<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER
AUGUST 1, 1999 0-21943
------------------
FOUR MEDIA COMPANY
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 95-4599440
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2813 West Alameda Avenue
Burbank, California 91505
(Address of principal executive offices) (Zip code)
Registrant's telephone number including area code: 818-840-7000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, par value $.01 per share
-------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Yes X No
--- ---
The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of October 27, 1999 was $29,949,008.
As of October 27, 1999, 19,693,629 shares of the Registrant's Common Stock,
$.01 par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
------------------------
<PAGE>
Foreign Currency Risk
Substantially all of our foreign transactions are denominated in foreign
currencies, including the liabilities of our foreign subsidiaries, 4MC Asia,
TVP, and Tvi. Although our foreign transactions are not generally subject to
foreign exchange transactions gains or losses, the financial statements of our
foreign subsidiaries are translated into United States dollars as part of our
consolidated financial reporting. Fluctuations in the exchange rate therefore
will affect our consolidated balance sheets and statements of operations. Until
the recent Asian economic difficulties, the Singapore dollar and British pound
have been stable relative to the United States dollar. However, during fiscal
1998, the Singapore dollar lost approximately 20% of its value relative to the
US dollar. Our total revenues denominated in a currency other than US dollars
for the fiscal year ended August 1, 1999 were approximately 7.8% of total
revenues. Our net assets maintained in a functional currency other than US
dollars for the fiscal year ended August 1, 1999 were approximately 5.2% of
total net assets.
Item 8. Financial Statements and Supplementary Data
The Financial Statements required to be filed hereunder are set forth on
pages F-1 to F-22 of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
On April 9, 1999, the Audit Committee of our Board of Directors voted to
dismiss PricewaterhouseCoopers LLP as our accountants and retain the accounting
firm of Ernst & Young LLP. On April 9, 1999, we retained Ernst & Young as our
accountants for the fiscal year ending August 1, 1999. Our decision to retain
Ernst & Young was not motivated by any disagreements between us and
PricewaterhouseCoopers LLP concerning any accounting principles or practices,
financial statement disclosure or auditing scope or procedure, but rather by our
desire to use the same accounting firm as Warburg, Pincus, our principal
stockholder.
Since our inception, PricewaterhouseCoopers LLP's report on our financial
statements has not contained an adverse opinion or a disclaimer of opinion, nor
were any opinions qualified or modified as to uncertainty, audit scope or
accounting principles, nor were there any events of the type requiring
disclosure under Item 304(a)(1)(v) of Regulation S-K under the Securities Act.
In addition, from our inception to April 9, 1999, we did not consult with Ernst
& Young LLP with respect to the matters described in Item 304(a)(2) of
Regulation S-K.
PART III
Items 10, 11 and 12
Item 10. Directors and Officers
The following table sets forth information concerning our directors and
officers:
<TABLE>
<CAPTION>
Name Position Age
---- -------- ---
<S> <C> <C>
Robert T. Walston........... Chairman of the Board and Chief Executive Officer 41
Jeffrey J. Marcketta........ President and Chief Operating Officer 45
John H. Donlon.............. President of Broadcast Syndication Division and Mastering and 55
Distribution Division
Lawrence Chernoff........... President of Television Entertainment Division 49
Christopher M.R. Phillips... Executive Vice President and Chief Financial Officer 40
Gavin W. Schutz............. Executive Vice President and Chief Technology Officer 47
Robert Bailey............... Executive Vice President of Marketing and Business development of 43
the Mastering and Distribution Division
William E. Niles............ Vice President of Business Affairs, General Counsel and Secretary 36
William C. Scott............ Director 66
William Amon................ Director 50
Sidney Lapidus.............. Director 62
David E. Libowitz........... Director 37
Eytan Shapiro............... Director 40
</TABLE>
Robert T. Walston is the founder of Four Media Company and has served as
our Chairman and Chief Executive Officer since August 1993. From 1991 until he
founded the Company, Mr. Walston served as a Vice President and Director of
Steinhardt Group, Inc. where he directed the firm's sourcing and financial
analysis of acquisitions of middle market companies. From 1988 to 1991, Mr.
Walston was a Vice President of Dean Witter Reynolds, Inc. where he worked on
merger and acquisition assignments and debt and equity offerings. Mr. Walston
received a BBA from Baylor University and an MBA from the University of Texas at
Austin.
Jeffrey J. Marcketta has served as our President and Chief Operating
Officer since January 1, 1999. For approximately six years prior thereto, Mr.
Marcketta served as the Executive Vice President and Chief Financial Officer of
Panavision Inc. For two years before that, Mr. Marcketta was the President of
Panavision Europe based in London, England where he was responsible for the
general management and expansion of Panavision's European operations. During the
preceding two years he served as Vice President of Corporate Development
assisting the Chief Executive Officer in the restructuring and rationalization
of Panavision's worldwide business operations. Before joining Panavision, Mr.
Marcketta worked for Ernst & Young LLP for almost ten years, the last three of
which were spent as a principal in the Mergers and Acquisition Consulting Group
of the New York office.
John H. Donlon has served as President of our Broadcast and Syndication
Division and Mastering and Distribution Division since September 1998. From 1993
to January 1999, Mr. Donlon served as our President and on our Board of
Directors. Prior to joining Four Media, Mr. Donlon was President and Chief
Executive Officer of Compact Video Group, Inc., a provider of post-production
services to the television industry, from 1984 to 1993. From 1981 to 1984, Mr.
Donlon was employed by Technicolor, Inc. as President of Technicolor's
videocassette subsidiary and from 1977 to 1981 as Vice President and Director of
Technicolor's Laboratory Operations. Mr. Donlon received a BA degree from the
University of Florida.
Lawrence Chernoff has served as the President of our television
Entertainment Division since September 1998. Mr. Chernoff is the founder of
Encore and has served as its CEO since starting the company in 1985. From 1975
to 1985 he was an award winning commercial editor for FilmCore, Inc. His
demonstrated excellence and success in pioneering and continuing to innovate and
lead the video post production industry was recognized in 1997 when Ernst &
Young named him their "Entrepreneur of the Year". Mr. Chernoff is a graduate of
the New York School of Visual Arts.
Gavin W. Schutz has served as our Executive Vice President and Chief
Technology Officer since August 1993 and served on our Board of Directors from
September 1996 to March 1999. Prior to joining the Four Media Company, Mr.
Schutz was Director of Engineering of Image Transform, Inc., a provider of
feature mastering and standards conversion services to the entertainment
industry, from 1980 to 1993. Mr. Schutz is responsible for the design of digital
video standards converters, time and smear correctors and video noise reduction
using four field non-recursive digital filtering algorithms. Mr. Schutz received
a BS degree in Electronic Engineering from the South Australia Institute of
Technology.
Robert Bailey has served as the Executive Vice President of Marketing and
Business Development of our Mastering and Distribution Division since September
1998. From 1996 to January 1999, Mr. Bailey served as our Vice President and
Director of Marketing and on our Board of Directors. Prior thereto, he served as
Vice President and Director of Marketing for our studio and television services
divisions. Prior to joining Four Media, he was Vice President of Image
Transform, Inc., from 1985 to 1993. From 1977 to 1985, he was creator/producer
of "Hollywood Detective" for the A&E Channel, Producer/Director of "Eye on L.A."
for ABC and Producer of "Remmington Steele" for MTM Productions. Mr. Bailey
received a BA from the University of Southern California.
Christopher M. R. Phillips has served as our Executive Vice President and
Chief Financial Officer since April 1999. For approximately twelve years prior
thereto, Mr. Phillips served as Vice President of Finance and Controller of
Panavision, Inc.
William Niles has served as our Vice President of Business Affairs, General
Counsel and Secretary since February 1998. Prior to joining Four Media Company,
Mr. Niles served as General Counsel and Vice President of Business Affairs for
Visualize (d.b.a. POP), a leading provider of postproduction and VIFX services
in television, sound, film, CGI and DVD. Prior to his appointment at POP in
1997, Mr. Niles practiced law as a partner of Stein & Kahan, a law corporation
specializing in corporate, transactional and real estate law. Before that, Mr.
Niles was an associate in the Los Angeles office of Baker & McKenzie. Mr. Niles
received a BA from the University of Southern California in 1985 and his law
degree from Georgetown Law School in 1988. Mr. Niles has been a member of the
State Bar of California since 1988.
William Scott was the Chairman and Chief Executive Officer of Panavision,
inc. from 1988 until December 31, 1998. From 1972 until 1987, Mr. Scott was
President and Chief Operating Officer of Western Pacific Industries, Inc., a
company listed on the New York Stock Exchange. Prior to 1972, Mr. Scott was a
Group Vice President of Cordura Corporation ( a business information company)
for three years, a Vice President of Booz Allen & Hamilton Inc. (a management
consulting firm) for five years and an owner/Operator of several small
businesses for eight years. Currently, Mr. Scott is non-executive Chairman of
Telecast Communications, Ltd. Mr. Scott is also a Director of Panavision Inc.
and Edison Control Corporation.
William Amon is a Senior Tax Partner with Deloitte & Touche LLP's Los
Angeles practice and has served on our Board of Directors since December 1997.
He is an adjunct professor of tax at the Golden Gate University Masters of Tax
Program and a frequent speaker on issues effecting corporate taxation and merger
and acquisition transactions. Mr. Amon received a BS degree with honors and a
law degree, with highest honors, from the University of Santa Clara. A member of
the California Bar Association, the American Bar Association, and the American
Institute of Certified Public Accountants, he is also a subcommittee member of
the American Bar Association tax committee for affiliated corporations and a
member of the Los Angeles International Tax Forum. He was recently selected as
one of North America's Top Tax Advisers for 1998/99 by the International Tax
Review.
Sidney Lapidus is a Managing Director of E.M. Warburg, Pincus & Co., LLC
("EMW LLC"), an affiliate of Warburg, Pincus. Mr. Lapidus has been associated
with EMW LLC or its predecessor since 1967. Mr. Lapidus serves on the board of
directors of Caribiner International, Inc., Lennar Corporation, Knoll, Inc.,
Grubb and Ellis Company, and Information Holdings, Inc., as well as several
privately held companies.
David E. Libowitz is a Managing Director of EMW LLC and has been associated
with EMW LLC or its predecessor since 1991. Mr. Libowitz serves on the board of
directors of Caribiner International , Inc. and Information Holdings, Inc.
Eytan Shapiro is a general partner of Fleming US Discovery Fund III, L.P.
and a Director of Fleming Capital management. Mr. Shapiro joined the Fleming
group in 1985, initially employed by Jardine Fleming, he transferred to Fleming
capital management in February 1992.
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the Securities Exchange Act requires the Company officers and directors, and
persons who own more than ten percent of its common stock, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten percent stockholders are required by
regulation of the Commission to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of forms furnished to the Company and written
representations from certain of the directors and officers that no form is
required to be filed, the Company believes that no director, officer or
beneficial owner of more than ten percent of its Common Stock failed to file on
a timely basis reports required pursuant to Section 16(a) of the Securities
Exchange Act with respect to the fiscal year ended August 1, 1999.
Item 11. Executive Compensation
Compensation of Executive Officers. The following table sets forth
information concerning the compensation during fiscal years ended August 1,
1999, August 2, 1998 and August 3, 1997 of the Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer and the four other most highly
compensated executive officers of the Company as of August 1, 1999 whose salary
and bonus for the year ended August 1, 1999 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
-------------------------------------------------- ------------
Other Annual All Other Awards Option
Name and Principal Position Year Salary Bonus Compensation Compensation Shares
---- ------ ----- ------------ ------------ ------
<S> <C> <C> <C> <C> <C> <C>
Robert T. Walston,......................... 1999 $398,462 $ -- (2) $ -- $ --
Chairman and 1998 276,538(1) -- (2) -- --
Chief Executive Officer 1997 240,000 -- (2) -- --
Jeffrey J. Marcketta....................... 1999 236,538 -- (2) -- --
President 1998 -- -- -- -- --
Chief Operating Officer 1997 -- -- -- -- --
Christopher M. R. Phillips................. 1999 63,077 -- (2) -- --
Executive Vice President 1998 -- -- -- -- --
Chief Financial Officer 1997 -- -- -- -- --
John H. Donlon,............................ 1999 294,747 -- (2) 1,022,962 (3) --
President - Broadcast, Syndication and 1998 253,493 -- (2) -- --
Manufacturing; President Foreign 1997 253,493 -- (2) -- --
Operations
Gavin W. Schutz,.......................... 1999 232,692 -- (2) 836,978 (3) --
Vice President and 1998 175,000 (2) -- --
Chief Technology Officer 1997 175,000 (2) -- --
Robert Bailey,............................ 1999 203,846 -- (2) 836,978 (3) --
Executive Vice President 1998 175,000 (2) -- --
Marketing & Business Development 1997 145,673 (2) -- --
James T. Conlon,.......................... 1999 150,000 -- (2) -- --
Vice President and 1998 150,000 -- (2) -- --
Director of International Operations 1997 145,073 (2) -- --
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------
(1) $16,538 of Mr. Walston's 1997 compensation was paid in 1998.
(2) Total amount of personal benefits paid to this executive officer during the
fiscal year was less than the lessor of (i) $50,000 or (ii) 10% of such
executive officer's total reported salary and bonus.
(3) Compensation related to exercise of stock options.
- --------------------------------------------------------------------------------
Employment Agreements. The Company entered into employment agreements with
Messrs. Walston, Marcketta, Phillips, Donlon, Schutz and Bailey. Each of the
employment agreements with Messrs. Walston, Marcketta, Schutz, Donlon and Bailey
is for a term extending through December 2003. The employment agreement with
Messr. Phillips has a term extending through March 2002. Messrs. Walston,
Marcketta, Donlon, Phillips, Schutz and Bailey are entitled to receive annual
salaries of $500,000, $350,000, $325,000, $200,000, $275,000 and $225,000,
respectively. In the event of termination without cause, Messrs. Walston,
Marcketta, Donlon, Schutz, and Bailey are entitled to receive the full amount of
compensation payable under the original terms of their respective employment
agreements for the remaining term of such agreements, and in the event of
disability, the full amount of compensation payable for the lesser of six months
or the remaining term of such agreements.
Stock Options Granted in Fiscal 1999. During fiscal 1999, options to
purchase 150,000 shares were granted to Christopher Phillips, options to
purchase 500,000 shares were granted to Jeffrey Marcketta and options to
purchase 2,500,000 shares were granted to Robert Walston.
Option Exercises and Fiscal 1999 Year-End Values. The following table
provides the specified information concerning exercises of options to purchase
the Company's Common Stock in the fiscal year ended August 1, 1999 and
unexercised options held as of August 1, 1999, by the persons named in the
Summary Compensation Table. A portion of the shares subject to these options are
not yet vested, and thus would be subject to repurchase by the Company at a
price equal to the option exercise price, if the corresponding options were
exercised before these shares had vested.
AGGREGATED OPTION EXCERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Shares Number of Securities Value in Dollars of
Acquired Value Underlying Unexercised Unexercised In-the-Money
-------- ----- Options at 8/1/99 Options at 8/1/99
Name On Exercise Realized/($)/ Exercisable/(1)(2)/ Unexercisable/(3)/ Exercisable/(2)/ Unexercisable/(4)/
---- ----------- ------------- ------------------- ------------------ ---------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Robert T. Walston -- -- -- 2,500,000 $ -- $ --
Jeffrey J. Marcketta -- -- -- 500,000 -- --
Christopher M.R. Phillips -- -- -- 150,000 -- --
John H. Donlon 133,546 1,022,962 -- 244,515 -- 246,391
Gavin W. Schutz 109,266 836,978 -- 186,422 -- 201,596
Robert Bailey 109,266 836,978 -- 186,422 -- 201,596
James T. Conlon -- -- 66,666 33,334 -- --
</TABLE>
- -----------------------
(1) Options granted in fiscal 1994 under the 1993 Stock Option Plan vest over a
six year period at a rate of 16.7% per year.
(2) Represents shares that are immediately exercisable and/or vested. Based on
the closing price of $5.875 as reported on the Nasdaq National Market, on
July 30, 1999, less the exercise price.
(3) Represents shares which are unvested and not immediately exercisable.
(4) Based on the closing price of $5.875 as reported on the Nasdaq National
Market, on July 30, 1999, less the exercise price.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table contains information as of September 30, 1999 regarding
the ownership of the Common Stock of the Company by all persons who, to the
knowledge of the Company, were (i) the beneficial owners of 5% or more of the
outstanding shares of Common Stock of the Company, (ii) each director and
director nominee of the Company, (iii) the Chief Executive Officer and the four
other most highly compensated executive officers of the Company as of August 1,
1999 whose salary and bonus for the year ended August 1, 1999 exceeded $100,000
and (iv) all current executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
Shares
Beneficially Owned (1)
-------------------------------
Name of Beneficial Owners Number Percent
- ---------------------------------------------------------- --------------- --------------
<S> <C> <C>
Warburg, Pincus Equity Partners L.P. (2) (3).............. 11,300,000 54.3%
Fleming US Discovery Fund III, L.P. and Fleming 2,250,000 11.4
US Discovery Offshore Fund III, L.P. (5).................
Robert T. Walston (6)..................................... 1,432,875 7.3
Jeffrey J. Marcketta (7).................................. -- --
Christopher M.R. Phillips (7)............................. -- --
John H. Donlon (8)........................................ 44,515 *
Gavin W. Schutz (9)....................................... 36,422 *
Robert Bailey (9)......................................... 36,422 *
James Conlon (10)......................................... 100,000 *
William Amon (11)......................................... 25,000 *
Sidney Lapidus (3)(4)..................................... 11,310,000 54.3
David E. Libowitz (3)(4).................................. 11,310,000 54.3
William C. Scott (12)..................................... 10,000 *
Eytan Shapiro (12)........................................ 10,000 *
All directors and executive officers as a group
(12 persons) (13)........................................ 13,015,234 62.6%
</TABLE>
- -------------------------
* Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options held by that person that are
currently exercisable or exercisable within 60 days of September 30, 1999
at a price less than or equal to the market price are deemed outstanding.
Such shares, however, are not deemed outstanding for the purposes of
computing the percentage ownership of any other person. Except as indicated
in the footnotes to this table and pursuant to applicable community
property laws, each stockholder named in the table has sole voting and
investment power with respect to the shares set forth opposite such
stockholder's name.
(2) The stockholder is Warburg, Pincus Equity Partners, L.P., which includes
three affiliated limited partnerships ("WPEP"). Warburg, Pincus & Co., LLC
("WP") is the sole general partner of WPEP. WPEP is managed by E.M.
Warburg, Pincus & Co., LLC ("EMW LLC"). Lionel I. Pincus is the managing
partner of WP and the managing member of EMW LLC and may be deemed to
control both entities.
Messrs. Lapidus and Libowitz, two of our directors, are managing directors
and members of EMW LLC and general partners of WP. Messrs. Lapidus and
Libowitz may be deemed to have an indirect pecuniary interest (within the
meaning of Rule 16a-1 under the Exchange Act) in an indeterminate portion
of the shares beneficially owned by WPEP.
The address of the Warburg, Pincus entities is 466 Lexington Avenue, New
York, New York 10017.
(3) Includes a presently exercisable warrant to purchase 1,100,000 shares of
our common stock held by WPEP.
(4) Includes presently exercisable options to purchase 10,000 shares of common
stock. Messrs. Lapidus and Libowitz are deemed to have an indirect
pecuniary interest (within the meaning of Rule 16a-1 under the Exchange
Act) in 11,300,000 of such shares as a result of their affiliation with the
Warburg, Pincus entities (see Note 2 above). Messrs. Lapidus and Libowitz
disclaim beneficial ownership of all such shares. The address of Messrs.
Lapidus and Libowitz is c/o E.M. Warburg, Pincus & Co., LLC, 466 Lexington
Avenue, New York, New York 10017.
(5) In connection with the Warburg, Pincus transaction, the Fleming US
Discovery Fund III, L.P. and Fleming US Discovery Offshore Fund III, L.P.
(collectively, the "Fleming Funds") converted
150,000 shares of Series A Convertible Preferred Stock into 2,250,000
shares of our common stock.
(6) In connection with a 1993 acquisition of shares of common stock by TSP, Mr.
Walston was granted a profit interest in TSP equal to 10% of the excess, if
any, by which the distributions (in cash or in kind) from TSP exceed the
partners' total investment in TSP plus a return of 9% per annum. As a
result of his profit interest in TSP, Mr. Walston is deemed to beneficially
own 1,432,875 shares of common stock.
The address of Mr. Walston is c/o Four Media Company, 2813 West Alameda
Avenue, Burbank, California 91505.
(7) Mr. Marcketta was appointed President and Chief Administrative Officer on
January 1, 1999. Mr. Phillips was appointed Executive Vice President and
Chief Financial Officer on April 1, 1999.
(8) Represents presently exercisable options to purchase 44,515 shares of our
common stock.
(9) Represents presently exercisable options to purchase 36,422 shares of our
common stock.
(10) Represents presently exercisable options to purchase 100,000 shares of our
common stock.
(11) Represents presently exercisable options to purchase 25,000 shares of our
common stock.
(12) Represents presently exercisable options to purchase 10,000 shares of our
common stock.
(13) Includes presently exercisable options to purchase 282,359 shares of our
common stock. Also includes 11,300,000 shares held by WPEP (see Note 4
above), beneficial ownership of which is disclaimed by Messrs. Lapidus and
Libowitz.
Item 13. Certain Relationships and related Transactions
Preferred Stock Conversion
In connection with the Warburg, Pincus transaction, pursuant to a
conversion agreement (the "Conversion Agreement"), Fleming US Discovery Fund
III, L.P. and Fleming US Discovery Offshore Fund III, L.P. (collectively, the
"Fleming Funds") converted the 150,000 shares of our Series A Convertible
Preferred Stock owned by such Funds into an aggregate of 2,250,000 shares of our
common stock (subject to adjustment). For so long as the Fleming Funds own at
least 50% of the common stock issued pursuant to the Conversion Agreement, the
Funds will, collectively, have the right to nominate one person to our Board.
The Fleming Funds elected Eytan Shapiro, a general partner of Fleming US
Discovery Fund III, L.P. and a director of Fleming Capital Management, to our
Board in connection with the Warburg, Pincus transaction.
Certain Voting Agreements
In connection with the Warburg, Pincus transaction, Warburg, Pincus entered
into (i) a voting agreement, dated as of January 18, 1999, with Robert T.
Walston, our Chief Executive Officer (the "Walston Voting Agreement"), and (ii)
a voting agreement dated as of January 18, 1999 with the Fleming Funds (the
"Fleming Voting Agreement"). Under the terms of the Walston Voting Agreement,
for so long as Warburg, Pincus is entitled to nominate directors to our Board,
Mr. Walston has agreed to vote all of the shares of common stock he owns in
favor of any of Warburg, Pincus' nominees to our Board. In exchange for Mr.
Walston's voting covenant, Warburg, Pincus has agreed to vote all of the shares
of common stock it owns in favor of Mr. Walston for election to the Board for so
long as he remains our Chief Executive Officer pursuant to the terms of his
employment agreement.
Under the terms of the Fleming Voting Agreement, for so long as Warburg,
Pincus is entitled to nominate directors to our Board under the securities
purchase agreement, the Fleming Funds have agreed to vote all of the shares of
common stock they own in favor of any of Warburg, Pincus' nominees to our Board.
In exchange for this voting covenant, Warburg, Pincus has agreed to vote of the
shares of common stock it owns in favor of the Fleming Funds' nominees to our
Board for so long as they are entitled to nominate a director to our Board.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on the 29th day of
November 1999.
FOUR MEDIA COMPANY
By: /s/ Christopher M. R. Phillips
--------------------------------------------
Christopher M.R. Phillips, Executive Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant, in the capacities indicated on this 29th day of November 1999.
S-1
<PAGE>
By: /s/ Robert T. Walston
----------------------------
Robert T. Walston,
Chairman of the Board and
Chief Executive Officer
By: /s/ Jeffrey J. Marcketta
----------------------------
Jeffrey J. Marcketta
President and Chief Operating Officer
By: /s/Sidney Lapidus
----------------------------
Sidney Lapidus
Director
By: /s/David E. Libowitz
----------------------------
David E. Libowitz
Director
By: /s/ William C. Scott
----------------------------
William C. Scott
Director
By: /s/ William Amon
----------------------------
William Amon
Director
By: /s/ Eytan Shapiro
----------------------------
Eytan Shapiro
Director
S-2
