
terminate. The Board of Directors may suspend, discontinue, modify or amend the
1999 Directors' Plan in any respect except that the Board may not suspend,
discontinue, modify or amend the 1999 Directors' Plan so as to adversely affect
the rights of a participant with respect to any grants that have previously been
made to such participant without such participant's approval. In addition, no
amendment to or modification of the 1999 Directors' Plan which: (i) materially
increases the benefits accruing to participants; (ii) except for certain changes
in capital stock as a result of stock splits or other comparable transactions as
set forth in the 1999 Directors' Plan, increases the number of shares that may
be issued under the 1999 Directors' Plan; or (iii) modifies the requirements as
to
22
eligibility for participation under the 1999 Directors' Plan, will be effective
without stockholder approval.
The 1999 Directors' Plan is not subject to ERISA and is not qualified under
Section 401(a) of the Code. For federal income tax information, see
"Proposal 2--Approval of the Company's 1999 Stock Option Plan--Federal Income
Tax Considerations."
NEW PLAN BENEFITS
The following table sets forth the number of stock options granted under the
1999 Directors' Plan since its adoption in January 1999 to the individuals set
forth in the Summary Compensation Table and to certain other individuals and
groups. In the event stockholders do not approve the plan, the options will be
cancelled.
1999 DIRECTORS' PLAN
EXERCISE PRICE NUMBER OF
(PER SHARE) STOCK OPTIONS
-------------- -------------
Mark Amin, Chairman of the Board and Chief
Executive Officer N/A N/A
Cami Winikoff, Executive Vice President and Chief
Administrative Officer of Trimark N/A N/A
Andrew Reimer, Senior Vice President, Worldwide Television,
of Trimark N/A N/A
Tim Swain, Former Executive Vice President, Domestic
Distribution, of Trimark N/A N/A
Peter Block, Executive Vice President of Trimark N/A N/A
Gordon Stulberg, Director $3.00 12,000
Matthew H. Saver, Director $3.00 10,000
Tofigh Shirazi, Director $3.00 10,000
Peter J. Dekom, Director N/A 0
Roger Burlage, Director(1) $3.00 2,000
All Current Executive Officers as a Group (11 persons) N/A N/A
All Current Directors as a Group Other than Executive
Officers (4 persons) $3.00 32,000
All Employees as a Group Other than Current Executive
Officers N/A N/A
- ------------------------
(1) Mr. Burlage resigned as a director on May 4, 1999, and his options have been
terminated.
PROPOSAL 4
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending June 30, 2000.
PricewaterhouseCoopers LLP, the Company's accountants for the fiscal year ended
June 30, 1999, performed audit services for fiscal year 1999 which included the
examination of the consolidated financial statements of the Company and services
relating to filings with the Securities and Exchange Commission. All
professional services rendered by PricewaterhouseCoopers LLP during fiscal year
1999 were furnished at customary rates and terms.
Representatives of PricewaterhouseCoopers LLP will be invited to be present
at the Meeting, will have the opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions from
stockholders.
23
Stockholders are being asked to ratify the appointment of
PricewaterhouseCoopers LLP as the Company's independent accountants for the
fiscal year ending June 30, 2000. Ratification of the proposal requires the
affirmative vote of a majority of the Company's shares of Common Stock
represented and voting at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT ACCOUNTANTS OF THE
COMPANY.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended June 30, 1999
accompanies this Proxy Statement. The Annual Report includes consolidated
financial statements of the Company and its subsidiaries and the report thereon
of PricewaterhouseCoopers LLP, independent accountants.
UPON WRITTEN REQUEST OF ANY PERSON ENTITLED TO VOTE AT THE MEETING,
ADDRESSED TO TRIMARK HOLDINGS, INC., ATTENTION: INVESTOR RELATIONS,
4553 GLENCOE AVENUE, SUITE 200, MARINA DEL REY, CALIFORNIA 90292, THE COMPANY
WILL PROVIDE WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED JUNE 30, 1999, INCLUDING THE FINANCIAL STATEMENTS AND THE
SCHEDULES THERETO, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
THE SECURITIES EXCHANGE ACT OF 1934.
PROPOSAL OF STOCKHOLDERS
Under certain circumstances, stockholders are entitled to present proposals
for consideration at stockholder meetings. Any such proposal to be included in
the Proxy Statement for the Company's 2000 Annual Meeting of Stockholders must
be submitted to the Secretary of the Company prior to June 26, 2000 and in
accordance with Rule 14a-8 of the Exchange Act. In addition, proxies solicited
by management may contain discretionary authority to vote on matters which are
not included in the Proxy Statement but which are raised at the Annual Meeting
by Stockholders, unless the Company receives written notice of such matters on
or before September 11, 2000. However, in the event that the date of the 2000
Annual Meeting of Stockholders is more than 30 days before or more than 30 days
after the anniversary date of the 1999 Annual Meeting, proposals to be
considered timely must be received at a reasonable time before the Company
begins to print and mail its proxy materials. It is suggested that such
proposals be sent by Certified Mail--Return Receipt Requested.
OTHER BUSINESS
The Board of Directors knows of no other business which will be presented
for consideration at the Meeting other than as stated in the accompanying Notice
of Annual Meeting of Stockholders. If, however, other matters are properly
brought before the Meeting, it is the intention of the persons named in the
accompanying form of Proxy to vote the shares represented thereby on such
matters in accordance with their best judgment and in their discretion, and
authority to do so is included in the Proxy.
TRIMARK HOLDINGS, INC.
/s/ Mark Amin
--------------------------------------
Mark Amin
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
Dated: October 15, 1999
24
ANNEX A
1999 STOCK OPTION PLAN
OF TRIMARK HOLDINGS, INC.
1. PURPOSE.
The purpose of this 1999 Stock Option Plan (the "Plan") of Trimark Holdings,
Inc., a Delaware corporation (the "Company"), is to secure for the Company and
its stockholders the benefits arising from stock ownership by selected employees
of the Company or its subsidiaries, Directors or consultants ("Participants") as
the Board of Directors or a committee of the Board of Directors constituted for
the purpose, may from time to time determine. This Plan will provide a means
whereby (i) such employees may purchase shares of the Common Stock of the
Company pursuant to options that will qualify as "incentive stock options" under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
(ii) such employees, Directors and consultants may purchase shares of the Common
Stock of the Company pursuant to "nonqualified stock options." Incentive stock
options and nonqualified stock options are sometimes referred to collectively as
"options." Options granted as incentive stock options pursuant to this Plan that
for any reason fail or cease to qualify as such shall be treated as nonqualified
stock options.
2. ADMINISTRATION.
2.1. This Plan shall be administered by the Board of Directors of the
Company or, if the Board in its sole discretion determines, by a committee of
the Board of Directors consisting of two or more Directors of the Company (the
"Committee") who are "Non-Employee Directors" as that term is defined in
Rule 16b-3 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and if, practicable, "Outside
Directors," as that term is defined under regulations promulgated under Code
Section 162(m), as amended from time to time and as interpreted by the Internal
Revenue Service. In the event that two or more members of the Board are not
Non-Employee Directors, the Committee shall be comprised of at least two
Directors, and in such case, any grants or awards hereunder to a Participant
subject to Section 16 of the Exchange Act shall also be approved by the Board of
Directors of the Company. Any action of the Committee with respect to
administration of this Plan shall be taken by a majority vote or written consent
of its members. If the Board of Directors administers the Plan, references
herein to the Committee shall be deemed to refer to the Board of Directors.
2.2. Subject to the provisions of this Plan, the Committee shall have
authority (i) to construe and interpret this Plan, (ii) to define the terms used
therein, (iii) to prescribe, amend and rescind rules and regulations relating to
this Plan, (iv) to determine the individuals to whom and the time or times at
which options shall be granted, whether any options granted will be incentive
stock options or nonqualified stock options, the number of shares to be subject
to each option (subject to the limitations set forth in Section 3 hereof), the
exercise price of an option (subject to the limitations set forth in Section 6
hereof) the number of installments, if any, in which each option may be
exercised, and the duration of each option, (v) in its discretion with the
written consent of the Participant, at any time and from time to time at or
after the grant of any option, accelerate or extend the vesting or exercise
period of any option as a whole or in part, and adjust or reduce the exercise
price of options held by a Participant by cancellation of such options and
granting of options at lower exercise prices or by modification, extension or
renewal of such options, (vi) to approve and determine the duration of leaves of
absence which may be granted to Participants without constituting a termination
of their employment for the purposes of this Plan, and (vii) to make all other
determinations necessary or advisable for the administration of this Plan. All
determinations and interpretations made by the
A-1
Committee shall be binding and conclusive on all Participants in this Plan and
their legal representatives and beneficiaries.
3. SHARES SUBJECT TO THIS PLAN.
Subject to adjustment as provided in Section 14 hereof, the shares to be
issued under this Plan shall consist of the Company's authorized but unissued
Common Stock, and the aggregate amount of such stock which may be issued upon
exercise of all options under the Plan shall not exceed 250,000 shares. If any
options granted under this Plan shall expire or terminate for any reason,
without having been exercised in full, the unpurchased shares subject thereto
shall again be available for options to be granted under this Plan.
Notwithstanding the foregoing, during any fiscal year of the Company, no
Participant shall be granted options that are issuable for more than
200,000 shares of Common Stock, subject to adjustment as provided in Section 14
hereof.
4. ELIGIBILITY AND PARTICIPATION.
4.1. All regular salaried employees of the Company or any Subsidiary (as
defined in Section 424(f) of the Code and whether now or hereafter existing)
shall be eligible to receive incentive stock options and nonqualified stock
options. Directors of the Company or any Subsidiary are not eligible to receive
incentive stock options, but are eligible to receive nonqualified stock options.
Consultants to the Company shall be eligible to receive nonqualified stock
options, provided that the rules governing the availability of a Form S-8
Registration Statement under the Securities Act of 1933 would permit the
registration of the offer or the sale of such securities.
4.2. No incentive stock options may be granted to any employee who, at the
time the incentive stock option is granted, owns shares possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company (or of its Subsidiaries) unless the exercise price of such incentive
stock option is at least one hundred ten percent (110%) of the fair market value
of the stock subject to the incentive stock option and such incentive stock
option by its terms is not exercisable after the expiration of five years from
the date such incentive stock option is granted, determining fair market value
as of the date each respective option is granted.
4.3. The aggregate fair market value of the Common Stock for which
incentive stock options granted to any one employee under this Plan or any other
incentive stock option plan of the Company may by their terms first become
exercisable during any calendar year shall not exceed $100,000, determining fair
market value as of the date each respective option is granted.
4.4. All options granted under this Plan shall be granted within ten years
from October 6, 1999.
5. DURATION OF OPTIONS.
Each option shall expire on such date as the Board of Directors or the
Committee may determine, but in no event later than ten years from the date on
which the option is granted, and shall be subject to earlier termination as
provided herein.
6. PRICE AND EXERCISE OF OPTIONS.
6.1. The exercise price of the Common Stock covered by each option shall be
determined by the Committee, but in the case of an incentive stock option shall
not be less than one hundred percent of the fair market value of such Common
Stock on the date the incentive stock option is granted, provided, however, that
if the optionee owns at least 10% of the then outstanding shares of the Common
Stock, then the exercise price shall be at least one hundred ten percent (110%)
of the fair market value per share of the Common Stock on the date such option
is granted. The purchase price of the Common Stock upon exercise of an option
shall be paid in full at the time of exercise (i) in cash
A-2
or by certified or cashier's check payable to the order of the Company, (ii) by
cancellation of indebtedness owed by the Company to the Participant, (iii) by
delivery of shares of Common Stock of the Company already owned by, and in the
possession of the Participant, (iv) if authorized by the Committee or if
specified in the option being exercised, by a promissory note made by the
Participant in favor of the Company, subject to terms and conditions determined
by the Committee, secured by the Common Stock issuable upon exercise, and in
compliance with applicable law (including, without limitation, state corporate
and federal margin requirements), (v) by any combination thereof, or (vi) in
such other manner as the Committee may specify in order to facilitate the
exercise of options by the holders thereof. Shares of Common Stock used to
satisfy the exercise price of an option shall be valued at their fair market
value determined in accordance with Section 7 hereof.
6.2. No option granted under this Plan shall be exercisable if such
exercise would involve a violation of any applicable law or regulation
(including without limitation, federal and state securities laws and
regulations). Each option shall be exercisable in such installments during the
period prior to its expiration date as the Committee shall determine; provided,
however, that unless otherwise determined by the Committee, if the Participant
shall not in any given installment period purchase all of the shares which the
Participant is entitled to purchase in such installment period, then such
Participant's right to purchase any shares not purchased in such installment
period shall continue until the expiration date or sooner termination of the
Participant's option. No option may be exercised for a fraction of a share and
no partial exercise of any option may be for less than ten shares.
7. FAIR MARKET VALUE OF COMMON STOCK.
The fair market value of a share of Common Stock of the Company for purposes
of this Plan shall be the closing price or last trade price of a share as
supplied by The NASDAQ Stock Market (or its successor in function) or, if such
shares are then traded on a principal stock exchange, by reference to the
closing price of a share on the principal stock exchange on which such shares
are traded, in each case as reported by The Wall Street Journal for the business
day immediately preceding the date on which the fair market value is determined
(or, if for any reason no such price is available, in such other manner as the
Committee may deem appropriate to reflect the then fair market value thereof).
8. WITHHOLDING TAX.
Upon (i) the disposition by an employee of shares of Common Stock acquired
pursuant to the exercise of an incentive stock option granted pursuant to this
Plan within two years of the granting of the incentive stock option or within
one year after exercise of the incentive stock option (or such earlier time
period as may be deemed appropriate by the Company to comply with applicable
withholding rules and regulations), or (ii) the exercise of a nonqualified stock
option, the Company shall have the right to require such employee, and such
employee by accepting the options granted under this Plan 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 of Common Stock to be acquired through the
exercise of such options if the optionee fails to provide the Company with
adequate assurance that such optionee will pay such amounts to the Company as
hereinabove required. In the event of (i) or (ii), then such employee or other
person may elect to pay the amount of any taxes which the Company may be
required to withhold by delivering to the Company shares of the Company's Common
Stock having a fair market value determined in accordance with Section 7 thereof
equal to the withholding tax obligation determined by the Company. Such shares
so delivered may be either shares withheld by the Company upon the exercise of
the option or other shares.
A-3
9. NONTRANSFERABILITY.
Except as otherwise provided by the Committee at the time of grant or
otherwise of a nonqualified stock option, an option granted under this Plan
shall, by its terms, be nontransferable by the holder either voluntarily or by
operation of law, other than by will or the laws of descent and distribution,
and shall be exercisable during the holder's lifetime only by the holder,
regardless of any community property interest therein of the spouse of the
holder, or such spouse's successors in interest. If the spouse of the holder
shall have acquired a community property interest in an option, the holder, or
the holder's permitted successors in interest, may exercise the option on behalf
of the spouse of the holder or such spouse's successors in interest.
10. HOLDING OF STOCK AFTER EXERCISE OF OPTION.
At the discretion of the Committee, any option may provide that the
Participant, by accepting such option, represents and agrees, for the
Participant and the Participant's permitted transferees that none of the shares
acquired upon exercise of an 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.
11. TERMINATION OF EMPLOYMENT.
If a holder of an incentive stock option ceases to be employed by the
Company or a Subsidiary for any reason other than the holder's death or
permanent and total disability (within the meaning of Section 22(e)(3) of the
Code), the holder's incentive stock options shall terminate at the time
designated in the individual option agreement as determined by the Committee,
but in no event later than three months after the date of cessation of
employment, provided that such incentive stock option may be exercised only to
the extent exercisable on the date of such cessation of employment. Termination
of employment or other relationship with the Company by the holder of a
nonqualified stock option will have the effect specified in the individual
option agreement or Certificate of Grant as determined by the Committee.
12. DEATH OR PERMANENT DISABILITY OF OPTION HOLDER.
If the holder of an incentive stock option dies or becomes permanently
disabled while the option holder is employed by the Company or a Subsidiary, the
holder's 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 incentive stock options may, to the extent that they remained
unexercised (but exercisable by the holder according to such option's terms) on
the date of such death, be exercised by the person or persons to whom the option
holder's rights under the incentive stock option shall pass by the option
holder's will or by the laws of descent and distribution. The death or permanent
disability of a holder of a nonqualified stock option will have the effect
specified in the individual option agreement or Certificate of Grant as
determined by the Committee.
13. PRIVILEGES OF STOCK OWNERSHIP.
No person entitled to exercise any option granted under this Plan shall have
any of the rights or privileges of a stockholder of the Company in respect of
any shares of Common Stock issuable upon exercise of such option until
certificates representing such shares shall have been issued and delivered. No
shares shall be issued and delivered upon exercise of any option unless and
until, in the opinion of counsel for the Company, there shall have been full
compliance with any applicable registration
A-4
requirements of the Securities Act, any applicable listing requirements of any
national securities exchange or automated quotation system on which the Common
Stock is then listed or quoted, and any other requirements of law or of any
regulatory bodies having jurisdiction over such issuance and delivery.
14. ADJUSTMENTS.
14.1. If the outstanding shares of the Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities of the Company through a reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, an appropriate and proportionate adjustment
shall be made in the maximum number and kind of shares as to which options may
be granted under this Plan. A corresponding adjustment changing the number or
kind of shares allocated to unexercised options or portions thereof, which shall
have been granted prior to any such change, shall likewise be made. Any such
adjustment in the outstanding options shall be made without change to the
aggregate purchase price applicable to the unexercised portion of the option but
with a corresponding adjustment in the purchase price for each share covered by
the option.
14.2. 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
(80%) of the then outstanding stock of the Company to another corporation, this
Plan shall terminate, and any options theretofore granted hereunder shall
terminate.
14.3. Notwithstanding the foregoing, the Board of Directors or the
Committee may provide in writing in connection with such transaction (or in the
individual option agreement or Certificate of Grant as to such transaction or
other transactions that may be deemed to involve an extraordinary transaction or
a change of control) for any or all of the following alternatives (separately or
in combinations): (i) for the options theretofore granted to become immediately
exercisable; (ii) for the assumption by the successor corporation of the options
thereto granted or the substitution by such corporation for such options of new
options covering the stock of the successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices; or (iii) for the continuance of this Plan by such successor
corporation in which event the Plan and the options theretofore granted shall
continue in the manner and under the terms so provided; or (iv) such other
arrangements as the Board of Directors or Committee deems equitable to the
Participants and the Company's stockholders.
14.4. Adjustments under this Section 14 shall be made by the Board of
Directors or the Committee, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of stock shall be issued under this Plan on any such
adjustment.
15. AMENDMENT AND TERMINATION OF PLAN.
15.1. The Board of Directors or the Committee may at any time suspend or
terminate this Plan. The Board of Directors or the Committee may also at any
time amend or revise the terms of this Plan, provided that no such amendment or
revision shall, unless appropriate stockholder approval of such amendment or
revision is obtained, (i) increase the maximum number of shares which may be
acquired pursuant to options granted under this Plan, except as permitted under
the provisions of Section 14 hereof, (ii) change the minimum purchase price set
forth in Section 6 hereof, (iii) increase the maximum term of options provided
for in Section 5 hereof, or (iv) change the designation of persons eligible to
receive options as provided in Section 4 hereof.
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15.2. No amendment, suspension or termination of this Plan shall, without
the consent of the holder, alter or impair any rights or obligations under any
option theretofore granted under this Plan.
16. EFFECTIVE DATE OF PLAN.
No option may be granted under this Plan unless and until (i) the options
and underlying shares have been registered under the Securities Act of 1933 and
qualified with the appropriate state regulatory agencies, or (ii) the Company
has been advised by counsel that such options and shares are exempt from such
registration and/or qualification. This Plan shall be submitted for approval by
the holders of the outstanding voting stock of the Company within twelve months
from the date this Plan is adopted by the Board of Directors. This Plan shall be
deemed approved by the holders of the outstanding voting stock of the Company by
(i) the affirmative vote of the holders of a majority of the voting shares of
the Company represented and voting at a duly held meeting at which a quorum is
present or (ii) the written consent of the holders of a majority of the
outstanding voting shares of the Company. Any options granted under this Plan
prior to obtaining such stockholder approval shall be granted under the
conditions that the options so granted (i) shall not be exercisable prior to
such approval, and (ii) shall become null and void if such stockholder approval
is not obtained.
A-6
ANNEX B
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.
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.
B-1
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.
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.
B-2
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 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.
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
B-3
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.
12. AMENDMENT OF THE PLAN.
A. The Board may at any time and from time to time suspend, discontinue, modify
or amend the Plan in any respect whatsoever 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.
B. 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.
13. 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.
B-4
SCHEDULE A
ONE TIME GRANT OF
NON-QUALIFIED OPTION
TO PURCHASE
THE FOLLOWING
NAME OF DIRECTOR NUMBER OF SHARES
- ---------------- --------------------
1. Gordon Stulberg................................ 10,000
2. Matthew H. Saver............................... 8,000
3. Tofigh Shirazi................................. 8,000
B-5
TRIMARK HOLDINGS, INC.
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 19, 1999
The undersigned stockholder of Trimark Holdings, Inc. (the "Company")
hereby nominates, constitutes and appoints Mark Amin and Jeff Gonzalez, and
each of them, the agent and proxy of the undersigned, each with full power of
substitution to vote all shares of Common Stock of the Company which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the Park Hyatt Los Angeles, Chateau 2, 2151 Avenue of
the Stars, Los Angeles, California on November 19, 1999 at 9:00 a.m. and at
any and all adjournments thereof, as fully and with the same force and effect
as the undersigned might or could do if personally present thereat, as follows:
1. THE ELECTION OF DIRECTORS: Electing Mark Amin, Peter Dekom,
Gordon Stulberg, Matthew H. Saver and Tofigh Shirazi to serve on the Board
of Directors of the Company until the next annual meeting following their
election and until their successors are elected and have qualified.
AUTHORITY GIVEN / / AUTHORITY WITHHELD / /
(INSTRUCTION: TO GRANT AUTHORITY TO VOTE FOR ALL OF THE NOMINEES NAMED
ABOVE CHECK THE "AUTHORITY GIVEN" BOX; TO WITHHOLD AUTHORITY FOR ANY
INDIVIDUAL NOMINEE CHECK THE "AUTHORITY GIVEN" BOX AND CROSS OUT THE NAME OF
THE INDIVIDUAL ABOVE; TO WITHHOLD AUTHORITY FOR ALL NOMINEES CHECK THE
"AUTHORITY WITHHELD" BOX.)
2. APPROVAL OF THE COMPANY'S 1999 STOCK OPTION PLAN: Approving the
Company's 1999 Stock Option Plan.
FOR / / AGAINST / / ABSTAIN / /
3. APPROVAL OF THE COMPANY'S 1999 DIRECTOR'S OPTION PLAN: Approving
the Company's 1999 Director's Option Plan.
FOR / / AGAINST / / ABSTAIN / /
4. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS: Approving
the selection of PricewaterhouseCoopers LLP to serve as independent accountants
of the Company for the fiscal year ending June 30, 2000.
5. OTHER BUSINESS: To transact, and authority to vote in their
discretion on such other business as may properly come before the meeting or
any adjournments thereof.
(PLEASE SIGN AND DATE THE OTHER SIDE)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "AUTHORITY GIVEN" ON PROPOSAL 1
AND A VOTE OF "FOR" ON PROPOSALS 2, 3 AND 4. THIS PROXY CONFERS AUTHORITY TO
AND SHALL BE VOTED IN ACCORDANCE WITH SUCH RECOMMENDATIONS OF THE BOARD OF
DIRECTORS UNLESS A CONTRARY INSTRUCTION IS INDICATED, IN WHICH CASE THE PROXY
SHALL BE VOTED IN ACCORDANCE WITH SUCH INSTRUCTION. IN ALL OTHER MATTERS, IF
ANY, PRESENTED AT THE MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH
THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
PLEASE SIGN AND DATE BELOW.
Dated:____________________________
I do _____ do not _____ expect to
attend the meeting.
__________________________________
(Signature of Stockholder)
__________________________________
(Signature of Stockholder)
(Please date this proxy and sign your name as it appears in the stock
certificate. Executors, administrators, trustees, etc. should give their full
title. All joint owners should sign.)
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS, AND MAY BE REVOKED
PRIOR TO ITS EXERCISE BY FILING WITH THE
SECRETARY OF THE COMPANY AN INSTRUMENT
REVOKING THIS PROXY OR A DULY EXECUTED
PROXY BEARING A LATER DATE OR BY
APPEARING AND VOTING IN PERSON AT THE
MEETING.