<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
(Amendment No. 1)
Under the Securities Exchange Act of 1934
Four Media Company
- -------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $0.01
- -------------------------------------------------------------------------------
(Title of Class of Securities)
350872107
- -------------------------------------------------------------------------------
(CUSIP Number of Class of Securities)
Stephen Distler
E.M. Warburg, Pincus & Co., LLC
466 Lexington Avenue
New York, New York 10017
(212) 878-0600
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Copies to:
Neil Novikoff, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019
(212) 728-8000
April 8, 1999
- -------------------------------------------------------------------------------
(Date of Event which Requires
Filing of this Schedule)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following: |_|
<PAGE>
SCHEDULE 13D/A
CUSIP No. 350872107 Page 2 of 18 Pages
- --------- ---------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus Equity Partners, L.P. I.D. #13-3986317
- --------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------- ---------------------------------------------------------------------
3 SEC USE ONLY
- --------- ---------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- --------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ------------------ ------- ----------------------------------------------------
7 SOLE VOTING POWER
0
------- ----------------------------------------------------
NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY EACH 10,678,500
REPORTING PERSON ------- ----------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
0
------- ----------------------------------------------------
10 SHARED DISPOSITIVE POWER
10,678,500
- --------- ---------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
10,678,500
- --------- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- --------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
52.6%
- --------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------- ---------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D/A
CUSIP No. 350872107 Page 3 of 18 Pages
- --------- ---------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus & Co. I.D. #13-6358475
- --------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------- ---------------------------------------------------------------------
3 SEC USE ONLY
- --------- ---------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- --------- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- ------------------ ------- ----------------------------------------------------
7 SOLE VOTING POWER
0
------- ----------------------------------------------------
NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY EACH 11,300,000
REPORTING PERSON ------- ----------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
0
------- ----------------------------------------------------
10 SHARED DISPOSITIVE POWER
11,300,000
- --------- ---------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
11,300,000
- --------- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [X]
- --------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
55.7%
- --------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------- ---------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D/A
CUSIP No. 350872107 Page 4 of 18 Pages
- --------- ---------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
E.M. Warburg, Pincus & Co., LLC I.D. #13-3536050
- --------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------- ---------------------------------------------------------------------
3 SEC USE ONLY
- --------- ---------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- --------- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- ----------------- ------- -----------------------------------------------------
7 SOLE VOTING POWER
0
------- -----------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 11,300,000
OWNED BY EACH ------- -----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
------- -----------------------------------------------------
10 SHARED DISPOSITIVE POWER
11,300,000
- --------- ---------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
11,300,000
- --------- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- --------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
55.7%
- --------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- --------- ---------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Explanatory Note
This Schedule 13D/A is being filed on behalf of Warburg, Pincus Equity
Partners, L.P., a Delaware limited partnership ("WPEP"), Warburg, Pincus & Co.,
a New York general partnership ("WP"), and E.M. Warburg, Pincus & Co., LLC, a
New York limited liability company ("EMW"), relating to the common stock, par
value $0.01 per share, of Four Media Company, a Delaware corporation (the
"Company"). Unless the context otherwise requires, references herein to the
"Common Stock" are to the Common Stock of Four Media Company, par value $0.01
per share.
As further detailed herein and in the Exhibits attached hereto, the
information reported on this Schedule 13D/A pertains to a purchase of Common
Stock from several different sellers (the "Transaction"). The original Schedule
13D with respect to the Transaction was filed on January 26, 1999, following the
execution of several agreements governing the Transaction.
Item 1. Security and Issuer.
This amended statement on Schedule 13D/A relates to the Common Stock of
the Company, and is being filed pursuant to Rules 13d-1 and 13d-2 under the
Exchange Act. The address of the principal executive offices of the Company is
2813 West Alameda Avenue, Burbank, California, 91505.
Item 2. Identity and Background.
(a) This statement is filed by WPEP, WP and EMW (collectively, the
"Reporting Entities"). The sole general partner of WPEP is WP. EMW manages WPEP.
Lionel I. Pincus is the managing partner of WP and the managing member of EMW
and may be deemed to
5 OF 18
<PAGE>
control both WP and EMW. WP has a 20% interest in the profits of WPEP as the
general partner. The general partners of WP and the members of EMW are described
in Schedule I hereto.
(b) The address of the principal business and principal office of each
of the Reporting Entities is 466 Lexington Avenue, New York, New York 10017.
(c) The principal business of WPEP is that of a partnership engaged in
making venture capital and related investments. The principal business of WP is
acting as general partner of WPEP, Warburg, Pincus Ventures International, L.P.,
Warburg, Pincus Ventures, L.P., Warburg Pincus Investors, L.P., and Warburg,
Pincus Capital Company, L.P. The principal business of EMW is acting as manager
of WPEP, Warburg, Pincus Ventures International, L.P., Warburg, Pincus Ventures,
L.P., Warburg, Pincus Investors, L.P., and Warburg, Pincus Capital Company, L.P.
(d) None of the Reporting Entities, nor, to the best of their knowledge,
any of the directors, executive officers, general partners or members referred
to in paragraph (a) has, during the last five years, been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) None of the Reporting Entities nor, to the best of their knowledge,
any of the directors, executive officers, general partners or members referred
to in paragraph (a) above has, during the last five years, been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
6 OF 18
<PAGE>
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) Except as otherwise indicated on Schedule I hereto, each of the
individuals referred to in paragraph (a) above is a United States citizen.
Item 3. Source and Amount of Funds or Other Consideration.
The total amount of funds supplied by WPEP and the Netherlands Entities
(as defined in Item 4(a)) to effect the Transaction was $80,040,187 and was
furnished from the working capital of WPEP and the Netherlands Entities.
Item 4. Purpose of Transaction.
The acquisition by WPEP of Common Stock was effected because of the
Reporting Entities' belief that the Company represents an attractive investment.
The Reporting Entities may from time to time acquire shares of Common Stock or
dispose of shares of Common Stock through open market or privately negotiated
transactions or otherwise, depending on existing market conditions and other
considerations discussed below. The Reporting Entities intend to review their
investment in the Company on a continuing basis and, depending upon the price
and availability of shares of Common Stock, subsequent developments affecting
the Company, the Company's business and prospects, other investment and business
opportunities available to the Reporting Entities, general stock market and
economic conditions, tax considerations and other factors considered relevant,
may decide at any time to increase,
7 OF 18
<PAGE>
not to increase, or to decrease, the size of their investment in the Company.
(a) In connection with the Transaction, certain acquisitions of Common
Stock were effected by WPEP along with Warburg, Pincus Netherlands Equity
Partners I, C.V., Warburg, Pincus Netherlands Equity Partners II, C.V. and
Warburg, Pincus Netherlands Equity Partners III, C.V. (WPEP, together with these
"Netherlands Entities", collectively, the "Purchasers"), in which WPEP acquired
beneficial ownership of 94.5% of the Common Stock purchased by the Purchasers.
The remaining 5.5% of such Common Stock was allocated to the Netherlands
Entities.
The Purchasers have acquired 6,582,607 newly issued shares of Common
Stock from the Company, and have received a warrant (the "Warrant") to purchase
an additional 1,100,000 shares of Common Stock at an exercise price of $15.00
per share, for $52,660,856. The Purchasers have also acquired 3,119,627 shares
of Common Stock beneficially owned by Technical Services Partners, L.P. ("TSP"),
a limited partnership controlled by Steinhardt Management Company, Inc., for
$23,397,203. Additionally, 497,766 shares of Common Stock have been purchased by
the Purchasers for $3,982,128 from the Company's founders (the "Founders") upon
the simultaneous exercise of stock options at the closing of the Transaction.
The Company has granted the Purchasers customary demand and piggyback
registration rights with respect to the shares of Common Stock acquired by the
Purchasers in the Transaction.
Concurrently with the closing of the Transaction, Fleming US Discovery
Fund III, L.P. and Fleming US Discovery Offshore Fund
8 OF 18
<PAGE>
III, L.P. (the "Preferred Stockholders"), the holders of all outstanding shares
of the Company's preferred stock, converted all of their preferred stock into
2,250,000 shares of Common Stock. The Company has granted the Preferred
Stockholders customary demand and piggyback registration rights with respect to
the shares of Common Stock issued upon conversion of their preferred stock in
the Transaction.
Additionally, in connection with the Transaction, Robert T. Walston, the
Chief Executive Officer of the Company ("Walston"), entered into a new
employment agreement (the "Walston Employment Agreement") with the Company,
dated as of January 1, 1999. The term of the Walston Employment Agreement
commenced on the closing of the Transaction. Under the terms of the Walston
Employment Agreement, the Company has granted Walston options to purchase
2,500,000 shares of Common Stock at an exercise price of $8.00 per share.
Except as set forth above, none of the Reporting Entities nor, to the
best of their knowledge, any person listed in Schedule I hereto, has any plans
or proposals which relate to or would result in any other acquisition by any
person of additional securities of the Company, or the disposition of securities
of the Company;
(b) Except as set forth above, none of the Reporting Entities nor, to
the best of their knowledge, any person listed in Schedule I hereto, has any
plans or proposals which relate to or would result in an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Company or any of its subsidiaries.
9 OF 18
<PAGE>
(c) Except as set forth above, none of the Reporting Entities nor, to
the best of their knowledge, any person listed in Schedule I hereto, has any
plans or proposals which relate to or would result in a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries.
(d) Pursuant to a securities purchase agreement, dated as of January 18,
1999, between the Purchasers and the Company, the Purchasers have the right, so
long as they beneficially own at least 35% of the then outstanding Common Stock,
to cause the Company to nominate and use its best efforts to elect individuals
designated by the Purchasers to comprise a majority of the members of the
Company's Board of Directors. Furthermore, for so long as the Purchasers
beneficially own at least 10% and less than 35% of the then outstanding shares
of Common Stock, the Company will continue to be obligated to nominate and use
its best efforts to elect individuals designated by the Purchasers as members of
the Company's Board of Directors, the number of such directors to decrease in
proportion to the Purchasers' ownership of Common Stock.
Except as set forth above, none of the Reporting Entities nor, to the
best of their knowledge, any person listed in Schedule I hereto, has any plans
or proposals which relate to or would result in any other changes in the board
of directors or management of the Company, or which relate to or would result in
(e) any material change in the present capitalization or dividend policy of the
Company; (f) any other material change in the Company's business or corporate
structure; (g) changes in the Company's charter, by-laws
10 OF 18
<PAGE>
or instruments corresponding thereto or other actions which may impede the
acquisition of control of the Company by any person; (h) causing a class of
securities of the Company to be delisted from a national securities exchange or
to cease to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association; (i) a class of equity securities of
the Company becoming eligible for termination of registration pursuant to
Section 12(g)(4) of the Exchange Act; or (j) any action similar to any of those
enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) As of April 8, 1999, the Purchasers, WP and EMW may be deemed to
beneficially own 11,300,000 shares of Common Stock. As of that date, WPEP may be
deemed to beneficially own 10,678,500 of these shares. The Purchasers are
controlled by WP. By reason of their respective relationships with WPEP, each of
the Reporting Entities may be deemed under Rule 13d-3 under the Exchange Act to
own beneficially all of the shares of Common Stock which WPEP beneficially owns.
As of April 8, 1999, 11,300,000 shares of Common Stock represented approximately
55.7% of the outstanding shares of Common Stock, based on the 20,295,863 shares
of Common Stock outstanding as of November 1, 1998, as reported by the Company
in its Proxy Statement for Special Meeting of Stockholders to Be Held on March
18, 1999. This figure is adjusted for the 2,250,000 shares of Common Stock
received by the Preferred Stockholders upon conversion of their preferred
holdings pursuant to the Transaction and for the newly issued shares of Common
Stock and the shares of Common Stock underlying
11 OF 18
<PAGE>
the Warrant, which is treated for these purposes as having been exercised.
(b) WPEP exercises shared voting and shared dispositive power over
10,678,500 shares of Common Stock. By virtue of ownership and control over the
Purchasers, WP and EMW may be deemed to exercise shared voting and shared
dispositive power over all 11,300,000 shares.
At the present time, none of the Reporting Entities exercises sole
voting or sole dispositive power over any Common Stock.
(c) Except as set forth above, there have been no transactions during
the last sixty days which were effected by the Reporting Entities or by any of
the persons set forth on Schedule I hereto.
(d) Except as set forth in this Item 5, no person other than each
respective record owner referred to herein of securities is known to have the
right to receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, such securities.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer.
Pursuant to Rule 13d-1(k) promulgated under the Exchange Act, the
Reporting Entities have entered into an agreement with respect to the joint
filing of the original Schedule 13D, this amendment and any further amendments
hereto.
Except as referred to above, in the Explanatory Note, and in Items 3, 4
and 5 of this statement, there are no contracts,
12 OF 18
<PAGE>
arrangements, understandings or relationships among the persons named in Item 2
or between such persons and any other person with respect to any securities of
the Company.
By virtue of the relationships among the Reporting Entities as described
in Item 2, the Reporting Entities may be deemed to be a "group" under the
Federal securities laws. Lionel I. Pincus disclaims any beneficial ownership of
the shares of Common Stock reported herein as being beneficially owned by the
Reporting Entities.
Item 7. Material to be Filed as Exhibits.
1. Joint Filing Agreement, dated as of January 25, 1999, by and among
the Reporting Entities.
2. Securities Purchase Agreement, dated as of January 18, 1999, among
Four Media Company (the "Company") and Warburg, Pincus Equity Partners, L.P.,
Warburg, Pincus Netherlands Equity Partners I, C.V., Warburg, Pincus Netherlands
Equity Partners II, C.V. and Warburg, Pincus Netherlands Equity Partners III,
C.V., as Purchasers, incorporated by reference to the same document included as
Exhibit 99.2 to Current Report on Form 8-K filed by the Company on January 20,
1999, under SEC File No. 0-21943 (the "Company Form 8-K").
3. Stock Purchase Agreement, dated as of January 18, 1999, among
Technical Services Partners, L.P. and Warburg, Pincus Equity Partners, L.P.,
Warburg, Pincus Netherlands Equity Partners I, C.V., Warburg, Pincus Netherlands
Equity Partners II, C.V. and Warburg, Pincus Netherlands Equity Partners III,
C.V.,
13 OF 18
<PAGE>
as Purchasers, incorporated by reference to the same document included as
Exhibit 99.3 to the Company Form 8-K.
4. Stock Purchase Agreement, dated as of January 18, 1999, among John
H. Donlon, Gavin W. Schutz, Robert Bailey and The Estate of John H. Sabin and
Warburg, Pincus Equity Partners, L.P., Warburg, Pincus Netherlands Equity
Partners I, C.V., Warburg, Pincus Netherlands Equity Partners II, C.V. and
Warburg, Pincus Netherlands Equity Partners III, C.V., as Purchasers,
incorporated by reference to the same document included as Exhibit 99.4 to the
Company Form 8-K.
5. Preferred Stock Conversion Agreement and Stockholders Agreement,
dated as of January 18, 1999, among the Company, Fleming US Discovery Fund III,
L.P., Fleming US Discovery Offshore Fund III, L.P. and Warburg, Pincus Equity
Partners, L.P., Warburg, Pincus Netherlands Equity Partners I, C.V., Warburg,
Pincus Netherlands Equity Partners II, C.V. and Warburg, Pincus Netherlands
Equity Partners III, C.V., incorporated by reference to the same document
included as Exhibit 99.5 to the Company Form 8-K.
6. Voting Agreement, dated as of January 18, 1999, among Fleming US
Discovery Fund III, L.P., Fleming US Discovery Offshore Fund III, L.P. and
Warburg, Pincus Equity Partners, L.P., Warburg, Pincus Netherlands Equity
Partners I, C.V., Warburg, Pincus Netherlands Equity Partners II, C.V. and
Warburg, Pincus Netherlands Equity Partners III, C.V., incorporated by reference
to the same document included as Exhibit 99.6 to the Company Form 8-K.
14 OF 18
<PAGE>
7. Voting Agreement, dated as of January 18, 1999, among Robert T.
Walston, Technical Services Partners, L.P. and Warburg, Pincus Equity Partners,
L.P., Warburg, Pincus Netherlands Equity Partners I, C.V., Warburg, Pincus
Netherlands Equity Partners II, C.V. and Warburg, Pincus Netherlands Equity
Partners III, C.V., incorporated by reference to the same document included as
Exhibit 99.7 to the Company Form 8-K.
8. Voting and Option Agreement, dated as of January 18, 1999, among
Technical Services Partners, L.P. and Warburg, Pincus Equity Partners, L.P.,
Warburg, Pincus Netherlands Equity Partners I, C.V., Warburg, Pincus Netherlands
Equity Partners II, C.V. and Warburg, Pincus Netherlands Equity Partners III,
C.V., incorporated by reference to the same document included as Exhibit 99.8 to
the Company Form 8-K.
9. Press Release issued by the Company on January 19, 1999, incorporated
by reference to the same document included as Exhibit 99.1 to the Company Form
8-K.
10. Registration Rights Agreement, dated as of April 8, 1999, among Four
Media Company and Warburg, Pincus Equity Partners, L.P., Warburg, Pincus
Netherlands Equity Partners I, C.V., Warburg, Pincus Netherlands Equity Partners
II, C.V. and Warburg, Pincus Netherlands Equity Partners III, C.V.
11. Common Stock Purchase Warrant, dated as of April 8, 1999, issued by
Four Media Company.
15 OF 18
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief,
the undersigned certify that the information set forth in this statement is
true, complete and correct.
Dated: April 15, 1999 WARBURG, PINCUS EQUITY
PARTNERS, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
----------------------
Partner
Dated: April 15, 1999 WARBURG, PINCUS & CO.
By: /s/ Stephen Distler
----------------------
Partner
Dated: April 15, 1999 E.M. WARBURG, PINCUS & CO., LLC
By: /s/ Stephen Distler
----------------------
Managing Director
<PAGE>
Schedule I
----------
Set forth below is the name, position and present principal occupation of each
of the general partners of Warburg, Pincus & Co. ("WP") and each of the members
of E.M. Warburg, Pincus & Co., LLC ("EMW"). The sole general partner of Warburg,
Pincus Equity Partners, L.P. ("WPEP") is WP. WP, EMW and WPEP are hereinafter
collectively referred to as the "Reporting Entities." Except as otherwise
indicated, the business address of each of such persons is 466 Lexington Avenue,
New York, New York 10017, and each of such persons is a citizen of the United
States.
General Partners of WP
----------------------
Present Principal Occupation
in Addition to Position with
WP, and Positions with the
Name Reporting Entities
- ---- ----------------------------
Joel Ackerman Managing Director and Member, EMW
Alvaro J. Aguirre Managing Director and Member, EMW
Harold Brown Senior Managing Director and Member,
EMW
W. Bowman Cutter Managing Director and Member, EMW
Elizabeth B. Dater Managing Director and Member, EMW
Cary J. Davis Managing Director and Member, EMW
Stephen Distler Managing Director, Member and
Treasurer, EMW
Harold W. Ehrlich Managing Director and Member, EMW
Kyle F. Frey Managing Director and Member, EMW
John L. Furth Managing Director and Member, EMW
Stewart K.P. Gross Managing Director and Member, EMW
S-1
<PAGE>
Patrick T. Hackett Managing Director and Member, EMW
Jeffrey A. Harris Managing Director and Member, EMW
William H. Janeway Senior Managing Director and Member,
EMW
Robert Janis Managing Director and Member, EMW
Douglas M. Karp Managing Director and Member, EMW
Charles R. Kaye Managing Director and Member, EMW
Henry Kressel Managing Director and Member, EMW
Joseph P. Landy Managing Director and Member, EMW
Sidney Lapidus Managing Director and Member, EMW
Kewsong Lee Managing Director and Member, EMW
Reuben S. Leibowitz Managing Director and Member, EMW
S. Joshua Lewis Managing Director and Member, EMW
Scott T. Lewis Managing Director and Member, EMW
David E. Libowitz Managing Director and Member, EMW
Brady T. Lipp Managing Director and Member, EMW
Stephen J. Lurito Managing Director and Member, EMW
Lynn S. Martin Managing Director and Member, EMW
Nancy Martin Managing Director and Member, EMW
S-2
<PAGE>
Edward J. McKinley Managing Director and Member, EMW
Rodman W. Moorhead III Senior Managing Director and Member,
EMW
Maryanne Mullarkey Managing Director and Member, EMW
Howard H. Newman Managing Director and Member, EMW
Gary D. Nusbaum Managing Director and Member, EMW
Sharon B. Parente Managing Director and Member, EMW
Dalip Pathak Managing Director and Member, EMW
Lionel I. Pincus Chairman of the Board, CEO, and
Managing Member, EMW; and Managing
Partner, Pincus & Co.
Eugene L. Podsiadlo Managing Director and Member, EMW
Ernest H. Pomerantz Managing Director and Member, EMW
Brian S. Posner Managing Director and Member, EMW
Arnold M. Reichman Managing Director and Member, EMW
Roger Reinlieb Managing Director and Member, EMW
John D. Santoleri Managing Director and Member, EMW
Steven G. Schneider Managing Director and Member, EMW
Donald C. Schutltheis Managing Director and Member, EMW
Sheila N. Scott Managing Director and Member, EMW
S-3
<PAGE>
Harold Sharon Managing Director and Member, EMW
Eugene J. Siembieda Managing Director and Member, EMW
Barbara Tarmy Managing Director and Member, EMW
James E. Thomas Managing Director and Member, EMW
Donna M. Vandenbulcke Managing Director and Member, EMW
John L. Vogelstein Vice Chairman and Member, EMW
Elizabeth H. Weatherman Managing Director and Member, EMW
Pincus & Co.*
NL & Co.**
* New York limited partnership; its primary activity is
ownership interest in WP and EMW.
** New York limited partnership; its primary activity is
ownership interest in WP.
S-4
<PAGE>
MEMBERS OF EMW
Present Principal Occupation
in Addition to Position with
EMW, and Positions with the
Name Reporting Entities
- ---- ----------------------------
Joel Ackerman Partner, WP
Alvaro J. Aguirre Partner, WP
Harold Brown Partner, WP
W. Bowman Cutter Partner, WP
Elizabeth B. Dater Partner, WP
Cary J. Davis Partner, WP
Stephen Distler Partner, WP
P. Nicholas Edwards(2)
Harold W. Ehrlich Partner, WP
Kyle F. Frey Partner, WP
John L. Furth Partner, WP
Stewart K.P. Gross Partner, WP
Patrick T. Hackett Partner, WP
Jeffrey A. Harris Partner, WP
William H. Janeway Partner, WP
Robert Janis Partner, WP
Douglas M. Karp Partner, WP
Charles R. Kaye Partner, WP
Richard H. King(2)
Henry Kressel Partner, WP
Rajiv B. Lall(4)
Joseph P. Landy Partner, WP
S-5
<PAGE>
Sidney Lapidus Partner, WP
Kewsong Lee Partner, WP
Reuben S. Leibowitz Partner, WP
S. Joshua Lewis Partner, WP
Scott T. Lewis Partner, WP
David E. Libowitz Partner, WP
Brady T. Lipp Partner, WP
Stephen J. Lurito Partner, WP
John W. MacIntosh(1)
Lynn S. Martin Partner, WP
Nancy Martin Partner, WP
Edward J. McKinley Partner, WP
James McNaught-Davis(2)
Rodman W. Moorhead III Partner, WP
Maryanne Mullarkey Partner, WP
Howard H. Newman Partner, WP
Gary D. Nusbaum Partner, WP
Sharon B. Parente Partner, WP
Dalip Pathak Partner, WP
Lionel I. Pincus Managing Partner, WP; Chairman
of the Board and CEO, EMW;
Managing Partner, Pincus & Co.
Eugene L. Podsiadlo Partner, WP
Ernest H. Pomerantz Partner, WP
Brian S. Posner Partner, WP
Arnold M. Reichman Partner, WP
Roger Reinlieb Partner, WP
John D. Santoleri Partner, WP
S-6
<PAGE>
Steven G. Schneider Partner, WP
Donald C. Schultheis Partner, WP
Sheila N. Scott Partner, WP
Harold Sharon Partner, WP
Dominic H. Shorthouse(2)
Eugene J. Siembieda Partner, WP
Chang Q. Sun(3)
Barbara Tarmy Partner, WP
James E. Thomas Partner, WP
Donna M. Vandenbulcke Partner, WP
John L. Vogelstein Partner, WP
Elizabeth H. Weathermen Partner, WP
Jeremy S. Young(2)
Pincus & Co.*
(1) Citizen of Canada
(2) Citizen of United Kingdom
(3) Citizen of People's Republic of China
(4) Citizen of India
* New York limited partnership; its primary activity is ownership
interest in WP and EMW.
S-7
<PAGE>
Exhibit Index
1. Joint Filing Agreement, dated as of January 25, 1999, by and among
the Reporting Entities.
2. Securities Purchase Agreement, dated as of January 18, 1999, among
Four Media Company (the "Company") and Warburg, Pincus Equity Partners, L.P.,
Warburg, Pincus Netherlands Equity Partners I, C.V., Warburg, Pincus Netherlands
Equity Partners II, C.V. and Warburg, Pincus Netherlands Equity Partners III,
C.V., as Purchasers, incorporated by reference to the same document included as
Exhibit 99.2 to Current Report on Form 8-K filed by the Company on January 20,
1999, under SEC File No. 0-21943 (the "Company Form 8-K").
3. Stock Purchase Agreement, dated as of January 18, 1999, among
Technical Services Partners, L.P. and Warburg, Pincus Equity Partners, L.P.,
Warburg, Pincus Netherlands Equity Partners I, C.V., Warburg, Pincus Netherlands
Equity Partners II, C.V. and Warburg, Pincus Netherlands Equity Partners III,
C.V., as Purchasers, incorporated by reference to the same document included as
Exhibit 99.3 to the Company Form 8-K.
4. Stock Purchase Agreement, dated as of January 18, 1999, among John H.
Donlon, Gavin W. Schutz, Robert Bailey and The Estate of John H. Sabin and
Warburg, Pincus Equity Partners, L.P., Warburg, Pincus Netherlands Equity
Partners I, C.V., Warburg, Pincus Netherlands Equity Partners II, C.V. and
Warburg, Pincus Netherlands Equity Partners III, C.V., as Purchasers,
incorporated by reference to the same document included as Exhibit 99.4 to the
Company Form 8-K.
5. Preferred Stock Conversion Agreement and Stockholders Agreement,
dated as of January 18, 1999, among the Company, Fleming US Discovery Fund III,
L.P., Fleming US Discovery Offshore Fund III, L.P. and Warburg, Pincus Equity
Partners, L.P., Warburg, Pincus Netherlands Equity Partners I, C.V., Warburg,
Pincus Netherlands Equity Partners II, C.V. and Warburg, Pincus Netherlands
Equity Partners III, C.V., incorporated by reference to the same document
included as Exhibit 99.5 to the Company Form 8-K.
6. Voting Agreement, dated as of January 18, 1999, among Fleming US
Discovery Fund III, L.P., Fleming US Discovery Offshore Fund III, L.P. and
Warburg, Pincus Equity Partners, L.P., Warburg, Pincus Netherlands Equity
Partners I, C.V., Warburg, Pincus Netherlands Equity Partners II, C.V. and
Warburg, Pincus Netherlands Equity Partners III, C.V., incorporated by reference
to the same document included as Exhibit 99.6 to the Company Form 8-K.
<PAGE>
7. Voting Agreement, dated as of January 18, 1999, among Robert T.
Walston, Technical Services Partners, L.P. and Warburg, Pincus Equity Partners,
L.P., Warburg, Pincus Netherlands Equity Partners I, C.V., Warburg, Pincus
Netherlands Equity Partners II, C.V. and Warburg, Pincus Netherlands Equity
Partners III, C.V., incorporated by reference to the same document included as
Exhibit 99.7 to the Company Form 8-K.
8. Voting and Option Agreement, dated as of January 18, 1999, among
Technical Services Partners, L.P. and Warburg, Pincus Equity Partners, L.P.,
Warburg, Pincus Netherlands Equity Partners I, C.V., Warburg, Pincus Netherlands
Equity Partners II, C.V. and Warburg, Pincus Netherlands Equity Partners III,
C.V., incorporated by reference to the same document included as Exhibit 99.8 to
the Company Form 8-K.
9. Press Release issued by the Company on January 19, 1999, incorporated
by reference to the same document included as Exhibit 99.1 to the Company Form
8-K.
10. Registration Rights Agreement, dated as of April 8, 1999, among Four
Media Company and Warburg, Pincus Equity Partners, L.P., Warburg, Pincus
Netherlands Equity Partners I, C.V., Warburg, Pincus Netherlands Equity Partners
II, C.V. and Warburg, Pincus Netherlands Equity Partners III, C.V.
11. Common Stock Purchase Warrant, dated as of April 8, 1999, issued by
Four Media Company.
<PAGE>
Joint Filing Agreement
The undersigned hereby agree that the statement on Schedule 13D with
respect to the shares of Common Stock of Four Media Company is, and any
amendment thereto signed by each of the undersigned shall be, filed on behalf of
each undersigned pursuant to and in accordance with the provisions of 13d-1(k)
under the Securities Exchange Act of 1934, as amended.
Dated: January 25, 1999
WARBURG, PINCUS EQUITY
PARTNERS, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
------------------------
Partner
WARBURG, PINCUS & CO.
By: /s/ Stephen Distler
------------------------
Partner
E.M. WARBURG, PINCUS & CO., LLC
By: /s/ Stephen Distler
------------------------
Managing Director
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of April 8, 1999, among the
investors listed on Schedule I hereto (collectively, the "Investor") and Four
Media Company, a Delaware corporation (the "Company").
R E C I T A L S
- - - - - - - -
WHEREAS, the Investor has, pursuant to the terms of three separate
Stock Purchase Agreements, each dated as of January 18, 1999, by and between (i)
the Company and the Investor, (ii) Technical Services Partners, L.P. ("TSP") and
the Investor and (iii) certain of the Company's current stockholders and the
Investor (collectively, the "Purchase Agreements"), agreed to purchase a total
of 10,200,000 shares (the "Shares") of common stock, par value $0.01 per share,
of the Company (the "Common Stock") and a Warrant to purchase an additional
1,100,000 shares of Common Stock (the "Warrant Shares"); and
WHEREAS, the Investor has, pursuant to the terms of a Voting and Option
Agreement, dated as of January 18, 1999, by and among the Investor, TSP and the
Company (the "Option Agreement"), been granted an irrevocable option to purchase
1,432,875 shares of Common Stock (the "Option Shares"); and
WHEREAS, the Company has agreed, as a condition precedent to the
Investor's obligations under the Purchase Agreements, to grant the Investor
certain registration rights with respect to the Shares, the Warrant Shares and
the Option Shares; and
WHEREAS, the Company and the Investor desire to define the registration
rights of the Investor with respect to the Shares, the Warrant Shares and the
Option Shares on the terms and subject to the conditions herein set forth.
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the parties hereby agree as follows:
1. DEFINITIONS
-----------
As used in this Agreement, the following terms have the respective
meanings set forth below:
Commission: shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act;
<PAGE>
Exchange Act: shall mean the Securities Exchange Act of 1934, as
amended;
Flemings Registration Rights Agreement: shall mean the Regis- tration
Rights Agreement, dated the date hereof, between the Company and Flemings (as
defined in the Purchase Agreements);
Flemings Shares: shall mean the shares of Common Stock defined as
Registrable Securities in the Flemings Registration Rights Agreement, held at
any time by Flemings;
Holder: shall mean any holder of Registrable Securities;
Initiating Holder: shall mean any Holder or Holders who in the
aggregate are Holders of more than 50% of the then outstanding Registrable
Securities;
Person: shall mean an individual, partnership, limited liability
company, joint-stock company, corporation, trust or unincorporated organization,
and a government or agency or political subdivision thereof;
register, registered and registration: shall mean a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act (and any post-effective amendments filed or required to be filed)
and the declaration or ordering of effectiveness of such registration statement;
Registrable Securities: shall mean (A) the Shares, the Warrant Shares
and the Option Shares, (B) any additional shares of Common Stock acquired by the
Investor and (C) any stock of the Company issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
Common Stock referred to in clause (A); provided, however, that the Common Stock
referred to in clauses (A) and (B) shall no longer be deemed Registrable
Securities upon the earliest of: (i) such time as a registration statement with
respect to such shares of Common Stock shall have been declared effective by the
Commission and all of the Registrable Securities registered thereunder shall
have been disposed of by the Holders in accordance with the plan of distribution
described in the prospectus forming a part of such effective registration
statement, (ii) the sale of all shares of Registrable Securities by the Holders
pursuant to Rule 144 under the Securities Act and (iii) the transfer of all
shares of Registrable Securities by the Holders to a transferee or transferees
who are not otherwise entitled to registration rights with respect to such
securities.
Registration Expenses: shall mean all expenses incurred by the Company
in compliance with Sections 2(a) and (b) hereof, including, without limitation,
all registration and filing fees, listing fees, printing expenses, fees and
<PAGE>
disbursements of counsel for the Company, fees and expenses of one counsel for
all the Holders in an amount not to exceed $15,000, blue sky fees and expenses
and the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company);
Security, Securities: shall have the meaning set forth in Section 2(1)
of the Securities Act;
Securities Act: shall mean the Securities Act of 1933, as amended; and
Selling Expenses: shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities, all fees and
disbursements of counsel for each of the Holders other than fees and expenses of
one counsel for all the Holders in an amount not to exceed $15,000 and all stock
transfer taxes related to the Registrable Securities.
Walston Shares: shall mean (A) the 1,432,875 shares of Common Stock
beneficially owned by Robert T. Walston pursuant to an agreement with Technical
Services Partners, L.P. and (B) any stock of the Company issued as a dividend or
other distribution with respect to, or in exchange for or in replacement of, the
Common Stock referred to in clause (A); provided, however, that the Common Stock
referred to in clauses (A) and (B) shall no longer be deemed Registrable
Securities upon the earliest of: (i) such time as a registration statement with
respect to such shares of Common Stock shall have been declared effective by the
Commission and all of the Registrable Securities registered thereunder shall
have been disposed of by the holder thereof in accordance with the plan of
distribution described in the prospectus forming a part of such effective
registration statement, (ii) the sale of all shares of Registrable Securities by
the holder thereof pursuant to Rule 144 under the Securities Act and (iii) the
transfer of all shares of Registrable Securities by the holder thereof to a
transferee or transferees who are not otherwise entitled to registration rights
with respect to such securities.
2. REGISTRATION RIGHTS
-------------------
(a) Requested Registration.
(i) Request for Registration. If the Company shall receive
from an Initiating Holder, at any time, a written request that the Company
effect a registration under the Securities Act with respect to all or a
part of the Registrable Securities, the Company will:
(A) promptly give written notice of the proposed
registration, qualification or compliance to
<PAGE>
all other Holders and the Other Stockholders (as hereinafter defined) in
the event of an underwritten offering, such notice to provide, in the
case of an underwritten offering, an opportunity for the holders of
Flemings Shares to jointly exercise their request for registration
rights with the Initiating Holder pursuant to Section 2(a)(i) of the
Flemings Registration Rights Agreement; and
(B) as soon as practicable, use its reasonable best
efforts to effect such registration (including, without limitation,
the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations
issued under the Securities Act) as may be so requested and as is
reasonably necessary to permit or facilitate the sale and distribution
of all or such portion of such Registrable Securities as are specified
in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are
specified in a written request received by the Company within 10
business days after written notice from the Company is given under
Section 2(a)(i)(A) above; provided that the Company shall not be
obligated to effect, or take any action to effect, any such registration
pursuant to this Section 2(a):
(x) In any particular jurisdiction in which
the Company would be required to execute a general consent to service
of process in effecting such registration, qualification or
compliance, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act or
applicable rules or regulations thereunder;
(y) After the Company has effected three (3) such
registrations (or, if the Purchase Agreements have been terminated
for any reason but the Investor has elected to exercise its option to
purchase the Option Shares pursuant to the Option Agreement, after
the Company has effected two (2) such registrations) pursuant to this
Section 2(a) and such registrations have been declared or ordered
effective and have remained effective for a period ending on the
earlier of (i) one hundred twenty (120) days after the date of such
effectiveness and (2) the date on which the sales of such Registrable
Securities shall have closed; provided, however, that in the event
that sales of the securities consistent with the plan of distribution
described in the prospectus forming a part of such effective
<PAGE>
registration statement are not been permitted by the Commission, or
such sales would not be in accordance with the applicable rules and
regulations of the Commission (as evidenced by written advice of
counsel), at any time during such 120-day period, such 120-day period
will be extended by such number of days during which such sales were
not permitted or not in accordance with such applicable rules and
regulations; or
(z) If the Registrable Securities requested by all
Holders to be registered pursuant to such request have an anticipated
aggregate public offering price (before any underwriting discounts
and commissions) of less than $15,000,000.
The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the provisions of Section 2(a)(ii) below,
include other securities of the Company which are held by Persons who, by virtue
of agreements with the Company, are entitled to include their securities in any
such registration, including without limitation the Walston Shares ("Other
Stockholders").
The registration rights set forth in this Section 2 may be assigned, in
whole or in part, to any transferee of Registrable Securities (who shall be
bound by all obligations of this Agreement).
The Initiating Holders may, at any time prior to the effective date of
the registration statement relating to any registration effected pursuant to
Section 2(a) of this Agreement, revoke such demand for registration by providing
written notice to the Company, in which event the Initiating Holders shall elect
either (i) that such request is deemed to be a request for registration under
this Section 2(a)(i) or (ii) that such request shall be deemed not to be a
request under this Section 2(a)(i) and, in the case of (ii) above, the
Initiating Holders, and not the Company, shall be responsible for any expenses
incurred by the Company in connection with such withdrawn registration
statement.
(ii) Underwriting. If the Initiating Holders intend to distri-
bute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request
made pursuant to Section 2(a)(i)(A). If Other Stockholders request
inclusion in such such underwritten offering, the Holders shall offer to
include the securities of such Other Stockholders in the underwriting on the
same terms and conditions as the Registrable Securities of the Holders
(subject to the limitations on sale set forth herein) and may condition
such offer on their acceptance of the further applicable provisions of this
Section 2. The Holders whose shares are to be included in such registration
and the Company
<PAGE>
shall (together with all Other Stockholders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement
in customary form with the representative of the underwriter or underwriters
selected for such underwriting by the Initiating Holders and reasonably
acceptable to the Company. Notwithstanding any other provision of this
Section 2(a), if the representative advises the Holders in writing that
marketing factors require a limitation on the number of shares to be
underwritten, the securities of the Company held by the Initiating Holder
and each Other Stockholder shall be excluded from such registration as
follows: first, securities held by each Other Stockholder (other than
Flemings Shares) to the minimum extent so required (which may be up to 100%
of such securities) by such limitation, such exclusion to be effected on a
pro rata basis (based on the number of shares requested for inclusion in
such registration by such Other Stockholders); and, second, to the extent
that the Company is advised that additional shares must also be excluded
from such registration, securities held by the holders of Flemings Shares
shall be excluded from such registration to the minimum extent so required
(which may be up to 100% of such securities) by such limitation, provided
that if the holders of Flemings Shares have elected to join in such request
for registration by notice to the Company and the Initiating Holders within
ten (10) days of the notice referred to in Section 2(a)(i) hereof, then the
foregoing limitation shall be inapplicable and, instead, securities held by
the holders of Flemings Shares and the Initiating Holders shall be excluded
from such registration to the minimum extent so required by such limitation,
such exclusion to be effected on a pro rata basis (based on the number of
shares requested for inclusion in such registration by the Initiating
Holders and the holders of the Flemings Shares). No Registrable Securities
or any other securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration.
If any Other Stockholder who has requested inclusion in such registration as
provided above disapproves of the terms of the underwriting, such person may
elect to withdraw therefrom by written notice to the Company, the under-
writer and the Initiating Holders. The securities so withdrawn shall also be
withdrawn from registration. If the underwriter has not limited the number
of Registrable Securities or other securities to be underwritten, the
Company and officers and directors of the Company may include its or their
securities for its or their own account in such registration if the
representative so agrees and if the number of Registrable Securities and
other securities which would otherwise have been included in such
registration and underwriting will not thereby be limited.
(iii) Right to Defer; General. Notwithstanding the foregoing, if
the Company shall promptly (but in no event later than five business days)
upon receipt of a request for registration pursuant to Section 2(a) furnish
to the Initiating Holders a certificate signed by the Secretary of the
Company stating that, in the good faith judgment of the Board of
<PAGE>
Directors of the Company (acting through its Independent Directors (as
defined in the Purchase Agreements) as set forth in a duly adopted written
resolution, it would materially interfere with a business or financial
transaction of substantial importance to the Company (other than an
underwritten public offering of its securities) for such registration
statement to be filed and it is therefore necessary to defer the filing of
such registration statement, the Company shall have the right to defer such
filing for a period of not more than one hundred thirty-five (135) days
after receipt of the request of the Initiating Holders; provided, however,
that the Company may not utilize this right more than once in any twelve
month period and in no event will the Company be permitted to defer such
filing for more than six (6) months in the aggregate pursuant to Sections
2(a)(iii) and (iv) hereof. In the event of any deferral pursuant to this
Section, the Initiating Holder may, at its option, promptly upon receipt of
notice of such deferral provide notice to the Company of its intention to
withdraw its demand for a registration pursuant to Section 2(a); provided,
however, that upon such withdrawal the Initiation Holder's withdrawn demand
for registration shall not be deemed to have been a demand for purposes of
Section 2(a)(i)(y) of this Agreement.
(iv) Right to Defer; Company Offering. Notwithstanding the
foregoing, if the Company receives a request for registration under Section
2(a) ofthis Agreement, then it may postpone such request for registration
for ninety (90) days in order to file a registration statement for a primary
offering of Common Stock; provided that, in such event, the Holders may
elect by delivering written notice to the Company within ten (10) days of
receipt of notice of such deferral to either (A) postpone such request for
registration, in which event the number of registrations that such holders
may exercise under Section 2(a)(i) hereof shall remain unaffected, (B)
exercise the registration rights granted to them pursuant to Section 2(b)
hereof, in which event the number of registrations that such holders may
exercise under Section 2(a)(i) hereof shall remain unaffected, or (C)
exercise a request for registration under Section 2(a) hereof in which
event such holders shall, notwithstanding the provisions of Section
2(b)(ii) hereof, be treated pari passu with the Company in all respects
(b) Company Registration.
--------------------
(i) If the Company shall determine to register any of its equity
securities either for its own account or for the account of Other
Stockholders, other than a registration relating solely to employee benefit
plans or employee stock plans or similar employee benefit plans, or a regis-
tration relating solely to a Commission Rule 145 transaction or similar
transaction, including any registration on Form S-4 or S-8 or any successor
form to such form, or a registration on any registration form which does not
permit secondary sales or does not include
<PAGE>
substantially the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities, the
Company will:
(A) promptly give to each of the Holders a written
notice thereof (which shall include a list of the jurisdictions in which
the Company intends to attempt to qualify such securities under the
applicable blue sky or other state securities laws), such notice to
provide, in the case of an underwritten offering for the account of
holders of Flemings Shares, an opportunity for the Holders to jointly
exercise their rights with the holders of Flemings Shares to a request
for registration pursuant to Section 2(a)(i) hereof; and
(B) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified
in a written request or requests, made by the Holders within fifteen
(15) days after receipt of the written notice from the Company described
in clause (A) above, except as set forth in Section 2(b)(ii) below.
Such written request may specify all or a part of the Holders'
Registrable Securities.
(ii) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting,
the Company shall so advise each of the Holders as a part of the written
notice given pursuant to Section 2(b)(i)(A). In such event, the right of
each of the Holders to registration pursuant to this Section 2(b) shall be
conditioned upon such Holders' participation in such underwriting and the
inclusion of such Holders' Registrable Securities in the underwriting to the
extent provided herein. The Holders whose shares are to be included in such
registration shall (together with the Company and the Other Stockholders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected for underwriting by the Company.
Notwithstanding any other provision of this Section 2(b), if the
representative determines that marketing factors require a limitation
on the number of shares to be underwritten, the representative may
(subject to the allocation priority set forth below) limit the number
of Registrable Securities to be included in the registration and
underwriting. The Company shall so advise all holders of securities
requesting registration, and the number of shares of securities that
are entitled to be included in the registration and underwriting shall
be allocated in the following manner: the securities of the Company held by
the Initiating Holders and by each Other Stockholder ("Demanding Holders")
shall be excluded from
<PAGE>
such registration and underwriting as follows: first, securities held by
each Other Stockholder (other than Flemings Shares) to the minimum extent
required (which may be up to 100% of such securities) by such limitation,
such exclusion to be effected on a pro rata basis (based on the number of
shares requested for inclusion in such registration by such Other Stock-
holder; and, second, to the extent that the Company is advised that
additional shares must also be excluded from such registration, securities
held by the holders of Flemings Shares and the Initiating Holders shall be
excluded from such registration to the minimum extent so required (which may
be up to 100% of such securities) by such limitation, such exclusion to be
effected on a pro rata basis (based on the number of shares requested for
inclusion in such registration by the Initiating Holders and the holders of
the Flemings Shares), provided that if such registration is a request by the
holders of Flemings Shares pursuant to Section 2(a)(i) of the Flemings
Registration Rights Agreement, then, unless the Initiating Holders have
elected to join in such request for registration by notice to the Company
and the holders of the Flemings Shares within ten (10) days of the notice
referred to in Section 2(b)(i)(A) hereof, such exclusion referred to in
"second" above shall apply only to the Initiating Holders and not to the
holders of Flemings Shares. If any of the Demanding Holders disapproves of
the terms of any such underwriting, he may elect to withdraw therefrom by
written notice to the Company and the underwriter. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration.
(c) Expenses of Registration. All Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
this Section 2 shall be borne by the Company, and all Selling Expenses shall be
borne by the Holders of the securities so registered pro rata on the basis of
the number of their shares so registered.
(d) Registration Procedures. In the case of each registration
effected by the Company pursuant to this Section 2, the Company will keep the
Holders, as applicable, advised in writing as to the initiation of each
registration and as to the completion thereof. At its expense, the Company will:
(i) prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use all reasonable
commercial efforts to cause such registration statement to become effective,
and, upon the request of the Holders of a majority of the Registrable
Securities registered thereunder, keep such registration effective for a
period of one hundred twenty (120) days or until the Holders, as applicable,
have completed the distribution described in the registration statement
relating thereto, whichever first occurs;
<PAGE>
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement, and furnish such
copies thereof to the Holders and any underwriters as they may reasonably
request;
(iii) furnish such number of prospectuses and other documents
incident thereto as each of the Holders, as applicable, from time to time
may reasonably request in order to facilitate the disposition of the
Registrable Securities of such Holder;
(iv) notify each Holder of Registrable Securities covered by such
registration at any time when a prospectus relating thereto is required to
be delivered under the Securities Act when the Company becomes aware of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, whereupon, each
Holder shall immediately cease to use such registration statement or
prospectus for any purpose and, as promptly as practicable thereafter, the
Company shall prepare and file with the Commission, and furnish without
charge to the appropriate Holders and managing underwriters, if any, a
supplement or amendment to such registration statement or prospectus which
will correct such statement or omission or effect such compliance and in
such quantities thereof as the Holders and any underwriters may reasonably
request, after which time the Holders may continue to use such supplemented
or amended registration statement and prospectus as provided herein; and
(v) furnish, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold
through underwriters or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to
such securities becomes effective, (1) an opinion, dated as of such date,
of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters
in an underwritten public offering and reasonably satisfactory to a
majority in interest of the Holders participating in such registration,
addressed to the underwriters, if any, and to the Holders participating in
such registration and (2) a letter, dated as of such date, from the
independent certified public accountants of the Company, in form and
substance as is
<PAGE>
customarily given by independent certified public accountants to
underwriters in an underwritten public offering and reasonably satisfactory
to a majority in interest of the Holders participating in such
registration, addressed to the underwriters, if any, and if permitted by
applicable accounting standards, to the Holders participating in such
registration.
(e) Indemnification.
---------------
(i) The Company will indemnify each of the Holders, as
applicable, each of its officers, directors and partners, and each
person controlling each of the Holders, with respect to each
registration which has been effected pursuant to this Section 2, and
each underwriter, if any, and each person who controls any underwriter,
against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or
the Exchange Act or any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and
will reimburse each of the Holders, each of its officers, directors and
partners, and each person controlling each of the Holders, each such
underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred (by one law firm
retained by them and appropriate local counsel) in connection with
investigating and defending any such claim, loss, damage, liability or
action, provided that the Company will not be liable in any such case
to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by the Holders
(including their respective officers, directors, partners and
controlling persons) or underwriters (including their controlling
persons) and stated to be specifically for use therein.
(ii) Each of the Holders will, if Registrable Securities held
by it are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company,
each of its directors and officers and each underwriter, if any, of the
Company's securities covered by such a registration statement, each person
who controls the Company or such underwriter, each
<PAGE>
Other Stockholder and each of their officers, directors, and partners, and
each person controlling such Other Stockholder against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering
circular or other document made by such Holder, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements by such Holder therein not misleading, and
will reimburse the Company and such Other Stockholders, directors, officers,
partners, persons, underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such Holder and stated to be specifically for use therein;
provided, however, that the obligations of each of the Holders hereunder
shall be limited to an amount equal to the net proceeds to such Holder of
securities sold as contemplated herein.
(iii) Each party entitled to indemnification under this Section
2(e) (the "Indemnified Party") shall give written notice to the party
required to provide indemnification (the "Indemnifying Party") promptly
after such Indemnified Party receives notice (whether oral or written) of
any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any litigation
resulting therefrom; provided that counsel for the Indemnifying Party, who
shall conduct the defense of such claim or any litigation resulting there-
from, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld) and the Indemnified Party may participate in such
defense at such party's expense (unless the named parties to any such action
or proceeding (including any impleaded parties) include both the Indemnify-
ing Party and the Indemnified Party and the Indemnified Party shall have
been advised by counsel in a written opinion that representation of both
parties by the same counsel would be inappropriate due to actual or
potential material differing interests between them, in which case the fees
and expenses of counsel shall be at the expense of the Indemnifying Party),
and provided further that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 2(e) unless the Indemnifying Party is mater-
ially prejudiced thereby. No Indemnifying Party, in the defense of any such
<PAGE>
claim or litigation shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant
or plaintiff to such Indemnified Party of a release from all liability in
respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemni-
fying Party may reasonably request in writing and as shall be reasonably
required in connection with the defense of such claim and litigation
resulting therefrom.
(iv) If the indemnification provided for in this Section 2(e) is
held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage or
expense referred to herein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
liability, claim, damage or expense in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one hand and of
the Indemnified Party on the other in connection with the statements or
omissions which resulted in such loss, liability, claim, damage or expense,
as well as any other relevant equitable considerations. The relative fault
of the Indemnifying Party and of the Indemnified Party shall be determined
by reference to, among other things, whether any action in question,
including the untrue (or alleged untrue) statement of a material fact or
the omission (or alleged omission) to state a material fact, relates to
information supplied by the Indemnifying Party or by the Indemnified Party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission.
(v) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with any underwritten public offering
contemplated by this Agreement are in conflict with the foregoing
provisions, the provisions in such underwriting agreement shall be
controlling.
(vi) The foregoing indemnity agreement of the Company and Holders
is subject to the condition that, insofar as they relate to any loss, claim,
liability or damage made in a preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the Commission at the time
the registration statement in question becomes effective or the amended
prospectus filed with the Commission pursuant to Commission Rule 424(b) (the
"Final Prospectus"), such indemnity or contribution agreement shall not
inure to the benefit of any underwriter
<PAGE>
or Holder if a copy of the Final Prospectus was furnished to the
underwriter or Holder and was not furnished to the person asserting the
loss, liability, claim or damage at or prior to the time such action is
required by the Securities Act.
(vii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 2(e) were determined by
pro rata allocation or by other method of allocation which does not take
into account the equitable considerations referred to in Section 2(e)(iv)
above. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution
from any Person who was not guilty of fraudulent misrepresentation.
(f) Information by the Holders. Each of the Holders holding
securities included in any registration shall furnish to the Company such infor-
mation regarding such Holder and the distribution proposed by such Holder as the
Company may reasonably request in writing and as shall be reasonably required in
connection with any registration, qualification or compliance referred to in
this Section 2.
(g) Rule 144 Reporting.
------------------
With a view to making available the benefits of certain rules and
regulations of the Commission which may permit the sale of restricted securities
to the public without registration, the Company agrees to:
(i) make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act ("Rule 144");
(ii) use its reasonable best efforts to file with the Commission
in a timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act; and
(iii) so long as the Holder owns any Registrable Securities,
furnish to the Holder upon request, a written statement by the Company as to
its compliance with the reporting requirements of Rule 144, and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so
filed as the Holder may reasonably request in availing itself of any rule
or regulation of the Commission allowing the Holder to sell any such
securities without registration.
(h) "Market Stand-Off" Agreement. Each Holder hereby agrees that
following the effective date of any registration effected pursuant to Sections
2(a) and (b) (provided
<PAGE>
the Holders are given written notice of the offering and the right to
participate therein as provided for in this Agreement), each Holder shall not,
for such reasonable period of time as the managing underwriters shall require
(but in no event longer than 135 days), unless otherwise agreed to by the
managing underwriter(s), directly or indirectly sell, offer to sell, contract to
sell (including, without limitation, any short sale), grant any option to
purchase or otherwise transfer or dispose of (other than to donees who agree to
be similarly bound) any securities of the Company held by it at any time during
such period except Registrable Securities included in such registration (the
"Lock-Up Shares"). In addition, each Holder agrees to acknowledge the
undertaking provided for in this Section 2(h) by entering into customary written
"lock-up" agreements with respect to the Lock-Up Shares with the managing
underwriter(s) of the relevant underwriting.
(i) Other Registration Rights. Except as provided in this
Agreement or the Flemings Registration Rights Agreement, or as otherwise
consented to in writing by the Holders, the Company will not grant to any Person
the right to request the Company to register any equity securities of the
Company, or any securities convertible, exchangeable or exercisable for or into
such securities ("Other Securities"), other than (i) piggyback registration
rights entitling the holder thereof to participate in registrations initiated by
the Company or by a Demanding Holder with holders of Registrable Securities;
provided, however, that the Registrable Securities shall have priority over
Other Securities in any such registration, (ii) registration rights granted in
connection with the Company's acquisition of a complementary business through a
pooling of interests transaction; provided, however, that (x) the Company is
required to grant such rights in order to account for any such acquisition as a
pooling of interests transaction, (y) such rights or the agreement or instrument
granting such rights will not restrict or otherwise adversely affect the ability
of the Company to perform its obligations under this Agreement and (z) the
Company shall use its reasonable best efforts to obtain agreements from any
holder or holders who receive such rights to the effect that such holders will
enter into lock-up agreements if requested to do so by any underwriter in any
registration effected pursuant to Section 2(a) (except that the Company shall
not be obligated to take such action if it would prevent the subject acquisition
from being accounted for as a pooling of interests) and (iii) registration
rights granted in connection with the Company's acquisition of a complementary
business through a purchase transaction (which could be in the form of demand
registration rights or the Company's agreement to file a registration statement
for securities delivered as consideration in such purchase transaction (a
"Purchase Registration")); provided, however, that (x) such rights or the
agreement or instrument granting such rights will not restrict or otherwise
adversely affect the ability of the Company to perform its obligations under
this Agreement and (y) the holders of
<PAGE>
the Registrable Securities shall have the right to piggyback on any Purchase
Registration and the priority of securities to be included in any such
registration shall be governed by Section 2(b) hereof. In the case of clause
(iii) above, the holders of the Registrable Securities shall be entitled to the
notice provided for in Section 2(a)(i)(a) hereof.
3. MISCELLANEOUS
-------------
(a) Directly or Indirectly. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person.
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely within such State.
(c) Section Headings. The headings of the sections and
subsections of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part thereof.
(d) Notices.
-------
(i) All communications under this Agreement shall be in writing
and shall be delivered by hand or facsimile or mailed by overnight courier
or by registered or certified mail, postage prepaid:
(A) if to the Company, to Four Media Company, 625
Arizona Avenue, Santa Monica, CA 90401, Attention: William E. Niles,
Esq. (facsimile: (310) 587-1277), or at such other address as it may
have furnished in writing to the Investor;
(B) if to the Investor, at the address or facsimile
number listed on Schedule I hereto, or at such other address or
facsimile number as may have been furnished the Company in writing.
(ii) Any notice so addressed shall be deemed to be given: if
delivered by hand or facsimile, on the date of such delivery; if mailed by
courier, on the first business day following the date of such mailing; and
if mailed by registered or certified mail, on the third business day after
the date of such mailing.
(e) Reproduction of Documents. This Agreement and all documents
relating thereto, including, without limitation, any consents, waivers and
modifications which may hereafter be executed may be reproduced by the Investor
by any
<PAGE>
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and the Investor may destroy any original document so
reproduced. The parties hereto agree and stipulate that any such reproduction
shall be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by the Investor in the regular course
of business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties.
(g) Entire Agreement; Amendment and Waiver. This Agreement
constitutes the entire understanding of the parties hereto with respect to the
subject matter described herein and supersedes all prior understanding among
such parties with respect thereto. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with (and only with) the
written consent of the Company and the Investor.
(h) Severability. In the event that any part or parts of this
Agreement shall be held illegal or unenforceable by any court or administrative
body of competent jurisdiction, such determination shall not effect the
remaining provisions of this Agreement which shall remain in full force and
effect.
(i) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
FOUR MEDIA COMPANY
By:_________________________
Name:
Title:
INVESTORS:
WARBURG, PINCUS EQUITY PARTNERS, L.P.
By: Warburg, Pincus & Co.,
General Partner
By:_________________________
Name:
Title:
WARBURG, PINCUS NETHERLANDS EQUITY
PARTNERS I, C.V.
By: Warburg, Pincus & Co.,
General Partner
By:_________________________
Name:
Title:
WARBURG, PINCUS NETHERLANDS EQUITY
PARTNERS II, C.V.
By: Warburg, Pincus & Co.,
General Partner
By:_________________________
Name:
Title:
<PAGE>
WARBURG, PINCUS NETHERLANDS EQUITY
PARTNERS III, C.V.
By: Warburg, Pincus & Co.,
General Partner
By:_________________________
Name:
Title:
<PAGE>
SCHEDULE I
Name and Address
of Investor:
- ------------
WARBURG, PINCUS EQUITY PARTNERS, L.P.
WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS I, C.V.
WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS II, C.V.
WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS III, C.V.
466 Lexington Avenue
New York, NY 10017
Attention: David E. Libowitz
Facsimile: (212) 878-9351
<PAGE>
WARRANT
THE SECURITIES (THE "SECURITIES") EVIDENCED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES THAT IT WILL
NOT OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER (INDIVIDUALLY AND COLLECTIVELY,
A "TRANSFER") THE SECURITIES EVIDENCED HEREBY, EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (B) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT. IF THE PROPOSED TRANSFER
IS TO BE MADE OTHER THAN PURSUANT TO CLAUSE (A) ABOVE, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE COMPANY AND THE TRANSFER AGENT SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OR ANY STATE OR FOREIGN SECURITIES LAW.
FOUR MEDIA COMPANY
Common Stock Purchase Warrant
FOUR MEDIA COMPANY, a Delaware corporation (the "Company"),
hereby certifies that, for value received, Warburg, Pincus & Co., as nominee, a
Delaware limited partnership (the "Holder"), or permitted assigns, is entitled,
subject to the terms set forth below, to purchase from the Company, at any time
and from time to time during the period beginning on April 8, 1999 and ending on
April 8, 2006, in whole or in part, an aggregate of one million one hundred
thousand (1,100,000) fully paid and non-assessable shares of the Common Stock,
$.01 par value per share, of the Company at a purchase price, subject to the
provisions of Paragraph 3 hereof, of $15.00 per share (the "Purchase Price").
The Purchase Price and the number and character of such shares are subject to
adjustment as provided below, and the term "Common Stock" shall mean, unless the
context otherwise requires, the stock or other securities or property at the
time deliverable upon the exercise of this Warrant. This Warrant is herein
called the "Warrant."
1. EXERCISE OF WARRANT. The purchase rights evidenced by this Warrant
shall be exercised by the holder surrendering this Warrant, with the form of
subscription at the end hereof duly executed by such holder, to the Company at
its principal office, accompanied by payment of an amount (the "Exercise
Payment") equal to the Purchase Price multiplied by the number of shares being
purchased pursuant to such exercise, payable as follows: (i) by payment to the
Company in cash, by certified or official bank check, or by wire transfer of the
Exercise Amount, (ii) by surrender to the Company for
<PAGE>
cancellation of securities of the Company having a Market Price (as hereinafter
defined) on the date of exercise equal to the Exercise Amount; or (c) by a
combination of the methods described in clauses (a) and (b) above. In lieu of
exercising the Warrant, the holder may elect to receive a payment equal to the
difference between (i) the Market Price multiplied by the number of shares as to
which the payment is then being elected and (ii) the exercise price with respect
to such shares, payable by the Company to the Holder only in shares of Common
Stock valued at the Market Price on the date of exercise. For purposes hereof,
the term "Market Price" shall mean the average closing price of a share of
Common Stock for the 15 consecutive trading days preceding such day on the
principal national securities exchange on which the shares of Common Stock or
securities are listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, the average of the reported bid and
asked prices during such 15 trading day period in the over-the-counter market as
furnished by the National Quotation Bureau, Inc., or, if such firm is not then
engaged in the business of reporting such prices, as furnished by any member of
the National Association of Securities Dealers, Inc. selected by the Company or,
if the shares of Common Stock or securities are not publicly traded, the Market
Price for such day shall be the fair market value thereof determined jointly in
good faith by the Board of Directors of the Company and the holder of this
Warrant; provided, however, that if such parties are unable to reach agreement
within a reasonable period of time, the Market Price shall be determined in good
faith by the independent investment banking firm selected jointly by the Company
and the holder of this Warrant or, if that selection cannot be made within 15
days, by an independent investment banking firm selected by the American
Arbitration Association in accordance with its rules.
1.1 Partial Exercise. This Warrant may be exercised for less than the
full number of shares of Common Stock, in which case the number of shares
receivable upon the exercise of this Warrant as a whole, and the sum payable
upon the exercise of this Warrant as a whole, shall be proportionately reduced.
Upon any such partial exercise, the Company at its expense will forthwith issue
to the holder hereof a new Warrant or Warrants of like tenor calling for the
number of shares of Common Stock as to which rights have not been exercised,
such Warrant or Warrants to be issued in the name of the holder hereof or his
nominee (upon payment by such holder of any applicable transfer taxes).
2. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. Subject to compliance
with applicable law and exchange or Nasdaq National Market requirements, as
applicable, as soon as practicable after the exercise of this Warrant and
payment of the Exercise Payment, and in any event within ten (10) days
thereafter, the Company, at its expense, will cause to be issued in the name of
and delivered to the holder hereof a certificate or certificates for the number
of fully paid and non-assessable
<
-2-
<PAGE>
shares or other securities or property to which such holder shall be entitled
upon such exercise, plus, in lieu of any fractional share to which such holder
would otherwise be entitled, cash in an amount determined in accordance with
Paragraph 3.9 hereof. The Company agrees that the shares so purchased shall be
deemed to be issued to the holder hereof as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been duly
exercised, surrendered and payment made for such shares as aforesaid.
3. ANTI-DILUTION PROVISIONS AND OTHER ADJUSTMENTS. In order to prevent
dilution of the right granted hereunder, the Purchase Price shall be subject to
adjustment from time to time in accordance with this Paragraph 3. Upon each
adjustment of the Purchase Price pursuant to this Paragraph 3, the registered
Holder of this Warrant shall thereafter be entitled to acquire upon exercise, at
the Purchase Price resulting from such adjustment, the number of shares of the
Company's Common Stock obtainable by multiplying the Purchase Price in effect
immediately prior to such adjustment by the number of shares of the Company's
Common Stock acquirable immediately prior to such adjustment and dividing the
product thereof by the Purchase Price resulting from such adjustment.
3.1 Adjustment for Issue or Sale of Common Stock at Less than Market
Price. Except as provided in Paragraph 3.2 or 3.5 below, if and whenever on or
after the date of issuance hereof the Company shall issue or sell, or shall in
accordance with subparagraphs 3.1(1) to (9), inclusive, be deemed to have issued
or sold, any shares of its Common Stock for a consideration per share less than
the Market Price per share on the date the Company fixes the issuance or sales
price (or shall have been deemed to have fixed the issuance or sales price) of
the subject shares of Common Stock, then forthwith upon such issue or sale (the
"Triggering Transaction"), the Purchase Price shall, subject to subparagraphs
(1) to (9) of this Paragraph 3.1, be reduced to the Purchase Price (calculated
to the nearest tenth of a cent) determined by dividing:
(i) an amount equal to the sum of (x) the product derived by
multiplying the Number of Common Shares Deemed Outstanding immediately
prior to such Triggering Transaction by the Purchase Price then in effect,
plus (y) the consideration, if any, received by the Company upon
consummation of such Triggering Transaction, by
(ii) an amount equal to the sum of (x) the Number of Common
Shares Deemed Outstanding immediately prior to such Triggering Transaction
plus (y) the number of shares of Common Stock issued (or deemed to be
issued in accordance with subparagraphs 3.1(1) to (9)) in connection with
the Triggering Transaction.
-3-
<PAGE>
For purposes of this Paragraph 3, the term "Number of Common
Shares Deemed Outstanding" at any given time shall mean the sum of (i) the
number of shares of the Company's Common Stock outstanding at such time, and
(ii) the number of shares of the Company's Common Stock deemed to be outstanding
under subparagraphs 3.1(1) to (9), inclusive, at such time.
For purposes of determining the adjusted Purchase Price under this
Paragraph 3.1, the following subsections (1) to (9), inclusive, shall be
applicable:
(1) In case the Company at any time shall in any manner grant
(whether directly or by assumption in a merger or otherwise) any
rights to subscribe for or to purchase, or any options for the
purchase of, Common Stock or any stock or other securities convertible
into or exchangeable for Common Stock (such rights or options being
herein called "Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities"), whether or
not such Options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per
share for which the Common Stock is issuable upon exercise, conversion
or exchange (determined by dividing (x) the total amount, if any,
received or receivable by the Company as consideration for the
granting of such Options, plus the minimum aggregate amount of
additional consideration payable to the Company upon the exercise of
all such Options, plus, in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by
(y) the total maximum number of shares of Common Stock issuable upon
the exercise of such Options or the conversion or exchange of such
Convertible Securities) shall be less than the Market Price per share
on the date the Company fixes the issuance or sales price (or shall
have been deemed to have fixed the issuance or sales price) of the
subject shares of Common Stock, then the total number of shares of
Common Stock issuable upon the exercise of such Options, or, in the
case of Options for Convertible Securities, upon the conversion or
exchange of such Convertible Securities, shall (as of the date of
granting of such Options) be deemed to be outstanding and to have been
issued and sold by the Company for such price per share. No adjustment
of the Purchase Price shall be made upon the actual issue of such
shares of Common Stock or such Convertible Securities upon the
exercise of such Options, except as otherwise provided in subparagraph
(3) below.
-4-
<PAGE>
(2) In case the Company at any time shall in any manner issue
(whether directly or by assumption in a merger or otherwise) or sell
any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (x) the total amount received or
receivable by the Company as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (y) the total maximum number of
shares of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities) shall be less than the Market Price per
share on the date the Company fixes the issuance or sales price (or
shall have been deemed to have fixed the issuance or sales price) of
the subject shares of Common Stock, then the total maximum number of
shares of Common Stock issuable upon conversion or exchange of all
such Convertible Securities shall (as of the date of the issue or sale
of such Convertible Securities) be deemed to be outstanding and to
have been issued and sold by the Company for such price per share. No
adjustment of the Purchase Price shall be made upon the actual issue
of such Common Stock upon the exchange or conversion of such
Convertible Securities, except as otherwise provided in subparagraph
(3) below.
(3) If the purchase price provided for in any Options referred to
in subparagraph (1), the additional consideration, if any, payable
upon the conversion or exchange of any Convertible Securities referred
to in subparagraphs (1) or (2), or the rate at which any Convertible
Securities referred to in subparagraph (1) or (2) are convertible into
or exchangeable for Common Stock shall change at any time (other than
under or by reason of provisions designed to protect against dilution
of the type set forth in Paragraph 3.1 or 3.3), the Purchase Price in
effect at the time of such change shall forthwith be readjusted to the
Purchase Price which would have been in effect at such time had such
Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate,
as the case may be, at the time initially granted, issued or sold. If
the purchase price provided for in any Option referred to in
subparagraph (1) or the rate at which any Convertible Securities
referred to in subparagraphs(1) or (2) are convertible into or
-5-
<PAGE>
exchangeable for Common Stock, shall be reduced at any time under or
by reason of provisions with respect thereto designed to protect
against dilution, then in case of the delivery of Common Stock upon
the exercise of any such Option or upon conversion or exchange of any
such Convertible Security, the Purchase Price then in effect hereunder
shall forthwith be adjusted to such respective amount as would have
been obtained had such Option or Convertible Security never been
issued as to such Common Stock and had adjustments been made upon the
issuance of the shares of Common Stock delivered as aforesaid, but
only if as a result of such adjustment the Purchase Price then in
effect hereunder is hereby reduced.
(4) On the expiration or termination of any Option or the
expiration or termination of any right to convert or exchange any
Convertible Securities, the Purchase Price then in effect hereunder
shall forthwith be increased to the Purchase Price which would have
been in effect at the time of such expiration or termination had such
Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination, never been
issued.
(5) In case any Options shall be issued in connection with the
issue or sale of other securities of the Company, together comprising
one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall
be deemed to have been issued without consideration.
(6) In case any shares of Common Stock, Options or Convertible
Securities shall be issued or sold or deemed to have been issued or
sold for cash, the consideration received therefor shall be deemed to
be the amount received by the Company therefor. In case any shares of
Common Stock, Options or Convertible Securities shall be issued or
sold for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be the
fair value of such consideration as determined in good faith by the
Board of Directors of the Company. In case any shares of Common Stock,
Options or Convertible Securities shall be issued in connection with
any merger in which the Company is the surviving corporation, the
amount of consideration therefor shall be deemed to be the fair value
of such portion of the net assets and business of the non-surviving
corporation as shall be attributed by the Board of Directors of the
Company in good faith to such Common Stock, Options or Convertible
Securities, as the case may be.
-6-
<PAGE>
(7) The number of shares of Common Stock outstanding at any given
time shall not include shares owned or held by or for the account of
the Company, and the disposition of any shares so owned or held shall
be considered an issue or sale of Common Stock for the purpose of this
Paragraph 3.1.
(8) In case the Company shall declare a dividend or make any
other distribution upon the stock of the Company payable in Options or
Convertible Securities, then in such case any Options or Convertible
Securities, as the case may be, issuable in payment of such dividend
or distribution shall be deemed to have been issued or sold without
consideration.
(9) For purposes of this Paragraph 3.1, in case the Company shall
take a record of the holders of its Common Stock for the purpose of
entitling them (x) to receive a dividend or other distribution payable
in Common Stock, Options or in Convertible Securities, or (y) to
subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such right or
subscription or purchase, as the case may be.
3.2 Dividends Not Paid Out of Earnings or Earned Surplus. In the
event the Company shall declare a dividend upon the Common Stock (other than a
dividend payable in Common Stock) payable otherwise than out of earnings or
earned surplus, determined in accordance with generally accepted accounting
principles, including the making of appropriate deductions for minority
interests, if any, in subsidiaries (herein referred to as "Liquidating
Dividends"), then, as soon as possible after the exercise of this Warrant, the
Company shall pay to the person exercising such Warrant an amount equal to the
aggregate value at the time of such exercise of all Liquidating Dividends
(including but not limited to the Common Stock which would have been issued at
the time of such earlier exercise and all other securities which would have been
issued with respect to such Common Stock by reason of stock splits, stock
dividends, mergers or reorganizations, or for any other reason). For the
purposes of this Paragraph 3.2, a dividend other than in cash shall be
considered payable out of earnings or earned surplus only to the extent that
such earnings or earned surplus are charged an amount equal to the fair value
-7-
<PAGE>
of such dividend as determined in good faith by the Board of Directors of the
Company.
3.3 Subdivisions and Combinations. In case the Corporation shall at
any time (i) subdivide the outstanding Common Stock or (ii) issue a stock
dividend on its outstanding Common Stock, the Purchase Price in effect
immediately prior to such subdivision or dividend shall be proportionately
reduced by the same ratio as the subdivision or dividend. In case the
Corporation shall at any time combine its outstanding Common Stock, the Purchase
Price in effect immediately prior to such combination shall be proportionately
increased by the same ratio as the combination.
3.4 Reorganization, Reclassification, Consolidation, Merger or Sale of
Assets. If any capital reorganization or reclassification of the capital stock
of the Company, or consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Common Stock shall
be entitled to receive stock, securities, cash or other property with respect to
or in exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provision
shall be made whereby the holder of this Warrant shall have the right to acquire
and receive upon exercise of this Warrant such shares of stock, securities, cash
or other property issuable or payable (as part of the reorganization,
reclassification, consolidation, merger or sale) with respect to or in exchange
for such number of outstanding shares of the Company's Common Stock as would
have been received upon exercise of this Warrant at the Purchase Price then in
effect. The Company will not effect any such consolidation, merger or sale,
unless prior to the consummation thereof the successor corporation (if other
than the Company) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume by written instrument mailed or delivered to
the holder of this Warrant at the last address of such holder appearing on the
books of the Company, the obligation to deliver to such holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to purchase. If a purchase, tender or exchange offer
is made to and accepted by the holders of more than 50% of the outstanding
shares of Common Stock of the Company, the Company shall not effect any
consolidation, merger or sale with the person having made such offer or with any
Affiliate of such person, unless prior to the consummation of such
consolidation, merger or sale the holder of this Warrant shall have been given a
reasonable opportunity to then elect to receive upon the exercise of this
Warrant either the stock, securities or assets then issuable with respect to the
Common Stock of the Company or the stock, securities or assets, or the
equivalent, issued to previous holders of the Common Stock in accordance with
such offer. For purposes hereof the term "Affiliate" with respect to any given
-8-
<PAGE>
person shall mean any person controlling, controlled by or under common control
with the given person.
3.5 No Adjustment for Exercise of Certain Options, Warrants, Etc. The
provisions of this Section 3 shall not apply to any Common Stock issued,
issuable or deemed outstanding under subparagraphs 3.1(1) to (9) inclusive: (i)
to any person pursuant to any stock option, stock purchase or similar plan or
arrangement for the benefit of employees, consultants or directors of the
Company or its subsidiaries in effect on the date of issuance hereof or (ii)
pursuant to options, warrants and conversion rights in existence on the date of
issuance hereof.
3.6 Notices of Record Date, Etc. In the event that:
(1) the Company shall declare any cash dividend
upon its Common Stock, or
(2) the Company shall declare any dividend upon its Common
Stock payable in stock or make any special dividend or other
distribution to the holders of its Common Stock, or
(3) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any
class or other rights, or
(4) there shall be any capital reorganization or
reclassification of the capital stock of the Company, including any
subdivision or combination of its outstanding shares of Common Stock,
or consolidation or merger of the Company with, or sale of all or
substantially all of its assets to, another corporation, or
(5) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in connection with such event, the Company shall give to the holder of
this Warrant:
(i) at least ten (10) days' prior written notice of the date
on which the books of the Company shall close or a record shall be
taken for such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up; and
(ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, at least ten (10) days' prior
-9-
<PAGE>
written notice of the date when the same shall take place.
Such notice in accordance with the foregoing clause (i) shall also
specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock
shall be entitled thereto, and such notice in accordance with the
foregoing clause (ii) shall also specify the date on which the holders
of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Each such written
notice shall be given by first class mail, postage prepaid, addressed
to the holder of this Warrant at the address of such holder as shown
on the books of the Company.
Failure to give any notice required by this section (or any
defect in any such notice) shall not affect the validity of the subject
transaction.
3.7 Grant, Issue or Sale of Options, Convertible Securities, or
Rights. If at any time or from time to time on or after the date of issuance
hereof, the Company shall grant, issue or sell any Options, Convertible
Securities or rights to purchase property (the "Purchase Rights") pro rata to
the record holders of any class of Common Stock of the Company and such grants,
issuances or sales do not result in an adjustment of the Purchase Price under
Paragraph 3.1 hereof, then the holder of this Warrant shall be entitled to
acquire (within thirty (30) days after the later to occur of the initial
exercise date of such Purchase Rights or receipt by such holder of the notice
concerning Purchase Rights to which such holder shall be entitled under
Paragraph 3.6) and upon the terms applicable to such Purchase Rights either:
(i) the aggregate Purchase Rights which such holder could
have acquired if it had held the number of shares of Common Stock
acquirable upon exercise of this Warrant immediately before the grant,
issuance or sale of such Purchase Rights; provided that if any
Purchase Rights were distributed to holders of Common Stock without
the payment of additional consideration by such holders, corresponding
Purchase Rights shall be distributed to the exercising holder of this
Warrant as soon as possible after such exercise and it shall not be
necessary for the exercising holder of this Warrant specifically to
request delivery of such rights; or
(ii) in the event that any such Purchase Rights shall have
expired or shall expire prior to the end of said thirty (30) day
period, the number of shares of Common Stock or the amount of property
which such holder could have acquired upon such exercise at the time
or times at which the Company granted, issued or sold such expired
Purchase Rights.
<PAGE>
-10-
3.8 Adjustment by Board of Directors. If any event occurs as to which,
in the opinion of the Board of Directors of the Company, the provisions of this
Section 3 are not strictly applicable or if strictly applicable would not fairly
protect the rights of the holder of this Warrant in accordance with the
essential intent and principles of such provisions, then the Board of Directors
shall make an adjustment in the application of such provisions, in accordance
with such essential intent and principles, so as to protect such rights as
aforesaid, but in no event shall any adjustment have the effect of increasing
the Purchase Price as otherwise determined pursuant to any of the provisions of
this Section 3 except in the case of a combination of shares of a type
contemplated in Paragraph 3.3 and then in no event to an amount greater than the
Purchase Price as adjusted pursuant to Paragraph 3.3.
3.9 Fractional Shares. The Company shall not issue fractions of shares
of Common Stock upon exercise of this Warrant or scrip in lieu thereof. If any
fraction of a share of Common Stock would, except for the provisions of this
Paragraph 3.9, be issuable upon exercise of this Warrant, the Company shall in
lieu thereof pay to the person entitled thereto an amount in cash equal to the
current value of such fraction, calculated to the nearest one-hundredth (1/100)
of a share, to be computed based on the Market Price of the Common Stock.
3.10 Officers' Statement as to Adjustments. Whenever the Purchase
Price shall be adjusted as provided in Section 3 hereof, the Company shall
forthwith file at each office designated for the exercise of this Warrant, a
statement, signed by either the Chairman of the Board, the President, any Vice
President or Treasurer of the Company, showing in reasonable detail the facts
requiring such adjustment and the Purchase Price that will be effective after
such adjustment. The Company shall also cause a notice setting forth any such
adjustments to be sent by mail, first class, postage prepaid, to the record
holder of this Warrant at his or its address appearing on the stock register. If
such notice relates to an adjustment resulting from an event referred to in
Paragraph 3.6, such notice shall be included as part of the notice required to
be mailed and published under the provisions of Paragraph 3.6 hereof.
4. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of
its charter or through reorganization, consolidation, merger, dissolution, sale
of assets or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the holder hereof against dilution or other impairment. Without limiting the
<PAGE>
-11-
generality of the foregoing, the Company will not increase the par value of any
shares of stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise, and at all times will take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable stock upon the exercise of this
Warrant.
5. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS. The
Company shall at all times reserve and keep available out of its authorized but
unissued stock, solely for the issuance and delivery upon the exercise of this
Warrant and other similar Warrants, such number of its duly authorized shares of
Common Stock as from time to time shall be issuable upon the exercise of this
Warrant and all other similar Warrants at the time outstanding.
6. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to it, or (in the case of mutilation) upon surrender and
cancellation thereof, the Company will issue, in lieu thereof, a new Warrant of
like tenor.
7. REMEDIES. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that the same may be specifically enforced.
8. NEGOTIABILITY, ETC. This Warrant is issued upon the following
terms, to all of which each taker or owner hereof consents and agrees:
(a) Subject to the legend appearing on the first page hereof,
title to this Warrant may be transferred by endorsement (by
the holder hereof executing the form of assignment at the
end hereof including guaranty of signature) and delivery in
the same manner as in the case of a negotiable instrument
transferable by endorsement and delivery.
(b) Any person in possession of this Warrant properly endorsed
is authorized to represent himself as absolute owner hereof
and is granted power to transfer absolute title hereto by
endorsement and delivery hereof to a bona fide purchaser
hereof for value; each prior taker or owner waives and
renounces all of his equities or rights in this Warrant in
favor of every such bona fide purchaser, and every such
-12-
<PAGE>
bona fide purchaser shall acquire title hereto and to all
rights represented hereby.
(c) Until this Warrant is transferred on the books of the
Company, the Company may treat the registered holder of this
Warrant as the absolute owner hereof for all purposes
without being affected by any notice to the contrary.
(d) Prior to the exercise of this Warrant, the holder hereof
shall not be entitled to any rights of a shareholder of the
Company with respect to shares for which this Warrant shall
be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except
as provided herein.
(e) The Company shall not be required to pay any Federal or
state transfer tax or charge that may be payable in respect
of any transfer involved in the transfer or delivery of this
Warrant or the issuance or conversion or delivery of
certificates for Common Stock in a name other than that of
the registered holder of this Warrant or to issue or deliver
any certificates for Common Stock upon the exercise of this
Warrant until any and all such taxes and charges shall have
been paid by the holder of this Warrant or until it has been
established to the Company's satisfaction that no such tax
or charge is due.
9. SUBDIVISION OF RIGHTS. This Warrant (as well as any new warrants
issued pursuant to the provisions of this paragraph) is exchangeable, upon the
surrender hereof by the holder hereof, at the principal office of the Company
for any number of new warrants of like tenor and date representing in the
aggregate the right to subscribe for and purchase the number of shares of Common
Stock of the Company which may be subscribed for and purchased hereunder.
10. MAILING OF NOTICES, ETC. All notices and other communications from
the Company to the holder of this Warrant shall be mailed by first-class
certified mail, postage prepaid, to the address furnished to the Company in
writing by the last registered holder of this Warrant who shall have furnished
an address to the Company in writing.
11. HEADINGS, ETC. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect the meaning hereof.
-13-
<PAGE>
12. CHANGE, WAIVER, ETC. Neither this Warrant nor any term hereof
may be changed, waived, discharged or terminated orally but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
13. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.
<PAGE>
-14-
FOUR MEDIA COMPANY
By _________________________
Dated: ________ , 1999
Attest:
<PAGE>
[To be signed only upon exercise of Warrant]
To Four Media Company:
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
for, and to purchase thereunder, shares of Common Stock of Four Media Company
and herewith makes payment of $ therefor, and requests that the certificates for
such shares be issued in the name of, and be delivered to Warburg, Pincus & Co.,
as nominee, whose address is --------------------.
Dated:
- ------------------
(Signature must conform in all respects to name of Holder as specified on
the face of the Warrant)
-----------------------
Address
- ----------------------
(Signature Guarantee)
-15-
<PAGE>
[To be signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _____________________________ the right represented by the within Warrant
to purchase the ________ shares of the Common Stock of Four Media Company to
which the within Warrant relates, and appoints ________________ attorney to
transfer said right on the books of Four Media Company with full power of
substitution in the premises.
Dated:
- -----------------
(Signature must conform in all respects to name of Holder as specified on the
face of the Warrant)
_______________________
Address
In the presence of
- -------------------
- ---------------------
(Signature Guarantee)
-16-
