SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 8, 1999
IWERKS ENTERTAINMENT, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-22558 95-4439361
(State or Other (Commission (IRS Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
4540 West Valerio Street
Burbank, California 91505-1045
(Address of Principal Executive Offices)
(818) 841-7766
(Registrant's Telephone Number)
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ITEM 5. OTHER EVENTS
On September 8, 1999, the Board of Directors of Iwerks Entertainment,
Inc., a Delaware corporation (the "Company"), increased the number of the
Company's directors from six to eight and elected Peter Guber and Paul Schaeffer
as new directors of the Company. The Board also appointed Mr. Guber as Chairman
and Mr. Schaeffer as Vice Chairman of the Company.
Concurrently with the appointment of Mr. Guber and Mr. Schaeffer as
directors and officers of the Company, the Company issued warrants to acquire a
total of 1,356,250 shares of the Company's common stock to a trust affiliated
with Mr. Guber and issued warrants to acquire a total of 193,750 shares of the
Company's common stock to a trust affiliated with Mr. Schaeffer. The total
purchase price of the warrants was $250,000.
The warrants were issued to the trust affiliated with Mr. Guber in four
tranches consisting of two tranches of 339,063 shares and two tranches of
339,062 shares, with exercise prices of $1.43 per share, $1.50 per share, $1.69
per share and $3.00 per share for the respective tranches. The warrants were
issued to the trust affiliated with Mr. Schaeffer in four tranches consisting of
two tranches of 48,438 shares and two tranches of 48,437 shares, with exercise
prices of $1.43 per share, $1.50 per share, $1.69 per share and $3.00 per share
for the respective tranches. The warrants may not be exercised until September
8, 2001 unless (1) the closing price of the Company's common stock on its
trading market is at least $4.00 per share on each of the ten consecutive
trading days prior to the date that notice of exercise is given, or (2) a change
of control of the Company occurs. Thereafter, the warrants may be exercised at
any time until September 7, 2004. The Company has the right to redeem the
unexercised portion of the warrants at any time after September 8, 2001 for the
ratable portion of the warrant purchase price if the closing price of the
Company's common stock on its trading market is more than $10.00 per share on
each of the 30 consecutive trading days prior to the date that notice of
redemption is given.
Mr. Guber is chairman and chief executive officer of the Mandalay
Entertainment Group, which includes Mandalay Pictures, Mandalay Television,
Mandalay Sports Entertainment, Mandalay Media Arts, and Mandalay E-Media.
Mr. Guber is a 30-year veteran of the entertainment industry. He served as
chairman and CEO of Sony Pictures Entertainment from 1989 to 1995, when he
founded Mandalay.
Mr. Schaeffer is vice chairman and chief operating officer of the Mandalay
Entertainment Group, and is responsible for all of Mandalay's corporate
operations. He previously served as executive vice president of Sony Pictures
Entertainment, overseeing its worldwide corporate operations, including
worldwide administration, financial affairs, human resources, corporate affairs,
legal affairs, and corporate communications.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
September 22, 1999 IWERKS ENTERTAINMENT, INC.
By: /s/ JEFF DAHL
-----------------------------------
Chief Financial Officer
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EXHIBIT INDEX
EXHIBITS
4.1 Warrant to Purchase 339,063 Shares of Common Stock of the
Registrant, dated September 8, 1999, by the Registrant to The Guber
Family Trust dated October 20, 1978.
4.2 Warrant to Purchase 339,063 Shares of Common Stock of the
Registrant, dated September 8, 1999, by the Registrant to The Guber
Family Trust dated October 20, 1978.
4.3 Warrant to Purchase 339,062 Shares of Common Stock of the
Registrant, dated September 8, 1999, by the Registrant to The Guber
Family Trust dated October 20, 1978.
4.4 Warrant to Purchase 339,062 Shares of Common Stock of the
Registrant, dated September 8, 1999, by the Registrant to The Guber
Family Trust dated October 20, 1978.
4.5 Warrant to Purchase 48,438 Shares of Common Stock of the Registrant,
dated September 8, 1999, by the Registrant to The Paul and Judy
Schaeffer Living Trust dated February 28, 1992.
4.6 Warrant to Purchase 48,438 Shares of Common Stock of the Registrant,
dated September 8, 1999, by the Registrant to The Paul and Judy
Schaeffer Living Trust dated February 28, 1992.
4.7 Warrant to Purchase 48,437 Shares of Common Stock of the Registrant,
dated September 8, 1999, by the Registrant to The Paul and Judy
Schaeffer Living Trust dated February 28, 1992.
4.8 Warrant to Purchase 48,437 Shares of Common Stock of the Registrant,
dated September 8, 1999, by the Registrant to The Paul and Judy
Schaeffer Living Trust dated February 28, 1992.
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Exhibit 4.1
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY SUCH
APPLICABLE STATE LAWS, OR IN VIOLATION OF THE PROVISIONS OF THIS WARRANT.
WARRANT (TRANCHE A)
To Purchase 339,063 Shares of
Common Stock of
IWERKS ENTERTAINMENT, INC.
THIS IS TO CERTIFY THAT The Guber Family Trust dated October 20,
1978 (the "Guber Trust"), or its registered assigns, is entitled, at any time
and from time to time prior to September 7, 2004 (the "Expiration Date"), to
purchase from Iwerks Entertainment, Inc., a Delaware corporation (the
"Company"), a total of 339,063 shares of Common Stock, par value $0.001 per
share (the "Common Stock"), of the Company, subject to adjustment as provided
herein, at a purchase price of $1.43 per share (the "Exercise Price"), subject
to adjustment as set forth herein, all on the terms and conditions and pursuant
to the provisions hereinafter set forth.
This Warrant was issued to the Guber Trust pursuant to the Warrant
Purchase Agreement dated as of September 8, 1999 (the "Agreement") between the
Company, the Guber Trust and The Paul and Judy Schaeffer Living Trust dated
February 28, 1992. Capitalized terms used and not otherwise defined herein shall
have the meanings set forth for such terms in the Agreement.
ARTICLE 1.
DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Affiliate" with respect to any Person shall mean any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. For the
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purpose of this definition, the term "control" as used with
respect to any Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise, and "controlling" and "controlled by" shall have correlative
meanings.
"Agreement" shall have the meaning set forth in the first
paragraph hereof.
"Business Day" shall mean any day that is not a Saturday or Sunday
or a day on which banks are required or permitted to be closed in Los Angeles,
California.
"Change of Control" means any of the following transactions or
series of related transactions: (i) the consolidation, merger or other business
combination of the Company with or into another Person (other than pursuant to a
merger effected solely for the purposes of changing the jurisdiction of
incorporation of the Company or a merger in which (x) shareholders of the
Company immediately prior to the closing of such merger continue to own in
excess of 50% of the voting power of the surviving corporation after the merger
and (y) a majority of the directors comprising the board of directors of the
surviving corporation after the closing of the merger were directors of the
Company immediately prior to the merger); (ii) the sale or transfer of all or
substantially all of the Company's assets; or (iii) the consummation of a
purchase, tender or exchange offer made to, and accepted by, the holders of more
than 50% of the economic interest in, or the combined voting power of all
classes of voting stock of, the Company.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock" shall have the meaning set forth in the first
paragraph hereof.
"Company" shall have the meaning set forth in the first paragraph
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exercise Price" shall have the meaning set forth in the first
paragraph hereof.
"Expiration Date" shall have the meaning set forth in the first
paragraph hereof.
"holder" shall mean each Person in whose name this Warrant or any
portion hereof is registered on the books of the Company maintained for such
purpose.
"Issue Date" shall mean September 8, 1999.
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"Market Price" of the Common Stock on any Trading Day shall mean the
closing sale price per share of the Common Stock on the Principal Market or, if
the Common Stock is not then traded or quoted on a Principal Market, such other
trading or quotation facility on which the Common Stock is then listed or quoted
for trading. If the Common Stock is not listed or quoted for trading on any
trading or quotation facility, the "Market Price" of the Common Stock on any
Trading Day shall mean the fair market value per share of Common Stock as
determined in good faith by the Board of Directors of the Company.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, corporation or other entity and shall include
any successor (by merger or otherwise) of such entity.
"Principal Market" shall mean the national stock market or trading
facility on which the Common Stock is listed or quoted for trading.
"Restricted Stock" shall mean shares of Warrant Stock which are, or
which upon their issuance on the exercise of this Warrant would be, evidenced by
a certificate bearing the restrictive legend set forth in Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Third Party" means a person who is not related to or affiliated or
associated in any manner with the Guber Trust, any of its affiliates or any of
their respective officers, directors or shareholders.
"Trading Day" means a day on which the Principal Market for the
Common Stock is open for the transaction of business or, if there is no
Principal Market, a Business Day.
"Transaction" shall have the meaning set forth in Section 4.3
hereof.
"Transfer" or "transfer" with respect to this Warrant or any Warrant
Stock shall mean any transfer, sale, encumbrance, hypothecation or other
disposition of this Warrant or any Warrant Stock or of any interest in either
thereof.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
"Warrant Price" shall mean an amount equal to (i) the number of
shares of Warrant Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Exercise Price as of the date of such
exercise.
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"Warrant Stock" shall mean the shares of Common Stock purchased by
the holder of this Warrant upon the exercise thereof.
ARTICLE 2.
EXERCISE OF WARRANT
Section 2.1. MANNER OF EXERCISE. From and after the date hereof and
until 5:00 P.M., California time, on the Expiration Date, but subject to SECTION
2.4, the holder may exercise this Warrant for all or any part of the number of
shares of Warrant Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, the holder
shall deliver to the Company at its office at 4540 Valerio Street, Burbank,
California 91505, or at the office or agency designated by the Company pursuant
to Article 12, (i) a written notice of the holder's election to exercise this
Warrant, which notice shall specify the number of shares of Warrant Stock to be
purchased, (ii) payment of the Warrant Price in the manner provided below, and
(iii) this Warrant. Such notice shall be substantially in the form of the
subscription form appearing at the end of this Warrant as EXHIBIT A, duly
executed by or on behalf of the holder. Upon receipt thereof, the Company shall,
as promptly as practicable, and in any event within five (5) Business Days
thereafter, execute or cause to be executed and deliver or cause to be delivered
to the holder a certificate or certificates representing the aggregate number of
full shares of Warrant Stock issuable upon such exercise, together with cash in
lieu of any fraction of a share, as hereinafter provided. The stock certificate
or certificates so delivered shall be, to the extent possible, in such
denomination or denominations as such holder shall request in the notice and
shall be registered in the name of the holder or, subject to Article 9, and such
other name as shall be designated in the notice.
This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the holder
or any other Person so designated to be named therein shall be deemed to have
become a holder of record of such shares of Warrant Stock for all purposes, as
of the date the notice, together with the payment of the Warrant Price and this
Warrant, are received by the Company as described above and all taxes required
to be paid by the holder, if any, pursuant to Section 2.2 prior to the issuance
of such shares of Warrant Stock have been paid. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate
or certificates representing Warrant Stock, deliver to the holder a new Warrant
evidencing the rights of the holder to purchase the unpurchased shares of
Warrant Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of the holder,
appropriate notation may be made on this Warrant and the same returned to the
holder.
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Payment of the Warrant Price shall be made at the option of the
holder by (1) cash, (2) wire transfer to an account in a bank located in the
United States designated for such purpose by the Company, (3) certified or
official bank check, (4) transfer to the Company of shares of Common Stock,
including shares to be issued upon the exercise of this Warrant, or (5) any
combination of payment under items (1), (2), (3) or (4). In the event of the
application of shares of Common Stock to the payment of the Warrant Price, the
amount to be credited to the payment of the Warrant Price for each share of
Common Stock so applied shall be the average Market Price of the Common Stock
for the ten Trading Day period ending on the Trading Day immediately prior to
the payment date.
Section 2.2. PAYMENT OF TAXES. The Company shall pay all expenses in
connection with, and all taxes and other governmental charges that may be
imposed with respect to, the issue or delivery of Warrant Stock purchased
hereunder, unless such tax or charge is imposed by law upon the holder, in which
case such taxes or charges shall be paid by the holder. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for shares of Warrant Stock
issuable upon exercise of this Warrant in any name other than that of the
holder, and in such case the Company shall not be required to issue or deliver
any stock certificate until such tax or other charge has been paid or it has
been established to the reasonable satisfaction of the Company that no such tax
or other charge is due.
Section 2.3. FRACTIONAL SHARES. The Company shall not be required to
issue a fractional share of Warrant Stock upon exercise of this Warrant. As to
any fraction of a share which the holder of this Warrant would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to the same fraction of the
average Market Price of the Common Stock for the ten Trading Day period ending
on the Trading Day immediately prior to the payment date.
Section 2.4. RESTRICTION ON EXERCISE. Notwithstanding the provisions
of SECTION 2.1 to the contrary, but subject to SECTION 7.3 and the last sentence
of this SECTION 2.4, by its acceptance of this Warrant the holder hereby agrees
not to exercise this Warrant in whole or in part until September 8, 2001 unless
the Market Price of the Common Stock is at least $4.00 per share on each of the
ten (10) Trading Days immediately preceding the date that the holder delivers
its notice of exercise to the Company in accordance with SECTION 2.1.
Notwithstanding the foregoing sentence, this Warrant shall be exercisable in
whole or in part one Business Day prior to the consummation of a Change of
Control of the Company.
ARTICLE 3.
TRANSFER, DIVISION AND COMBINATION
Section 3.1. TRANSFER. Subject to compliance with Article 9,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the
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Company to be maintained for such purpose, upon surrender of this Warrant at the
principal office of the Company referred to in Section 2.1 or the office or
agency designated by the Company pursuant to Article 12, together with a written
assignment of this Warrant substantially in the form of EXHIBIT B hereto duly
executed by the holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall, subject to Article 9, execute
and deliver a new Warrant or Warrants in the name(s) of the assignee or
assignees and in the denomination(s) specified in such instrument of assignment,
and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be canceled. A Warrant,
if properly assigned in compliance with Article 9, may be exercised by a new
holder for the purchase of shares of Warrant Stock without having a new Warrant
issued.
Section 3.2. DIVISION AND COMBINATION. Subject to Article 9, this
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the holder or its agent or attorney. Subject to compliance with
Section 3.1 and with Article 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
Section 3.3. EXPENSES. The Company shall prepare, issue and
deliver at its own expense (other than transfer taxes) the new Warrant or
Warrants under this Article 3.
Section 3.4. MAINTENANCE OF BOOKS. The Company agrees to
maintain, at its aforesaid office or agencies, books for the registration,
recordation, issuance and the registration of transfer of the Warrants.
ARTICLE 4.
ADJUSTMENTS
The number of shares of Warrant Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this Article 4. The Company shall give the holder notice of any event described
below which requires an adjustment pursuant to this Article 4 at the time of
such event.
Section 4.1. STOCK DIVIDENDS, SUBDIVISIONS, COMBINATIONS AND
RECLASSIFICATIONS. If the Company shall at any time or from time to time
after the Issue Date:
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(a) pay a dividend or make a distribution on the outstanding
shares of Common Stock in shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock,
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or
(d) issue by reclassification of its shares of Common Stock any
shares of capital stock of the Company,
then, and in each such case, the number of shares of Warrant Stock issuable upon
exercise of the Warrant evidenced hereby immediately prior to such event or the
record date therefor, whichever is earlier, shall be adjusted so that the holder
of any Warrant evidenced hereby thereafter exercised shall be entitled to
receive the number of shares of Warrant Stock or other securities of the Company
which such holder would have owned or have been entitled to receive after the
happening of any of the events described above, had such Warrant been exercised
immediately prior to the happening of such event or the record date therefor,
whichever is earlier. An adjustment made pursuant to this Section 4.1 shall
become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of shares of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of any such subdivision, reclassification or
combination, at the close of business on the day upon which such corporate
action becomes effective.
Section 4.2. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER
THIS SECTION. The following provisions shall be applicable to the making of
adjustments provided for in this Article 4:
(a) For purposes of this Article 4, the number of shares of Common
Stock at any time outstanding shall not include any shares of Common Stock
then owned or held by or for the account of the Company.
(b) The term "dividend" as used in this Article 4 shall mean a
dividend or other distribution upon stock of the Company except pursuant
to the Rights Agreement dated as of May 22, 1995 (as amended from time to
time, the "Rights Agreement") between the Company and U.S. Stock Transfer
Corporation as rights agent. Notwithstanding anything in this Article 4 to
the contrary, the number of shares of Warrant Stock issuable upon exercise
of the Warrant evidenced hereby shall not be adjusted as a result of any
dividend, distribution or issuance of securities of the Company pursuant
to the Rights Agreement.
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(c) Notwithstanding anything in this Article 4 to the contrary, the
Company shall not be required to give effect to any adjustment in the
number of shares of Warrant Stock issuable upon exercise of the Warrant
evidenced hereby unless and until the net effect of one or more
adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change in the number of shares of
Warrant Stock issuable upon exercise of the Warrants evidenced hereby by
at least one-hundredth of one share of Warrant Stock, and when the
cumulative net effect of more than one adjustment so determined shall be
to change the number of shares of Warrant Stock issuable upon exercise of
the Warrant evidenced hereby by at least one-hundredth of one share of
Warrant Stock, such change in the number of shares of Warrant Stock
issuable upon exercise of the Warrant evidenced hereby shall thereupon be
given effect.
(d) If the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then, no adjustment in the number of shares of
Warrant Stock issuable upon exercise of the Warrant evidenced hereby shall
be required by reason of the taking of such record.
(e) There shall be no adjustment of the number of shares of Warrant
Stock issuable upon exercise of the Warrant evidenced hereby in case of
the issuance of any stock of the Company in a merger, reorganization,
acquisition or other similar transaction except as set forth in Section
4.3.
(f) Notwithstanding anything herein to the contrary, the Company
agrees not to enter into any transaction that, by reason of any adjustment
hereunder, would cause the Exercise Price to be less than the par value
per share of the Common Stock.
(g) Upon each adjustment to the number of shares of Warrant Stock
issuable upon exercise of the Warrant pursuant to Section 4.1, the
Exercise Price effective immediately prior to the making of such
adjustment shall thereafter be adjusted to be the amount obtained by (i)
multiplying (A) the applicable number of shares of Warrant Stock issuable
upon exercise of the Warrant immediately prior to such adjustment by (B)
the Exercise Price in effect immediately prior to such adjustment and (ii)
dividing the product so obtained by the number of shares of Warrant Stock
issuable upon exercise of the Warrant immediately after such adjustment.
Section 4.3. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION
OR DISPOSITION OF ASSETS. In case of any reorganization or reclassification of
outstanding shares of Common Stock (other than a reclassification covered by
Section 4.1), or in case of any
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consolidation or merger of the Company with or into another corporation, or in
the case of any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety (each of the foregoing
being referred to as a "Transaction"), this Warrant shall thereafter be
exercisable for, in lieu of the Common Stock issuable upon such exercise prior
to consummation of the Transaction, the kind and amount of shares of stock and
other securities and property receivable (including cash) upon the consummation
of the Transaction by a holder of that number of shares of Common Stock issuable
upon exercise of such Warrant immediately prior to the Transaction (including,
on a pro rata basis, the cash, securities or property received by holders of
Common Stock in any tender or exchange offer that is a step in the Transaction).
Section 4.4. NOTICES TO WARRANTHOLDERS. In case at any time or from
time to time, prior to the Expiration Date, the Company shall pay any dividend
or make any other distribution to the holders of its Common Stock, or shall
offer for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or any other right, or there shall be
any capital reorganization or reclassification of the Common Stock of the
Company or consolidation or merger of the Company with or into another
corporation, or any sale or conveyance to another corporation of the property of
the Company as an entirety or substantially as an entirety, or there shall be a
voluntary or involuntary dissolution, liquidation or winding up of the Company,
then, in any one or more of said cases the Company shall give at least 20 days'
prior written notice (the time of mailing of such notice shall be deemed to be
the time of giving thereof) to the registered holder of the Warrant evidenced
hereby at its address as shown on the books of the Company maintained by the
Transfer Agent thereof of the date on which (i) the books of the Company shall
close or a record shall be taken for such stock dividend, distribution or
subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution, liquidation or winding
up shall take place, as the case may be, provided that in the case of any
Transaction to which Section 4.3 applies the Company shall give at least 30
days' prior written notice as aforesaid. Such notice shall also specify the date
as of which the holders of the Common Stock of record shall participate in said
dividend, distribution or subscription rights or shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance or
participate in such dissolution, liquidation or winding up, as the case may be.
Failure to give such notice shall not invalidate any action so taken.
Section 4.5. CERTIFICATES. Upon any adjustment of the number of
shares of Warrant Stock issuable upon exercise of the Warrant evidenced hereby
or of the Exercise Price, then, and in each such case, the Company shall
promptly deliver to the holders of the Warrant a certificate signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Company setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the increased or decreased number
of shares of
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Warrant Stock issuable upon exercise of the Warrant evidenced hereby and the
Exercise Price then in effect following such adjustment.
ARTICLE 5.
NO IMPAIRMENT
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities 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 actions as may be necessary or appropriate to protect the rights of the
holder of the Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the Exercise
Price immediately prior to such increase in par value, (b) take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Warrant Stock, free and
clear of any liens, claims, encumbrances and restrictions (other than as
provided herein) upon the exercise of this Warrant, and (c) use its best efforts
to obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.
Upon the request of the holder of the Warrant, the Company will at
any time during the period this Warrant is outstanding acknowledge in writing,
in form satisfactory to the holder of this Warrant, the continuing validity of
this Warrant and the obligations of the Company hereunder.
ARTICLE 6.
RESERVATION AND AUTHORIZATION OF
COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
The Company covenants and agrees that, until the Expiration Date,
the Company shall at all times reserve and keep available for issue upon the
exercise of this Warrant such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full of this
Warrant. All shares of Common Stock which shall be so issuable, when issued upon
exercise of this Warrant and payment therefor in accordance with the terms of
this Warrant, shall be duly and validly issued, fully paid and nonassessable and
free and clear of any liens, claims and restrictions (other than as provided
herein). No stockholder of the Company has or shall have any preemptive rights
to subscribe for such shares of Common Stock.
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Before taking any action which would result in an adjustment in the
number of shares of Warrant Stock for which this Warrant is exercisable or in
the Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
ARTICLE 7.
REDEMPTION
Section 7.1. REDEMPTION RIGHT. All (but not less than all) of the
outstanding portion of this Warrant may be redeemed by the Company at any time
after September 8, 2001 at its option upon the notice described in Section 7.2
hereof at a price equal to $54,687 times the quotient of (a) the number of
shares of Warrant Stock for which this Warrant is then exercisable (adjusted as
applicable pursuant to Article 4) divided by (b) 339,063 (subject to adjustment
pursuant to Article 4) (the "Redemption Price"). The Company's redemption right
contained in the preceding sentence is subject to the condition that the Market
Price of the Common Stock is more than $10.00 per share on each of the 30
consecutive Trading Days immediately prior to the date on which the Company
delivers a redemption notice pursuant to Section 7.2 hereof.
Section 7.2. DATE FIXED FOR, AND NOTICE OF, REDEMPTION. In the event
the Company shall elect to redeem the outstanding portion of this Warrant
pursuant to Section 7.1 hereof, the Company shall fix a date for the redemption.
Notice of redemption shall be mailed by first class mail, postage prepaid, by
the Company or the Company's agent at its direction not less than 90 days from
the date fixed for redemption to the registered holders of the outstanding
portion of this Warrant to be redeemed at their last addresses as they appear on
the Company's registration books. Any notice mailed in the manner herein
provided shall be conclusively presumed to have been duly given whether or not
the registered holder received such notice.
Section 7.3. EXERCISE AFTER NOTICE OF REDEMPTION. The outstanding
portion of this Warrant called for redemption may be exercised in accordance
with Article 2 (other than pursuant to Section 2.4) of this Warrant at any time
after notice of redemption is given by the Company pursuant to Section 7.2
hereof and prior to the date fixed for redemption. On and after the redemption
date, the record holders of the outstanding portion of this Warrant shall have
no further rights except to receive, upon surrender of such holder's portion of
this outstanding Warrant, the Redemption Price.
Page 11
<PAGE>
ARTICLE 8.
STOCK AND WARRANT TRANSFER BOOKS
The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.
ARTICLE 9.
RESTRICTIONS ON TRANSFERABILITY
This Warrant and the Restricted Stock shall not be transferred
before satisfaction of the conditions specified in this Article 9, which
conditions are, among other things, intended to ensure compliance with the
provisions of the Securities Act and state securities laws with respect to the
transfer of this Warrant or any Restricted Stock. The holder, by acceptance of
this Warrant, agrees to be bound by the provisions of this Article 9.
Section 9.1. RESTRICTIVE LEGEND. (a) Except as otherwise provided in
this Article 9, each certificate for Restricted Stock initially issued upon any
exercise of this Warrant, and each certificate for Restricted Stock issued to
any subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws
of any state and are subject to the conditions specified in a
certain Warrant dated September 8, 1999, originally issued by Iwerks
Entertainment, Inc. The shares represented by this certificate may
not be transferred in violation of such Act and laws, the rules and
regulations thereunder or the provisions of the Warrant. A copy of
the form of said Warrant is on file with the Secretary of Iwerks
Entertainment, Inc. The holder of this certificate, by acceptance of
this certificate, agrees to be bound by the provisions of such
Warrant."
(b) Except as otherwise provided in this Article 9, this Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state and are subject to the conditions
specified herein. This Warrant may not be sold or otherwise
transferred in the absence of such registration or an exemption
therefrom under the
Page 12
<PAGE>
Securities Act of 1933, as amended, and under any such applicable
state laws, or in violation of the provisions of this Warrant."
Section 9.2. TRANSFERS. Prior to any transfer or attempted transfer
of this Warrant or any shares of Restricted Stock, the holder of this Warrant or
Restricted Stock shall give notice (a "Transfer Notice") to the Company of such
holder's intention to effect such transfer, describing the manner and
circumstances of the proposed transfer, and obtain from counsel a written
opinion addressed and reasonably satisfactory to the Company that the proposed
transfer of this Warrant or such Restricted Stock may be effected without
registration under the Securities Act and applicable state securities laws.
After receipt of the Transfer Notice and written opinion, the Company shall,
within two Business Days thereof, so notify the holder of this Warrant or such
Restricted Stock and such holder shall thereupon be entitled to transfer this
Warrant or such Restricted Stock, in accordance with the terms of the Transfer
Notice. Each certificate, if any, evidencing such shares of Restricted Stock
issued upon such transfer shall bear the restrictive legend set forth in Section
9.1(a), and each Warrant issued upon such transfer shall bear the restrictive
legend set forth in Section 9.1(b), unless in the written opinion of counsel
addressed to the Company such legend is not required in order to ensure
compliance with the Securities Act.
Section 9.3. NO TRANSFERS UNTIL SEPTEMBER 8, 2001. In addition to
the restrictions on transfer imposed by Section 9.1 hereof, unless this Warrant
can be exercised pursuant to Section 2.4, no holder of this Warrant may transfer
this Warrant in whole or in part until September 8, 2001, except for transfers
to a holder's Affiliates. The provisions of this Section 9.3 shall not restrict
the transfer of any Warrant Shares issued or issuable upon exercise of this
Warrant.
Section 9.4. TERMINATION OF RESTRICTIONS. Notwithstanding the
foregoing provisions of this Article 9, the restrictions imposed by this Article
9 upon the transferability of this Warrant and the Restricted Stock and the
legend requirements of Section 9.1 shall terminate as to this Warrant or
Restricted Stock (i) as to the Restricted Stock, when and so long as the resale
of such security shall have been effectively registered under the Securities Act
and disposed of pursuant thereto, or (ii) as to the Warrant and Restricted
Stock, when the holder of the Warrant or Restricted Stock shall have delivered
to the Company the written opinion of counsel addressed and reasonably
satisfactory to the Company stating that such legend is not required in order to
ensure compliance with the Securities Act. Whenever the restrictions imposed by
this Article 9 shall terminate as to any share of Restricted Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, at the Company's expense (except for any transfer taxes), a new
certificate representing such Common Stock not bearing the restrictive legend
set forth in Section 9.1(a).
Page 13
<PAGE>
ARTICLE 10.
SUPPLYING INFORMATION
The Company shall cooperate with the holder of this Warrant and the
holder of Restricted Stock in supplying such information as may be reasonably
requested by such holder or reasonably necessary for such holder to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of an exemption from the
Securities Act for the sale of this Warrant or Restricted Stock.
ARTICLE 11.
LOSS OR MUTILATION
Upon receipt by the Company from any holder of evidence reasonably
satisfactory to the Company of the ownership of and the loss, theft, destruction
or mutilation of this Warrant and indemnity reasonably satisfactory to it and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to the holder.
ARTICLE 12.
OFFICE OF THE COMPANY
As long as any portion of this Warrant remains outstanding, the
Company shall maintain an office or agency (which may be the principal executive
offices of the Company) where this Warrant may be presented for exercise,
registration of transfer, division or combination as provided in this Warrant.
ARTICLE 13.
LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by the
holder to purchase shares of Warrant Stock, and no enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
the holder for the purchase price of any Warrant Stock or as a stockholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.
ARTICLE 14.
REPRESENTATION OF HOLDER
The holder represents that it is acquiring the Warrant and the
Warrant Stock for the purpose of investment and not with a view to the resale or
distribution hereof or thereof; PROVIDED, that the disposition of holder's
property shall at all times be and remain within its control.
Page 14
<PAGE>
ARTICLE 15.
MISCELLANEOUS
Section 15.1. NONWAIVER. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the parties shall operate
as a waiver of such right or otherwise prejudice the parties' rights, powers or
remedies.
Section 15.2. NO RIGHTS AS STOCKHOLDER. The Person in whose name
this Warrant is registered shall be deemed the owner hereof and of this Warrant
evidenced hereby for all purposes. The registered holder of this Warrant shall
not be entitled to any rights whatsoever as a stockholder of the Company except
as herein provided.
Section 15.3. NOTICE GENERALLY. Any notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder to be
made pursuant to the provisions of this Warrant shall be sufficiently given or
made if in writing and either delivered in person with receipt acknowledged or
sent by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to the holder, at its last known address appearing on the
books of the Company maintained for such purpose.
(b) If to the Company:
Iwerks Entertainment, Inc.
4540 Valerio Street
Burbank, California 91505
Attention: Charles Goldwater
Fax No.: (818) 840-6192
with a copy to:
Troop Steuber Pasich Reddick & Tobey, LLP
2029 Century Park East, 24th Floor
Los Angeles, California 90067-3010
Attention: C. N. Franklin Reddick, Esq.
Fax No.: (310) 728-2204
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on
Page 15
<PAGE>
which personally delivered, with receipt acknowledged, or three (3) Business
Days after the same shall have been deposited in the United States mail.
Section 15.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of
Section 3.1 and Article 9, (i) this Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and assigns of the holder, and (ii) the provisions of this
Warrant are intended to be for the benefit of all holders from time to time of
this Warrant, and shall be enforceable by any such holders.
Section 15.5. AMENDMENT. This Warrant may be modified or
amended or the provisions thereof waived with the written consent of the
Company and the holders of the majority of the portion of this Warrant then
outstanding.
Section 15.6. SEVERABILITY. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Warrant.
Section 15.7. HEADINGS. The headings used in this Warrant are
for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
Section 15.8. GOVERNING LAW. This Warrant shall be governed by
and construed in accordance with the laws of the State of California, without
giving effect to conflicts of law principles thereof.
Section 15.10. MUTUAL WAIVER OF JURY TRIAL. Because disputes arising
in connection with complex financial transactions are most quickly and
economically resolved by an experienced and expert person and the parties wish
applicable state and federal laws to apply (rather than arbitration rules), the
parties desire that their disputes be resolved by a judge applying such
applicable laws. Therefore, to achieve the best combination of the benefits of
the judicial system and of arbitration, the Company and the holder waive all
right to trial by jury in any action, suit or proceeding brought to enforce or
defend any rights or remedies under this Warrant.
Page 16
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer on September 8, 1999.
IWERKS ENTERTAINMENT, INC.
By /S/ CHARLES GOLDWATER
----------------------------------
Name: Charles Goldwater
Title: President and Chief
Executive Office
Page 17
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of _____ Shares of Common Stock (the
"Common Stock") of IWERKS ENTERTAINMENT, INC. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to __________________ whose address is
____________________ and, if such shares of Common Stock shall not include all
of the shares of Common Stock issuable as provided in this Warrant, that a new
Warrant of like tenor and date for the balance of the shares of Common Stock
issuable hereunder be delivered to the undersigned.
(Name of Registered Owner)
- ----------------------
(Signature of Registered owner)
- ----------------------
(Street Address)
- ----------------------
(City) (State) (Zip Code)
- ----------------------
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
and does hereby irrevocably constitute and appoint ____________ attorney-in-fact
to register such transfer on the books of IWERKS ENTERTAINMENT, INC. maintained
for the purpose, with full power of substitution in the premises.
Dated:
------------------------------
Name:
------------------------------
Signature:
--------------------------
Witness:
----------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
Page 19
Exhibit 4.2
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY SUCH
APPLICABLE STATE LAWS, OR IN VIOLATION OF THE PROVISIONS OF THIS WARRANT.
WARRANT (TRANCHE B)
To Purchase 339,063 Shares of
Common Stock of
IWERKS ENTERTAINMENT, INC.
THIS IS TO CERTIFY THAT The Guber Family Trust dated October 20,
1978 (the "Guber Trust"), or its registered assigns, is entitled, at any time
and from time to time prior to September 7, 2004 (the "Expiration Date"), to
purchase from Iwerks Entertainment, Inc., a Delaware corporation (the
"Company"), a total of 339,063 shares of Common Stock, par value $0.001 per
share (the "Common Stock"), of the Company, subject to adjustment as provided
herein, at a purchase price of $1.50 per share (the "Exercise Price"), subject
to adjustment as set forth herein, all on the terms and conditions and pursuant
to the provisions hereinafter set forth.
This Warrant was issued to the Guber Trust pursuant to the Warrant
Purchase Agreement dated as of September 8, 1999 (the "Agreement") between the
Company, the Guber Trust and The Paul and Judy Schaeffer Living Trust dated
February 28, 1992. Capitalized terms used and not otherwise defined herein shall
have the meanings set forth for such terms in the Agreement.
ARTICLE 1.
DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Affiliate" with respect to any Person shall mean any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. For the
<PAGE>
purpose of this definition, the term "control" as used with respect to any
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise, and
"controlling" and "controlled by" shall have correlative meanings.
"Agreement" shall have the meaning set forth in the first
paragraph hereof.
"Business Day" shall mean any day that is not a Saturday or Sunday
or a day on which banks are required or permitted to be closed in Los Angeles,
California.
"Change of Control" means any of the following transactions or
series of related transactions: (i) the consolidation, merger or other business
combination of the Company with or into another Person (other than pursuant to a
merger effected solely for the purposes of changing the jurisdiction of
incorporation of the Company or a merger in which (x) shareholders of the
Company immediately prior to the closing of such merger continue to own in
excess of 50% of the voting power of the surviving corporation after the merger
and (y) a majority of the directors comprising the board of directors of the
surviving corporation after the closing of the merger were directors of the
Company immediately prior to the merger); (ii) the sale or transfer of all or
substantially all of the Company's assets; or (iii) the consummation of a
purchase, tender or exchange offer made to, and accepted by, the holders of more
than 50% of the economic interest in, or the combined voting power of all
classes of voting stock of, the Company.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock" shall have the meaning set forth in the first
paragraph hereof.
"Company" shall have the meaning set forth in the first paragraph
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exercise Price" shall have the meaning set forth in the first
paragraph hereof.
"Expiration Date" shall have the meaning set forth in the first
paragraph hereof.
"holder" shall mean each Person in whose name this Warrant or any
portion hereof is registered on the books of the Company maintained for such
purpose.
"Issue Date" shall mean September 8, 1999.
Page 2
<PAGE>
"Market Price" of the Common Stock on any Trading Day shall mean the
closing sale price per share of the Common Stock on the Principal Market or, if
the Common Stock is not then traded or quoted on a Principal Market, such other
trading or quotation facility on which the Common Stock is then listed or quoted
for trading. If the Common Stock is not listed or quoted for trading on any
trading or quotation facility, the "Market Price" of the Common Stock on any
Trading Day shall mean the fair market value per share of Common Stock as
determined in good faith by the Board of Directors of the Company.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, corporation or other entity and shall include
any successor (by merger or otherwise) of such entity.
"Principal Market" shall mean the national stock market or trading
facility on which the Common Stock is listed or quoted for trading.
"Restricted Stock" shall mean shares of Warrant Stock which are, or
which upon their issuance on the exercise of this Warrant would be, evidenced by
a certificate bearing the restrictive legend set forth in Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Third Party" means a person who is not related to or affiliated or
associated in any manner with the Guber Trust, any of its affiliates or any of
their respective officers, directors or shareholders.
"Trading Day" means a day on which the Principal Market for the
Common Stock is open for the transaction of business or, if there is no
Principal Market, a Business Day.
"Transaction" shall have the meaning set forth in Section 4.3
hereof.
"Transfer" or "transfer" with respect to this Warrant or any Warrant
Stock shall mean any transfer, sale, encumbrance, hypothecation or other
disposition of this Warrant or any Warrant Stock or of any interest in either
thereof.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
"Warrant Price" shall mean an amount equal to (i) the number of
shares of Warrant Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Exercise Price as of the date of such
exercise.
Page 3
<PAGE>
"Warrant Stock" shall mean the shares of Common Stock purchased by
the holder of this Warrant upon the exercise thereof.
ARTICLE 2.
EXERCISE OF WARRANT
Section 2.1. MANNER OF EXERCISE. From and after the date hereof and
until 5:00 P.M., California time, on the Expiration Date, but subject to SECTION
2.4, the holder may exercise this Warrant for all or any part of the number of
shares of Warrant Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, the holder
shall deliver to the Company at its office at 4540 Valerio Street, Burbank,
California 91505, or at the office or agency designated by the Company pursuant
to Article 12, (i) a written notice of the holder's election to exercise this
Warrant, which notice shall specify the number of shares of Warrant Stock to be
purchased, (ii) payment of the Warrant Price in the manner provided below, and
(iii) this Warrant. Such notice shall be substantially in the form of the
subscription form appearing at the end of this Warrant as EXHIBIT A, duly
executed by or on behalf of the holder. Upon receipt thereof, the Company shall,
as promptly as practicable, and in any event within five (5) Business Days
thereafter, execute or cause to be executed and deliver or cause to be delivered
to the holder a certificate or certificates representing the aggregate number of
full shares of Warrant Stock issuable upon such exercise, together with cash in
lieu of any fraction of a share, as hereinafter provided. The stock certificate
or certificates so delivered shall be, to the extent possible, in such
denomination or denominations as such holder shall request in the notice and
shall be registered in the name of the holder or, subject to Article 9, and such
other name as shall be designated in the notice.
This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the holder
or any other Person so designated to be named therein shall be deemed to have
become a holder of record of such shares of Warrant Stock for all purposes, as
of the date the notice, together with the payment of the Warrant Price and this
Warrant, are received by the Company as described above and all taxes required
to be paid by the holder, if any, pursuant to Section 2.2 prior to the issuance
of such shares of Warrant Stock have been paid. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate
or certificates representing Warrant Stock, deliver to the holder a new Warrant
evidencing the rights of the holder to purchase the unpurchased shares of
Warrant Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of the holder,
appropriate notation may be made on this Warrant and the same returned to the
holder.
Page 4
<PAGE>
Payment of the Warrant Price shall be made at the option of the
holder by (1) cash, (2) wire transfer to an account in a bank located in the
United States designated for such purpose by the Company, (3) certified or
official bank check, (4) transfer to the Company of shares of Common Stock,
including shares to be issued upon the exercise of this Warrant, or (5) any
combination of payment under items (1), (2), (3) or (4). In the event of the
application of shares of Common Stock to the payment of the Warrant Price, the
amount to be credited to the payment of the Warrant Price for each share of
Common Stock so applied shall be the average Market Price of the Common Stock
for the ten Trading Day period ending on the Trading Day immediately prior to
the payment date.
Section 2.2. PAYMENT OF TAXES. The Company shall pay all expenses in
connection with, and all taxes and other governmental charges that may be
imposed with respect to, the issue or delivery of Warrant Stock purchased
hereunder, unless such tax or charge is imposed by law upon the holder, in which
case such taxes or charges shall be paid by the holder. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for shares of Warrant Stock
issuable upon exercise of this Warrant in any name other than that of the
holder, and in such case the Company shall not be required to issue or deliver
any stock certificate until such tax or other charge has been paid or it has
been established to the reasonable satisfaction of the Company that no such tax
or other charge is due.
Section 2.3. FRACTIONAL SHARES. The Company shall not be required to
issue a fractional share of Warrant Stock upon exercise of this Warrant. As to
any fraction of a share which the holder of this Warrant would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to the same fraction of the
average Market Price of the Common Stock for the ten Trading Day period ending
on the Trading Day immediately prior to the payment date.
Section 2.4. RESTRICTION ON EXERCISE. Notwithstanding the provisions
of SECTION 2.1 to the contrary, but subject to SECTION 7.3 and the last sentence
of this SECTION 2.4, by its acceptance of this Warrant the holder hereby agrees
not to exercise this Warrant in whole or in part until September 8, 2001 unless
the Market Price of the Common Stock is at least $4.00 per share on each of the
ten (10) Trading Days immediately preceding the date that the holder delivers
its notice of exercise to the Company in accordance with SECTION 2.1.
Notwithstanding the foregoing sentence, this Warrant shall be exercisable in
whole or in part one Business Day prior to the consummation of a Change of
Control of the Company.
ARTICLE 3.
TRANSFER, DIVISION AND COMBINATION
Section 3.1. TRANSFER. Subject to compliance with Article 9,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the
Page 5
<PAGE>
Company to be maintained for such purpose, upon surrender of this Warrant at the
principal office of the Company referred to in Section 2.1 or the office or
agency designated by the Company pursuant to Article 12, together with a written
assignment of this Warrant substantially in the form of EXHIBIT B hereto duly
executed by the holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall, subject to Article 9, execute
and deliver a new Warrant or Warrants in the name(s) of the assignee or
assignees and in the denomination(s) specified in such instrument of assignment,
and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be canceled. A Warrant,
if properly assigned in compliance with Article 9, may be exercised by a new
holder for the purchase of shares of Warrant Stock without having a new Warrant
issued.
Section 3.2. DIVISION AND COMBINATION. Subject to Article 9, this
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the holder or its agent or attorney. Subject to compliance with
Section 3.1 and with Article 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
Section 3.3. EXPENSES. The Company shall prepare, issue and
deliver at its own expense (other than transfer taxes) the new Warrant or
Warrants under this Article 3.
Section 3.4. MAINTENANCE OF BOOKS. The Company agrees to
maintain, at its aforesaid office or agencies, books for the registration,
recordation, issuance and the registration of transfer of the Warrants.
ARTICLE 4.
ADJUSTMENTS
The number of shares of Warrant Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this Article 4. The Company shall give the holder notice of any event described
below which requires an adjustment pursuant to this Article 4 at the time of
such event.
Section 4.1. STOCK DIVIDENDS, SUBDIVISIONS, COMBINATIONS AND
RECLASSIFICATIONS. If the Company shall at any time or from time to time
after the Issue Date:
Page 6
<PAGE>
(a) pay a dividend or make a distribution on the outstanding
shares of Common Stock in shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock,
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or
(d) issue by reclassification of its shares of Common Stock any
shares of capital stock of the Company,
then, and in each such case, the number of shares of Warrant Stock issuable upon
exercise of the Warrant evidenced hereby immediately prior to such event or the
record date therefor, whichever is earlier, shall be adjusted so that the holder
of any Warrant evidenced hereby thereafter exercised shall be entitled to
receive the number of shares of Warrant Stock or other securities of the Company
which such holder would have owned or have been entitled to receive after the
happening of any of the events described above, had such Warrant been exercised
immediately prior to the happening of such event or the record date therefor,
whichever is earlier. An adjustment made pursuant to this Section 4.1 shall
become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of shares of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of any such subdivision, reclassification or
combination, at the close of business on the day upon which such corporate
action becomes effective.
Section 4.2. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER
THIS SECTION. The following provisions shall be applicable to the making of
adjustments provided for in this Article 4:
(a) For purposes of this Article 4, the number of shares of Common
Stock at any time outstanding shall not include any shares of Common Stock
then owned or held by or for the account of the Company.
(b) The term "dividend" as used in this Article 4 shall mean a
dividend or other distribution upon stock of the Company except pursuant
to the Rights Agreement dated as of May 22, 1995 (as amended from time to
time, the "Rights Agreement") between the Company and U.S. Stock Transfer
Corporation as rights agent. Notwithstanding anything in this Article 4 to
the contrary, the number of shares of Warrant Stock issuable upon exercise
of the Warrant evidenced hereby shall not be adjusted as a result of any
dividend, distribution or issuance of securities of the Company pursuant
to the Rights Agreement.
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<PAGE>
(c) Notwithstanding anything in this Article 4 to the contrary, the
Company shall not be required to give effect to any adjustment in the
number of shares of Warrant Stock issuable upon exercise of the Warrant
evidenced hereby unless and until the net effect of one or more
adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change in the number of shares of
Warrant Stock issuable upon exercise of the Warrants evidenced hereby by
at least one-hundredth of one share of Warrant Stock, and when the
cumulative net effect of more than one adjustment so determined shall be
to change the number of shares of Warrant Stock issuable upon exercise of
the Warrant evidenced hereby by at least one-hundredth of one share of
Warrant Stock, such change in the number of shares of Warrant Stock
issuable upon exercise of the Warrant evidenced hereby shall thereupon be
given effect.
(d) If the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then, no adjustment in the number of shares of
Warrant Stock issuable upon exercise of the Warrant evidenced hereby shall
be required by reason of the taking of such record.
(e) There shall be no adjustment of the number of shares of Warrant
Stock issuable upon exercise of the Warrant evidenced hereby in case of
the issuance of any stock of the Company in a merger, reorganization,
acquisition or other similar transaction except as set forth in Section
4.3.
(f) Notwithstanding anything herein to the contrary, the Company
agrees not to enter into any transaction that, by reason of any adjustment
hereunder, would cause the Exercise Price to be less than the par value
per share of the Common Stock.
(g) Upon each adjustment to the number of shares of Warrant Stock
issuable upon exercise of the Warrant pursuant to Section 4.1, the
Exercise Price effective immediately prior to the making of such
adjustment shall thereafter be adjusted to be the amount obtained by (i)
multiplying (A) the applicable number of shares of Warrant Stock issuable
upon exercise of the Warrant immediately prior to such adjustment by (B)
the Exercise Price in effect immediately prior to such adjustment and (ii)
dividing the product so obtained by the number of shares of Warrant Stock
issuable upon exercise of the Warrant immediately after such adjustment.
Section 4.3. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION
OR DISPOSITION OF ASSETS. In case of any reorganization or reclassification of
outstanding shares of Common Stock (other than a reclassification covered by
Section 4.1), or in case of any consolidation or merger of the Company with or
into another corporation, or in the case of any
Page 8
<PAGE>
sale or conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety (each of the foregoing being referred
to as a "Transaction"), this Warrant shall thereafter be exercisable for, in
lieu of the Common Stock issuable upon such exercise prior to consummation of
the Transaction, the kind and amount of shares of stock and other securities and
property receivable (including cash) upon the consummation of the Transaction by
a holder of that number of shares of Common Stock issuable upon exercise of such
Warrant immediately prior to the Transaction (including, on a pro rata basis,
the cash, securities or property received by holders of Common Stock in any
tender or exchange offer that is a step in the Transaction).
Section 4.4. NOTICES TO WARRANTHOLDERS. In case at any time or from
time to time, prior to the Expiration Date, the Company shall pay any dividend
or make any other distribution to the holders of its Common Stock, or shall
offer for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or any other right, or there shall be
any capital reorganization or reclassification of the Common Stock of the
Company or consolidation or merger of the Company with or into another
corporation, or any sale or conveyance to another corporation of the property of
the Company as an entirety or substantially as an entirety, or there shall be a
voluntary or involuntary dissolution, liquidation or winding up of the Company,
then, in any one or more of said cases the Company shall give at least 20 days'
prior written notice (the time of mailing of such notice shall be deemed to be
the time of giving thereof) to the registered holder of the Warrant evidenced
hereby at its address as shown on the books of the Company maintained by the
Transfer Agent thereof of the date on which (i) the books of the Company shall
close or a record shall be taken for such stock dividend, distribution or
subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution, liquidation or winding
up shall take place, as the case may be, provided that in the case of any
Transaction to which Section 4.3 applies the Company shall give at least 30
days' prior written notice as aforesaid. Such notice shall also specify the date
as of which the holders of the Common Stock of record shall participate in said
dividend, distribution or subscription rights or shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance or
participate in such dissolution, liquidation or winding up, as the case may be.
Failure to give such notice shall not invalidate any action so taken.
Section 4.5. CERTIFICATES. Upon any adjustment of the number of
shares of Warrant Stock issuable upon exercise of the Warrant evidenced hereby
or of the Exercise Price, then, and in each such case, the Company shall
promptly deliver to the holders of the Warrant a certificate signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Company setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the increased or decreased number
of shares of
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<PAGE>
Warrant Stock issuable upon exercise of the Warrant evidenced hereby and the
Exercise Price then in effect following such adjustment.
ARTICLE 5.
NO IMPAIRMENT
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities 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 actions as may be necessary or appropriate to protect the rights of the
holder of the Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the Exercise
Price immediately prior to such increase in par value, (b) take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Warrant Stock, free and
clear of any liens, claims, encumbrances and restrictions (other than as
provided herein) upon the exercise of this Warrant, and (c) use its best efforts
to obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.
Upon the request of the holder of the Warrant, the Company will at
any time during the period this Warrant is outstanding acknowledge in writing,
in form satisfactory to the holder of this Warrant, the continuing validity of
this Warrant and the obligations of the Company hereunder.
ARTICLE 6.
RESERVATION AND AUTHORIZATION OF
COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
The Company covenants and agrees that, until the Expiration Date,
the Company shall at all times reserve and keep available for issue upon the
exercise of this Warrant such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full of this
Warrant. All shares of Common Stock which shall be so issuable, when issued upon
exercise of this Warrant and payment therefor in accordance with the terms of
this Warrant, shall be duly and validly issued, fully paid and nonassessable and
free and clear of any liens, claims and restrictions (other than as provided
herein). No stockholder of the Company has or shall have any preemptive rights
to subscribe for such shares of Common Stock.
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<PAGE>
Before taking any action which would result in an adjustment in the
number of shares of Warrant Stock for which this Warrant is exercisable or in
the Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
ARTICLE 7.
REDEMPTION
Section 7.1. REDEMPTION RIGHT. All (but not less than all) of the
outstanding portion of this Warrant may be redeemed by the Company at any time
after September 8, 2001 at its option upon the notice described in Section 7.2
hereof at a price equal to $54,687 times the quotient of (a) the number of
shares of Warrant Stock for which this Warrant is then exercisable (adjusted as
applicable pursuant to Article 4) divided by (b) 339,063 (subject to adjustment
pursuant to Article 4) (the "Redemption Price"). The Company's redemption right
contained in the preceding sentence is subject to the condition that the Market
Price of the Common Stock is more than $10.00 per share on each of the 30
consecutive Trading Days immediately prior to the date on which the Company
delivers a redemption notice pursuant to Section 7.2 hereof.
Section 7.2. DATE FIXED FOR, AND NOTICE OF, REDEMPTION. In the event
the Company shall elect to redeem the outstanding portion of this Warrant
pursuant to Section 7.1 hereof, the Company shall fix a date for the redemption.
Notice of redemption shall be mailed by first class mail, postage prepaid, by
the Company or the Company's agent at its direction not less than 90 days from
the date fixed for redemption to the registered holders of the outstanding
portion of this Warrant to be redeemed at their last addresses as they appear on
the Company's registration books. Any notice mailed in the manner herein
provided shall be conclusively presumed to have been duly given whether or not
the registered holder received such notice.
Section 7.3. EXERCISE AFTER NOTICE OF REDEMPTION. The outstanding
portion of this Warrant called for redemption may be exercised in accordance
with Article 2 (other than pursuant to Section 2.4) of this Warrant at any time
after notice of redemption is given by the Company pursuant to Section 7.2
hereof and prior to the date fixed for redemption. On and after the redemption
date, the record holders of the outstanding portion of this Warrant shall have
no further rights except to receive, upon surrender of such holder's portion of
this outstanding Warrant, the Redemption Price.
Page 11
<PAGE>
ARTICLE 8.
STOCK AND WARRANT TRANSFER BOOKS
The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.
ARTICLE 9.
RESTRICTIONS ON TRANSFERABILITY
This Warrant and the Restricted Stock shall not be transferred
before satisfaction of the conditions specified in this Article 9, which
conditions are, among other things, intended to ensure compliance with the
provisions of the Securities Act and state securities laws with respect to the
transfer of this Warrant or any Restricted Stock. The holder, by acceptance of
this Warrant, agrees to be bound by the provisions of this Article 9.
Section 9.1. RESTRICTIVE LEGEND. (a) Except as otherwise provided in
this Article 9, each certificate for Restricted Stock initially issued upon any
exercise of this Warrant, and each certificate for Restricted Stock issued to
any subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws
of any state and are subject to the conditions specified in a
certain Warrant dated September 8, 1999, originally issued by Iwerks
Entertainment, Inc. The shares represented by this certificate may
not be transferred in violation of such Act and laws, the rules and
regulations thereunder or the provisions of the Warrant. A copy of
the form of said Warrant is on file with the Secretary of Iwerks
Entertainment, Inc. The holder of this certificate, by acceptance of
this certificate, agrees to be bound by the provisions of such
Warrant."
(b) Except as otherwise provided in this Article 9, this Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state and are subject to the conditions
specified herein. This Warrant may not be sold or otherwise
transferred in the absence of such registration or an exemption
therefrom under the
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<PAGE>
Securities Act of 1933, as amended, and under any such applicable
state laws, or in violation of the provisions of this Warrant."
Section 9.2. TRANSFERS. Prior to any transfer or attempted transfer
of this Warrant or any shares of Restricted Stock, the holder of this Warrant or
Restricted Stock shall give notice (a "Transfer Notice") to the Company of such
holder's intention to effect such transfer, describing the manner and
circumstances of the proposed transfer, and obtain from counsel a written
opinion addressed and reasonably satisfactory to the Company that the proposed
transfer of this Warrant or such Restricted Stock may be effected without
registration under the Securities Act and applicable state securities laws.
After receipt of the Transfer Notice and written opinion, the Company shall,
within two Business Days thereof, so notify the holder of this Warrant or such
Restricted Stock and such holder shall thereupon be entitled to transfer this
Warrant or such Restricted Stock, in accordance with the terms of the Transfer
Notice. Each certificate, if any, evidencing such shares of Restricted Stock
issued upon such transfer shall bear the restrictive legend set forth in Section
9.1(a), and each Warrant issued upon such transfer shall bear the restrictive
legend set forth in Section 9.1(b), unless in the written opinion of counsel
addressed to the Company such legend is not required in order to ensure
compliance with the Securities Act.
Section 9.3. NO TRANSFERS UNTIL SEPTEMBER 8, 2001. In addition to
the restrictions on transfer imposed by Section 9.1 hereof, unless this Warrant
can be exercised pursuant to Section 2.4, no holder of this Warrant may transfer
this Warrant in whole or in part until September 8, 2001, except for transfers
to a holder's Affiliates. The provisions of this Section 9.3 shall not restrict
the transfer of any Warrant Shares issued or issuable upon exercise of this
Warrant.
Section 9.4. TERMINATION OF RESTRICTIONS. Notwithstanding the
foregoing provisions of this Article 9, the restrictions imposed by this Article
9 upon the transferability of this Warrant and the Restricted Stock and the
legend requirements of Section 9.1 shall terminate as to this Warrant or
Restricted Stock (i) as to the Restricted Stock, when and so long as the resale
of such security shall have been effectively registered under the Securities Act
and disposed of pursuant thereto, or (ii) as to the Warrant and Restricted
Stock, when the holder of the Warrant or Restricted Stock shall have delivered
to the Company the written opinion of counsel addressed and reasonably
satisfactory to the Company stating that such legend is not required in order to
ensure compliance with the Securities Act. Whenever the restrictions imposed by
this Article 9 shall terminate as to any share of Restricted Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, at the Company's expense (except for any transfer taxes), a new
certificate representing such Common Stock not bearing the restrictive legend
set forth in Section 9.1(a).
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<PAGE>
ARTICLE 10.
SUPPLYING INFORMATION
The Company shall cooperate with the holder of this Warrant and the
holder of Restricted Stock in supplying such information as may be reasonably
requested by such holder or reasonably necessary for such holder to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of an exemption from the
Securities Act for the sale of this Warrant or Restricted Stock.
ARTICLE 11.
LOSS OR MUTILATION
Upon receipt by the Company from any holder of evidence reasonably
satisfactory to the Company of the ownership of and the loss, theft, destruction
or mutilation of this Warrant and indemnity reasonably satisfactory to it and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to the holder.
ARTICLE 12.
OFFICE OF THE COMPANY
As long as any portion of this Warrant remains outstanding, the
Company shall maintain an office or agency (which may be the principal executive
offices of the Company) where this Warrant may be presented for exercise,
registration of transfer, division or combination as provided in this Warrant.
ARTICLE 13.
LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by the
holder to purchase shares of Warrant Stock, and no enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
the holder for the purchase price of any Warrant Stock or as a stockholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.
ARTICLE 14.
REPRESENTATION OF HOLDER
The holder represents that it is acquiring the Warrant and the
Warrant Stock for the purpose of investment and not with a view to the resale or
distribution hereof or thereof; PROVIDED, that the disposition of holder's
property shall at all times be and remain within its control.
Page 14
<PAGE>
ARTICLE 15.
MISCELLANEOUS
Section 15.1. NONWAIVER. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the parties shall operate
as a waiver of such right or otherwise prejudice the parties' rights, powers or
remedies.
Section 15.2. NO RIGHTS AS STOCKHOLDER. The Person in whose name
this Warrant is registered shall be deemed the owner hereof and of this Warrant
evidenced hereby for all purposes. The registered holder of this Warrant shall
not be entitled to any rights whatsoever as a stockholder of the Company except
as herein provided.
Section 15.3. NOTICE GENERALLY. Any notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder to be
made pursuant to the provisions of this Warrant shall be sufficiently given or
made if in writing and either delivered in person with receipt acknowledged or
sent by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to the holder, at its last known address appearing on the
books of the Company maintained for such purpose.
(b) If to the Company:
Iwerks Entertainment, Inc.
4540 Valerio Street
Burbank, California 91505
Attention: Charles Goldwater
Fax No.: (818) 840-6192
with a copy to:
Troop Steuber Pasich Reddick & Tobey, LLP
2029 Century Park East, 24th Floor
Los Angeles, California 90067-3010
Attention: C. N. Franklin Reddick, Esq.
Fax No.: (310) 728-2204
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on
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<PAGE>
which personally delivered, with receipt acknowledged, or three (3) Business
Days after the same shall have been deposited in the United States mail.
Section 15.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of
Section 3.1 and Article 9, (i) this Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and assigns of the holder, and (ii) the provisions of this
Warrant are intended to be for the benefit of all holders from time to time of
this Warrant, and shall be enforceable by any such holders.
Section 15.5. AMENDMENT. This Warrant may be modified or
amended or the provisions thereof waived with the written consent of the
Company and the holders of the majority of the portion of this Warrant then
outstanding.
Section 15.6. SEVERABILITY. Wherever possible, each provision of
this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Warrant.
Section 15.7. HEADINGS. The headings used in this Warrant are
for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
Section 15.8. GOVERNING LAW. This Warrant shall be governed by
and construed in accordance with the laws of the State of California, without
giving effect to conflicts of law principles thereof.
Section 15.10. MUTUAL WAIVER OF JURY TRIAL. Because disputes arising
in connection with complex financial transactions are most quickly and
economically resolved by an experienced and expert person and the parties wish
applicable state and federal laws to apply (rather than arbitration rules), the
parties desire that their disputes be resolved by a judge applying such
applicable laws. Therefore, to achieve the best combination of the benefits of
the judicial system and of arbitration, the Company and the holder waive all
right to trial by jury in any action, suit or proceeding brought to enforce or
defend any rights or remedies under this Warrant.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer on September 8, 1999.
IWERKS ENTERTAINMENT, INC.
By /s/ CHARLES GOLDWATER
----------------------------------
Name: Charles Goldwater
Title: President and Chief
Executive Officer
Page 17
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of _____ Shares of Common Stock (the
"Common Stock") of IWERKS ENTERTAINMENT, INC. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to __________________ whose address is
____________________ and, if such shares of Common Stock shall not include all
of the shares of Common Stock issuable as provided in this Warrant, that a new
Warrant of like tenor and date for the balance of the shares of Common Stock
issuable hereunder be delivered to the undersigned.
(Name of Registered Owner)
- ----------------------
(Signature of Registered owner)
- ----------------------
(Street Address)
- ----------------------
(City) (State) (Zip Code)
- ----------------------
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
and does hereby irrevocably constitute and appoint ____________ attorney-in-fact
to register such transfer on the books of IWERKS ENTERTAINMENT, INC. maintained
for the purpose, with full power of substitution in the premises.
Dated:
------------------------------
Name:
------------------------------
Signature:
--------------------------
Witness:
----------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
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Exhibit 4.3
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY SUCH
APPLICABLE STATE LAWS, OR IN VIOLATION OF THE PROVISIONS OF THIS WARRANT.
WARRANT (TRANCHE C)
To Purchase 339,062 Shares of
Common Stock of
IWERKS ENTERTAINMENT, INC.
THIS IS TO CERTIFY THAT The Guber Family Trust dated October 20,
1978 (the "Guber Trust"), or its registered assigns, is entitled, at any time
and from time to time prior to September 7, 2004 (the "Expiration Date"), to
purchase from Iwerks Entertainment, Inc., a Delaware corporation (the
"Company"), a total of 339,062 shares of Common Stock, par value $0.001 per
share (the "Common Stock"), of the Company, subject to adjustment as provided
herein, at a purchase price of $1.69 per share (the "Exercise Price"), subject
to adjustment as set forth herein, all on the terms and conditions and pursuant
to the provisions hereinafter set forth.
This Warrant was issued to the Guber Trust pursuant to the Warrant
Purchase Agreement dated as of September 8, 1999 (the "Agreement") between the
Company, the Guber Trust and The Paul and Judy Schaeffer Living Trust dated
February 28, 1992. Capitalized terms used and not otherwise defined herein shall
have the meanings set forth for such terms in the Agreement.
ARTICLE 1.
DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Affiliate" with respect to any Person shall mean any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. For the
<PAGE>
purpose of this definition, the term "control" as used with
respect to any Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise, and "controlling" and "controlled by" shall have correlative
meanings.
"Agreement" shall have the meaning set forth in the first
paragraph hereof.
"Business Day" shall mean any day that is not a Saturday or Sunday
or a day on which banks are required or permitted to be closed in Los Angeles,
California.
"Change of Control" means any of the following transactions or
series of related transactions: (i) the consolidation, merger or other business
combination of the Company with or into another Person (other than pursuant to a
merger effected solely for the purposes of changing the jurisdiction of
incorporation of the Company or a merger in which (x) shareholders of the
Company immediately prior to the closing of such merger continue to own in
excess of 50% of the voting power of the surviving corporation after the merger
and (y) a majority of the directors comprising the board of directors of the
surviving corporation after the closing of the merger were directors of the
Company immediately prior to the merger); (ii) the sale or transfer of all or
substantially all of the Company's assets; or (iii) the consummation of a
purchase, tender or exchange offer made to, and accepted by, the holders of more
than 50% of the economic interest in, or the combined voting power of all
classes of voting stock of, the Company.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock" shall have the meaning set forth in the first
paragraph hereof.
"Company" shall have the meaning set forth in the first paragraph
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exercise Price" shall have the meaning set forth in the first
paragraph hereof.
"Expiration Date" shall have the meaning set forth in the first
paragraph hereof.
"holder" shall mean each Person in whose name this Warrant or any
portion hereof is registered on the books of the Company maintained for such
purpose.
"Issue Date" shall mean September 8, 1999.
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<PAGE>
"Market Price" of the Common Stock on any Trading Day shall mean the
closing sale price per share of the Common Stock on the Principal Market or, if
the Common Stock is not then traded or quoted on a Principal Market, such other
trading or quotation facility on which the Common Stock is then listed or quoted
for trading. If the Common Stock is not listed or quoted for trading on any
trading or quotation facility, the "Market Price" of the Common Stock on any
Trading Day shall mean the fair market value per share of Common Stock as
determined in good faith by the Board of Directors of the Company.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, corporation or other entity and shall include
any successor (by merger or otherwise) of such entity.
"Principal Market" shall mean the national stock market or trading
facility on which the Common Stock is listed or quoted for trading.
"Restricted Stock" shall mean shares of Warrant Stock which are, or
which upon their issuance on the exercise of this Warrant would be, evidenced by
a certificate bearing the restrictive legend set forth in Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Third Party" means a person who is not related to or affiliated or
associated in any manner with the Guber Trust, any of its affiliates or any of
their respective officers, directors or shareholders.
"Trading Day" means a day on which the Principal Market for the
Common Stock is open for the transaction of business or, if there is no
Principal Market, a Business Day.
"Transaction" shall have the meaning set forth in Section 4.3
hereof.
"Transfer" or "transfer" with respect to this Warrant or any Warrant
Stock shall mean any transfer, sale, encumbrance, hypothecation or other
disposition of this Warrant or any Warrant Stock or of any interest in either
thereof.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
"Warrant Price" shall mean an amount equal to (i) the number of
shares of Warrant Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Exercise Price as of the date of such
exercise.
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<PAGE>
"Warrant Stock" shall mean the shares of Common Stock purchased by
the holder of this Warrant upon the exercise thereof.
ARTICLE 2.
EXERCISE OF WARRANT
Section 2.1. MANNER OF EXERCISE. From and after the date hereof and
until 5:00 P.M., California time, on the Expiration Date, but subject to SECTION
2.4, the holder may exercise this Warrant for all or any part of the number of
shares of Warrant Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, the holder
shall deliver to the Company at its office at 4540 Valerio Street, Burbank,
California 91505, or at the office or agency designated by the Company pursuant
to Article 12, (i) a written notice of the holder's election to exercise this
Warrant, which notice shall specify the number of shares of Warrant Stock to be
purchased, (ii) payment of the Warrant Price in the manner provided below, and
(iii) this Warrant. Such notice shall be substantially in the form of the
subscription form appearing at the end of this Warrant as EXHIBIT A, duly
executed by or on behalf of the holder. Upon receipt thereof, the Company shall,
as promptly as practicable, and in any event within five (5) Business Days
thereafter, execute or cause to be executed and deliver or cause to be delivered
to the holder a certificate or certificates representing the aggregate number of
full shares of Warrant Stock issuable upon such exercise, together with cash in
lieu of any fraction of a share, as hereinafter provided. The stock certificate
or certificates so delivered shall be, to the extent possible, in such
denomination or denominations as such holder shall request in the notice and
shall be registered in the name of the holder or, subject to Article 9, and such
other name as shall be designated in the notice.
This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the holder
or any other Person so designated to be named therein shall be deemed to have
become a holder of record of such shares of Warrant Stock for all purposes, as
of the date the notice, together with the payment of the Warrant Price and this
Warrant, are received by the Company as described above and all taxes required
to be paid by the holder, if any, pursuant to Section 2.2 prior to the issuance
of such shares of Warrant Stock have been paid. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate
or certificates representing Warrant Stock, deliver to the holder a new Warrant
evidencing the rights of the holder to purchase the unpurchased shares of
Warrant Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of the holder,
appropriate notation may be made on this Warrant and the same returned to the
holder.
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Payment of the Warrant Price shall be made at the option of the
holder by (1) cash, (2) wire transfer to an account in a bank located in the
United States designated for such purpose by the Company, (3) certified or
official bank check, (4) transfer to the Company of shares of Common Stock,
including shares to be issued upon the exercise of this Warrant, or (5) any
combination of payment under items (1), (2), (3) or (4). In the event of the
application of shares of Common Stock to the payment of the Warrant Price, the
amount to be credited to the payment of the Warrant Price for each share of
Common Stock so applied shall be the average Market Price of the Common Stock
for the ten Trading Day period ending on the Trading Day immediately prior to
the payment date.
Section 2.2. PAYMENT OF TAXES. The Company shall pay all expenses in
connection with, and all taxes and other governmental charges that may be
imposed with respect to, the issue or delivery of Warrant Stock purchased
hereunder, unless such tax or charge is imposed by law upon the holder, in which
case such taxes or charges shall be paid by the holder. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for shares of Warrant Stock
issuable upon exercise of this Warrant in any name other than that of the
holder, and in such case the Company shall not be required to issue or deliver
any stock certificate until such tax or other charge has been paid or it has
been established to the reasonable satisfaction of the Company that no such tax
or other charge is due.
Section 2.3. FRACTIONAL SHARES. The Company shall not be required to
issue a fractional share of Warrant Stock upon exercise of this Warrant. As to
any fraction of a share which the holder of this Warrant would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to the same fraction of the
average Market Price of the Common Stock for the ten Trading Day period ending
on the Trading Day immediately prior to the payment date.
Section 2.4. RESTRICTION ON EXERCISE. Notwithstanding the provisions
of SECTION 2.1 to the contrary, but subject to SECTION 7.3 and the last sentence
of this SECTION 2.4, by its acceptance of this Warrant the holder hereby agrees
not to exercise this Warrant in whole or in part until September 8, 2001 unless
the Market Price of the Common Stock is at least $4.00 per share on each of the
ten (10) Trading Days immediately preceding the date that the holder delivers
its notice of exercise to the Company in accordance with SECTION 2.1.
Notwithstanding the foregoing sentence, this Warrant shall be exercisable in
whole or in part one Business Day prior to the consummation of a Change of
Control of the Company.
ARTICLE 3.
TRANSFER, DIVISION AND COMBINATION
Section 3.1. TRANSFER. Subject to compliance with Article 9,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the
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Company to be maintained for such purpose, upon surrender of this Warrant at the
principal office of the Company referred to in Section 2.1 or the office or
agency designated by the Company pursuant to Article 12, together with a written
assignment of this Warrant substantially in the form of EXHIBIT B hereto duly
executed by the holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall, subject to Article 9, execute
and deliver a new Warrant or Warrants in the name(s) of the assignee or
assignees and in the denomination(s) specified in such instrument of assignment,
and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be canceled. A Warrant,
if properly assigned in compliance with Article 9, may be exercised by a new
holder for the purchase of shares of Warrant Stock without having a new Warrant
issued.
Section 3.2. DIVISION AND COMBINATION. Subject to Article 9, this
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the holder or its agent or attorney. Subject to compliance with
Section 3.1 and with Article 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
Section 3.3. EXPENSES. The Company shall prepare, issue and
deliver at its own expense (other than transfer taxes) the new Warrant or
Warrants under this Article 3.
Section 3.4. MAINTENANCE OF BOOKS. The Company agrees to
maintain, at its aforesaid office or agencies, books for the registration,
recordation, issuance and the registration of transfer of the Warrants.
ARTICLE 4.
ADJUSTMENTS
The number of shares of Warrant Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this Article 4. The Company shall give the holder notice of any event described
below which requires an adjustment pursuant to this Article 4 at the time of
such event.
Section 4.1. STOCK DIVIDENDS, SUBDIVISIONS, COMBINATIONS AND
RECLASSIFICATIONS. If the Company shall at any time or from time to time
after the Issue Date:
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(a) pay a dividend or make a distribution on the outstanding
shares of Common Stock in shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock,
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or
(d) issue by reclassification of its shares of Common Stock any
shares of capital stock of the Company,
then, and in each such case, the number of shares of Warrant Stock issuable upon
exercise of the Warrant evidenced hereby immediately prior to such event or the
record date therefor, whichever is earlier, shall be adjusted so that the holder
of any Warrant evidenced hereby thereafter exercised shall be entitled to
receive the number of shares of Warrant Stock or other securities of the Company
which such holder would have owned or have been entitled to receive after the
happening of any of the events described above, had such Warrant been exercised
immediately prior to the happening of such event or the record date therefor,
whichever is earlier. An adjustment made pursuant to this Section 4.1 shall
become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of shares of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of any such subdivision, reclassification or
combination, at the close of business on the day upon which such corporate
action becomes effective.
Section 4.2. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER
THIS SECTION. The following provisions shall be applicable to the making of
adjustments provided for in this Article 4:
(a) For purposes of this Article 4, the number of shares of Common
Stock at any time outstanding shall not include any shares of Common Stock
then owned or held by or for the account of the Company.
(b) The term "dividend" as used in this Article 4 shall mean a
dividend or other distribution upon stock of the Company except pursuant
to the Rights Agreement dated as of May 22, 1995 (as amended from time to
time, the "Rights Agreement") between the Company and U.S. Stock Transfer
Corporation as rights agent. Notwithstanding anything in this Article 4 to
the contrary, the number of shares of Warrant Stock issuable upon exercise
of the Warrant evidenced hereby shall not be adjusted as a result of any
dividend, distribution or issuance of securities of the Company pursuant
to the Rights Agreement.
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(c) Notwithstanding anything in this Article 4 to the contrary, the
Company shall not be required to give effect to any adjustment in the
number of shares of Warrant Stock issuable upon exercise of the Warrant
evidenced hereby unless and until the net effect of one or more
adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change in the number of shares of
Warrant Stock issuable upon exercise of the Warrants evidenced hereby by
at least one-hundredth of one share of Warrant Stock, and when the
cumulative net effect of more than one adjustment so determined shall be
to change the number of shares of Warrant Stock issuable upon exercise of
the Warrant evidenced hereby by at least one-hundredth of one share of
Warrant Stock, such change in the number of shares of Warrant Stock
issuable upon exercise of the Warrant evidenced hereby shall thereupon be
given effect.
(d) If the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then, no adjustment in the number of shares of
Warrant Stock issuable upon exercise of the Warrant evidenced hereby shall
be required by reason of the taking of such record.
(e) There shall be no adjustment of the number of shares of Warrant
Stock issuable upon exercise of the Warrant evidenced hereby in case of
the issuance of any stock of the Company in a merger, reorganization,
acquisition or other similar transaction except as set forth in Section
4.3.
(f) Notwithstanding anything herein to the contrary, the Company
agrees not to enter into any transaction that, by reason of any adjustment
hereunder, would cause the Exercise Price to be less than the par value
per share of the Common Stock.
(g) Upon each adjustment to the number of shares of Warrant Stock
issuable upon exercise of the Warrant pursuant to Section 4.1, the
Exercise Price effective immediately prior to the making of such
adjustment shall thereafter be adjusted to be the amount obtained by (i)
multiplying (A) the applicable number of shares of Warrant Stock issuable
upon exercise of the Warrant immediately prior to such adjustment by (B)
the Exercise Price in effect immediately prior to such adjustment and (ii)
dividing the product so obtained by the number of shares of Warrant Stock
issuable upon exercise of the Warrant immediately after such adjustment.
Section 4.3. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION
OR DISPOSITION OF ASSETS. In case of any reorganization or reclassification of
outstanding shares of Common Stock (other than a reclassification covered by
Section 4.1), or in case of any
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consolidation or merger of the Company with or into another corporation, or in
the case of any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety (each of the foregoing
being referred to as a "Transaction"), this Warrant shall thereafter be
exercisable for, in lieu of the Common Stock issuable upon such exercise prior
to consummation of the Transaction, the kind and amount of shares of stock and
other securities and property receivable (including cash) upon the consummation
of the Transaction by a holder of that number of shares of Common Stock issuable
upon exercise of such Warrant immediately prior to the Transaction (including,
on a pro rata basis, the cash, securities or property received by holders of
Common Stock in any tender or exchange offer that is a step in the Transaction).
Section 4.4. NOTICES TO WARRANTHOLDERS. In case at any time or from
time to time, prior to the Expiration Date, the Company shall pay any dividend
or make any other distribution to the holders of its Common Stock, or shall
offer for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or any other right, or there shall be
any capital reorganization or reclassification of the Common Stock of the
Company or consolidation or merger of the Company with or into another
corporation, or any sale or conveyance to another corporation of the property of
the Company as an entirety or substantially as an entirety, or there shall be a
voluntary or involuntary dissolution, liquidation or winding up of the Company,
then, in any one or more of said cases the Company shall give at least 20 days'
prior written notice (the time of mailing of such notice shall be deemed to be
the time of giving thereof) to the registered holder of the Warrant evidenced
hereby at its address as shown on the books of the Company maintained by the
Transfer Agent thereof of the date on which (i) the books of the Company shall
close or a record shall be taken for such stock dividend, distribution or
subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution, liquidation or winding
up shall take place, as the case may be, provided that in the case of any
Transaction to which Section 4.3 applies the Company shall give at least 30
days' prior written notice as aforesaid. Such notice shall also specify the date
as of which the holders of the Common Stock of record shall participate in said
dividend, distribution or subscription rights or shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance or
participate in such dissolution, liquidation or winding up, as the case may be.
Failure to give such notice shall not invalidate any action so taken.
Section 4.5. CERTIFICATES. Upon any adjustment of the number of
shares of Warrant Stock issuable upon exercise of the Warrant evidenced hereby
or of the Exercise Price, then, and in each such case, the Company shall
promptly deliver to the holders of the Warrant a certificate signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Company setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the increased or decreased number
of shares of
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Warrant Stock issuable upon exercise of the Warrant evidenced hereby and the
Exercise Price then in effect following such adjustment.
ARTICLE 5.
NO IMPAIRMENT
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities 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 actions as may be necessary or appropriate to protect the rights of the
holder of the Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the Exercise
Price immediately prior to such increase in par value, (b) take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Warrant Stock, free and
clear of any liens, claims, encumbrances and restrictions (other than as
provided herein) upon the exercise of this Warrant, and (c) use its best efforts
to obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.
Upon the request of the holder of the Warrant, the Company will at
any time during the period this Warrant is outstanding acknowledge in writing,
in form satisfactory to the holder of this Warrant, the continuing validity of
this Warrant and the obligations of the Company hereunder.
ARTICLE 6.
RESERVATION AND AUTHORIZATION OF
COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
The Company covenants and agrees that, until the Expiration Date,
the Company shall at all times reserve and keep available for issue upon the
exercise of this Warrant such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full of this
Warrant. All shares of Common Stock which shall be so issuable, when issued upon
exercise of this Warrant and payment therefor in accordance with the terms of
this Warrant, shall be duly and validly issued, fully paid and nonassessable and
free and clear of any liens, claims and restrictions (other than as provided
herein). No stockholder of the Company has or shall have any preemptive rights
to subscribe for such shares of Common Stock.
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Before taking any action which would result in an adjustment in the
number of shares of Warrant Stock for which this Warrant is exercisable or in
the Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
ARTICLE 7.
REDEMPTION
Section 7.1. REDEMPTION RIGHT. All (but not less than all) of the
outstanding portion of this Warrant may be redeemed by the Company at any time
after September 8, 2001 at its option upon the notice described in Section 7.2
hereof at a price equal to $54,687 times the quotient of (a) the number of
shares of Warrant Stock for which this Warrant is then exercisable (adjusted as
applicable pursuant to Article 4) divided by (b) 339,062 (subject to adjustment
pursuant to Article 4) (the "Redemption Price"). The Company's redemption right
contained in the preceding sentence is subject to the condition that the Market
Price of the Common Stock is more than $10.00 per share on each of the 30
consecutive Trading Days immediately prior to the date on which the Company
delivers a redemption notice pursuant to Section 7.2 hereof.
Section 7.2. DATE FIXED FOR, AND NOTICE OF, REDEMPTION. In the event
the Company shall elect to redeem the outstanding portion of this Warrant
pursuant to Section 7.1 hereof, the Company shall fix a date for the redemption.
Notice of redemption shall be mailed by first class mail, postage prepaid, by
the Company or the Company's agent at its direction not less than 90 days from
the date fixed for redemption to the registered holders of the outstanding
portion of this Warrant to be redeemed at their last addresses as they appear on
the Company's registration books. Any notice mailed in the manner herein
provided shall be conclusively presumed to have been duly given whether or not
the registered holder received such notice.
Section 7.3. EXERCISE AFTER NOTICE OF REDEMPTION. The outstanding
portion of this Warrant called for redemption may be exercised in accordance
with Article 2 (other than pursuant to Section 2.4) of this Warrant at any time
after notice of redemption is given by the Company pursuant to Section 7.2
hereof and prior to the date fixed for redemption. On and after the redemption
date, the record holders of the outstanding portion of this Warrant shall have
no further rights except to receive, upon surrender of such holder's portion of
this outstanding Warrant, the Redemption Price.
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ARTICLE 8.
STOCK AND WARRANT TRANSFER BOOKS
The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.
ARTICLE 9.
RESTRICTIONS ON TRANSFERABILITY
This Warrant and the Restricted Stock shall not be transferred
before satisfaction of the conditions specified in this Article 9, which
conditions are, among other things, intended to ensure compliance with the
provisions of the Securities Act and state securities laws with respect to the
transfer of this Warrant or any Restricted Stock. The holder, by acceptance of
this Warrant, agrees to be bound by the provisions of this Article 9.
Section 9.1. RESTRICTIVE LEGEND. (a) Except as otherwise provided in
this Article 9, each certificate for Restricted Stock initially issued upon any
exercise of this Warrant, and each certificate for Restricted Stock issued to
any subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws
of any state and are subject to the conditions specified in a
certain Warrant dated September 8, 1999, originally issued by Iwerks
Entertainment, Inc. The shares represented by this certificate may
not be transferred in violation of such Act and laws, the rules and
regulations thereunder or the provisions of the Warrant. A copy of
the form of said Warrant is on file with the Secretary of Iwerks
Entertainment, Inc. The holder of this certificate, by acceptance of
this certificate, agrees to be bound by the provisions of such
Warrant."
(b) Except as otherwise provided in this Article 9, this Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state and are subject to the conditions
specified herein. This Warrant may not be sold or otherwise
transferred in the absence of such registration or an exemption
therefrom under the
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Securities Act of 1933, as amended, and under any such applicable
state laws, or in violation of the provisions of this Warrant."
Section 9.2. TRANSFERS. Prior to any transfer or attempted transfer
of this Warrant or any shares of Restricted Stock, the holder of this Warrant or
Restricted Stock shall give notice (a "Transfer Notice") to the Company of such
holder's intention to effect such transfer, describing the manner and
circumstances of the proposed transfer, and obtain from counsel a written
opinion addressed and reasonably satisfactory to the Company that the proposed
transfer of this Warrant or such Restricted Stock may be effected without
registration under the Securities Act and applicable state securities laws.
After receipt of the Transfer Notice and written opinion, the Company shall,
within two Business Days thereof, so notify the holder of this Warrant or such
Restricted Stock and such holder shall thereupon be entitled to transfer this
Warrant or such Restricted Stock, in accordance with the terms of the Transfer
Notice. Each certificate, if any, evidencing such shares of Restricted Stock
issued upon such transfer shall bear the restrictive legend set forth in Section
9.1(a), and each Warrant issued upon such transfer shall bear the restrictive
legend set forth in Section 9.1(b), unless in the written opinion of counsel
addressed to the Company such legend is not required in order to ensure
compliance with the Securities Act.
Section 9.3. NO TRANSFERS UNTIL SEPTEMBER 8, 2001. In addition to
the restrictions on transfer imposed by Section 9.1 hereof, unless this Warrant
can be exercised pursuant to Section 2.4, no holder of this Warrant may transfer
this Warrant in whole or in part until September 8, 2001, except for transfers
to a holder's Affiliates. The provisions of this Section 9.3 shall not restrict
the transfer of any Warrant Shares issued or issuable upon exercise of this
Warrant.
Section 9.4. TERMINATION OF RESTRICTIONS. Notwithstanding the
foregoing provisions of this Article 9, the restrictions imposed by this Article
9 upon the transferability of this Warrant and the Restricted Stock and the
legend requirements of Section 9.1 shall terminate as to this Warrant or
Restricted Stock (i) as to the Restricted Stock, when and so long as the resale
of such security shall have been effectively registered under the Securities Act
and disposed of pursuant thereto, or (ii) as to the Warrant and Restricted
Stock, when the holder of the Warrant or Restricted Stock shall have delivered
to the Company the written opinion of counsel addressed and reasonably
satisfactory to the Company stating that such legend is not required in order to
ensure compliance with the Securities Act. Whenever the restrictions imposed by
this Article 9 shall terminate as to any share of Restricted Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, at the Company's expense (except for any transfer taxes), a new
certificate representing such Common Stock not bearing the restrictive legend
set forth in Section 9.1(a).
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ARTICLE 10.
SUPPLYING INFORMATION
The Company shall cooperate with the holder of this Warrant and the
holder of Restricted Stock in supplying such information as may be reasonably
requested by such holder or reasonably necessary for such holder to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of an exemption from the
Securities Act for the sale of this Warrant or Restricted Stock.
ARTICLE 11.
LOSS OR MUTILATION
Upon receipt by the Company from any holder of evidence reasonably
satisfactory to the Company of the ownership of and the loss, theft, destruction
or mutilation of this Warrant and indemnity reasonably satisfactory to it and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to the holder.
ARTICLE 12.
OFFICE OF THE COMPANY
As long as any portion of this Warrant remains outstanding, the
Company shall maintain an office or agency (which may be the principal executive
offices of the Company) where this Warrant may be presented for exercise,
registration of transfer, division or combination as provided in this Warrant.
ARTICLE 13.
LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by the
holder to purchase shares of Warrant Stock, and no enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
the holder for the purchase price of any Warrant Stock or as a stockholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.
ARTICLE 14.
REPRESENTATION OF HOLDER
The holder represents that it is acquiring the Warrant and the
Warrant Stock for the purpose of investment and not with a view to the resale or
distribution hereof or thereof; PROVIDED, that the disposition of holder's
property shall at all times be and remain within its control.
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ARTICLE 15.
MISCELLANEOUS
Section 15.1. NONWAIVER. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the parties shall operate
as a waiver of such right or otherwise prejudice the parties' rights, powers or
remedies.
Section 15.2. NO RIGHTS AS STOCKHOLDER. The Person in whose name
this Warrant is registered shall be deemed the owner hereof and of this Warrant
evidenced hereby for all purposes. The registered holder of this Warrant shall
not be entitled to any rights whatsoever as a stockholder of the Company except
as herein provided.
Section 15.3. NOTICE GENERALLY. Any notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder to be
made pursuant to the provisions of this Warrant shall be sufficiently given or
made if in writing and either delivered in person with receipt acknowledged or
sent by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to the holder, at its last known address appearing on the
books of the Company maintained for such purpose.
(b) If to the Company:
Iwerks Entertainment, Inc.
4540 Valerio Street
Burbank, California 91505
Attention: Charles Goldwater
Fax No.: (818) 840-6192
with a copy to:
Troop Steuber Pasich Reddick & Tobey, LLP
2029 Century Park East, 24th Floor
Los Angeles, California 90067-3010
Attention: C. N. Franklin Reddick, Esq.
Fax No.: (310) 728-2204
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on
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which personally delivered, with receipt acknowledged, or three (3) Business
Days after the same shall have been deposited in the United States mail.
Section 15.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of
Section 3.1 and Article 9, (i) this Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and assigns of the holder, and (ii) the provisions of this
Warrant are intended to be for the benefit of all holders from time to time of
this Warrant, and shall be enforceable by any such holders.
Section 15.5. AMENDMENT. This Warrant may be modified or
amended or the provisions thereof waived with the written consent of the
Company and the holders of the majority of the portion of this Warrant then
outstanding.
Section 15.6. SEVERABILITY. Wherever possible, each provision of
this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Warrant.
Section 15.7. HEADINGS. The headings used in this Warrant are
for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
Section 15.8. GOVERNING LAW. This Warrant shall be governed by
and construed in accordance with the laws of the State of California, without
giving effect to conflicts of law principles thereof.
Section 15.10. MUTUAL WAIVER OF JURY TRIAL. Because disputes arising
in connection with complex financial transactions are most quickly and
economically resolved by an experienced and expert person and the parties wish
applicable state and federal laws to apply (rather than arbitration rules), the
parties desire that their disputes be resolved by a judge applying such
applicable laws. Therefore, to achieve the best combination of the benefits of
the judicial system and of arbitration, the Company and the holder waive all
right to trial by jury in any action, suit or proceeding brought to enforce or
defend any rights or remedies under this Warrant.
Page 16
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
Warrant to be duly executed by its authorized officer on September 8, 1999.
IWERKS ENTERTAINMENT, INC.
By /s/ CHARLES GOLDWATER
----------------------------------
Name: Charles Goldwater
Title: President and Chief
Executive Officer
Page 17
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of _____ Shares of Common Stock (the
"Common Stock") of IWERKS ENTERTAINMENT, INC. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to __________________ whose address is
____________________ and, if such shares of Common Stock shall not include all
of the shares of Common Stock issuable as provided in this Warrant, that a new
Warrant of like tenor and date for the balance of the shares of Common Stock
issuable hereunder be delivered to the undersigned.
(Name of Registered Owner)
- ----------------------
(Signature of Registered owner)
- ----------------------
(Street Address)
- ----------------------
(City) (State) (Zip Code)
- ----------------------
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
and does hereby irrevocably constitute and appoint ____________ attorney-in-fact
to register such transfer on the books of IWERKS ENTERTAINMENT, INC. maintained
for the purpose, with full power of substitution in the premises.
Dated:
------------------------------
Name:
-------------------------------
Signature:
--------------------------
Witness:
----------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
Page 19
Exhibit 4.4
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY SUCH
APPLICABLE STATE LAWS, OR IN VIOLATION OF THE PROVISIONS OF THIS WARRANT.
WARRANT (TRANCHE D)
To Purchase 339,062 Shares of
Common Stock of
IWERKS ENTERTAINMENT, INC.
THIS IS TO CERTIFY THAT The Guber Family Trust dated October 20,
1978 (the "Guber Trust"), or its registered assigns, is entitled, at any time
and from time to time prior to September 7, 2004 (the "Expiration Date"), to
purchase from Iwerks Entertainment, Inc., a Delaware corporation (the
"Company"), a total of 339,062 shares of Common Stock, par value $0.001 per
share (the "Common Stock"), of the Company, subject to adjustment as provided
herein, at a purchase price of $3.00 per share (the "Exercise Price"), subject
to adjustment as set forth herein, all on the terms and conditions and pursuant
to the provisions hereinafter set forth.
This Warrant was issued to the Guber Trust pursuant to the Warrant
Purchase Agreement dated as of September 8, 1999 (the "Agreement") between the
Company, the Guber Trust and The Paul and Judy Schaeffer Living Trust dated
February 28, 1992. Capitalized terms used and not otherwise defined herein shall
have the meanings set forth for such terms in the Agreement.
ARTICLE 1.
DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Affiliate" with respect to any Person shall mean any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. For the
<PAGE>
purpose of this definition, the term "control" as used with respect to any
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise, and
"controlling" and "controlled by" shall have correlative meanings.
"Agreement" shall have the meaning set forth in the first
paragraph hereof.
"Business Day" shall mean any day that is not a Saturday or Sunday
or a day on which banks are required or permitted to be closed in Los Angeles,
California.
"Change of Control" means any of the following transactions or
series of related transactions: (i) the consolidation, merger or other business
combination of the Company with or into another Person (other than pursuant to a
merger effected solely for the purposes of changing the jurisdiction of
incorporation of the Company or a merger in which (x) shareholders of the
Company immediately prior to the closing of such merger continue to own in
excess of 50% of the voting power of the surviving corporation after the merger
and (y) a majority of the directors comprising the board of directors of the
surviving corporation after the closing of the merger were directors of the
Company immediately prior to the merger); (ii) the sale or transfer of all or
substantially all of the Company's assets; or (iii) the consummation of a
purchase, tender or exchange offer made to, and accepted by, the holders of more
than 50% of the economic interest in, or the combined voting power of all
classes of voting stock of, the Company.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock" shall have the meaning set forth in the first
paragraph hereof.
"Company" shall have the meaning set forth in the first paragraph
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exercise Price" shall have the meaning set forth in the first
paragraph hereof.
"Expiration Date" shall have the meaning set forth in the first
paragraph hereof.
"holder" shall mean each Person in whose name this Warrant or any
portion hereof is registered on the books of the Company maintained for such
purpose.
"Issue Date" shall mean September 8, 1999.
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<PAGE>
"Market Price" of the Common Stock on any Trading Day shall mean the
closing sale price per share of the Common Stock on the Principal Market or, if
the Common Stock is not then traded or quoted on a Principal Market, such other
trading or quotation facility on which the Common Stock is then listed or quoted
for trading. If the Common Stock is not listed or quoted for trading on any
trading or quotation facility, the "Market Price" of the Common Stock on any
Trading Day shall mean the fair market value per share of Common Stock as
determined in good faith by the Board of Directors of the Company.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, corporation or other entity and shall include
any successor (by merger or otherwise) of such entity.
"Principal Market" shall mean the national stock market or trading
facility on which the Common Stock is listed or quoted for trading.
"Restricted Stock" shall mean shares of Warrant Stock which are, or
which upon their issuance on the exercise of this Warrant would be, evidenced by
a certificate bearing the restrictive legend set forth in Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Third Party" means a person who is not related to or affiliated or
associated in any manner with the Guber Trust, any of its affiliates or any of
their respective officers, directors or shareholders.
"Trading Day" means a day on which the Principal Market for the
Common Stock is open for the transaction of business or, if there is no
Principal Market, a Business Day.
"Transaction" shall have the meaning set forth in Section 4.3
hereof.
"Transfer" or "transfer" with respect to this Warrant or any Warrant
Stock shall mean any transfer, sale, encumbrance, hypothecation or other
disposition of this Warrant or any Warrant Stock or of any interest in either
thereof.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
"Warrant Price" shall mean an amount equal to (i) the number of
shares of Warrant Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Exercise Price as of the date of such
exercise.
Page 3
<PAGE>
"Warrant Stock" shall mean the shares of Common Stock purchased by
the holder of this Warrant upon the exercise thereof.
ARTICLE 2.
EXERCISE OF WARRANT
Section 2.1. MANNER OF EXERCISE. From and after the date hereof and
until 5:00 P.M., California time, on the Expiration Date, but subject to SECTION
2.4, the holder may exercise this Warrant for all or any part of the number of
shares of Warrant Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, the holder
shall deliver to the Company at its office at 4540 Valerio Street, Burbank,
California 91505, or at the office or agency designated by the Company pursuant
to Article 12, (i) a written notice of the holder's election to exercise this
Warrant, which notice shall specify the number of shares of Warrant Stock to be
purchased, (ii) payment of the Warrant Price in the manner provided below, and
(iii) this Warrant. Such notice shall be substantially in the form of the
subscription form appearing at the end of this Warrant as EXHIBIT A, duly
executed by or on behalf of the holder. Upon receipt thereof, the Company shall,
as promptly as practicable, and in any event within five (5) Business Days
thereafter, execute or cause to be executed and deliver or cause to be delivered
to the holder a certificate or certificates representing the aggregate number of
full shares of Warrant Stock issuable upon such exercise, together with cash in
lieu of any fraction of a share, as hereinafter provided. The stock certificate
or certificates so delivered shall be, to the extent possible, in such
denomination or denominations as such holder shall request in the notice and
shall be registered in the name of the holder or, subject to Article 9, and such
other name as shall be designated in the notice.
This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the holder
or any other Person so designated to be named therein shall be deemed to have
become a holder of record of such shares of Warrant Stock for all purposes, as
of the date the notice, together with the payment of the Warrant Price and this
Warrant, are received by the Company as described above and all taxes required
to be paid by the holder, if any, pursuant to Section 2.2 prior to the issuance
of such shares of Warrant Stock have been paid. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate
or certificates representing Warrant Stock, deliver to the holder a new Warrant
evidencing the rights of the holder to purchase the unpurchased shares of
Warrant Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of the holder,
appropriate notation may be made on this Warrant and the same returned to the
holder.
Page 4
<PAGE>
Payment of the Warrant Price shall be made at the option of the
holder by (1) cash, (2) wire transfer to an account in a bank located in the
United States designated for such purpose by the Company, (3) certified or
official bank check, (4) transfer to the Company of shares of Common Stock,
including shares to be issued upon the exercise of this Warrant, or (5) any
combination of payment under items (1), (2), (3) or (4). In the event of the
application of shares of Common Stock to the payment of the Warrant Price, the
amount to be credited to the payment of the Warrant Price for each share of
Common Stock so applied shall be the average Market Price of the Common Stock
for the ten Trading Day period ending on the Trading Day immediately prior to
the payment date.
Section 2.2. PAYMENT OF TAXES. The Company shall pay all expenses in
connection with, and all taxes and other governmental charges that may be
imposed with respect to, the issue or delivery of Warrant Stock purchased
hereunder, unless such tax or charge is imposed by law upon the holder, in which
case such taxes or charges shall be paid by the holder. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for shares of Warrant Stock
issuable upon exercise of this Warrant in any name other than that of the
holder, and in such case the Company shall not be required to issue or deliver
any stock certificate until such tax or other charge has been paid or it has
been established to the reasonable satisfaction of the Company that no such tax
or other charge is due.
Section 2.3. FRACTIONAL SHARES. The Company shall not be required to
issue a fractional share of Warrant Stock upon exercise of this Warrant. As to
any fraction of a share which the holder of this Warrant would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to the same fraction of the
average Market Price of the Common Stock for the ten Trading Day period ending
on the Trading Day immediately prior to the payment date.
Section 2.4. RESTRICTION ON EXERCISE. Notwithstanding the provisions
of SECTION 2.1 to the contrary, but subject to SECTION 7.3 and the last sentence
of this SECTION 2.4, by its acceptance of this Warrant the holder hereby agrees
not to exercise this Warrant in whole or in part until September 8, 2001 unless
the Market Price of the Common Stock is at least $4.00 per share on each of the
ten (10) Trading Days immediately preceding the date that the holder delivers
its notice of exercise to the Company in accordance with SECTION 2.1.
Notwithstanding the foregoing sentence, this Warrant shall be exercisable in
whole or in part one Business Day prior to the consummation of a Change of
Control of the Company.
ARTICLE 3.
TRANSFER, DIVISION AND COMBINATION
Section 3.1. TRANSFER. Subject to compliance with Article 9,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the
Page 5
<PAGE>
Company to be maintained for such purpose, upon surrender of this Warrant at the
principal office of the Company referred to in Section 2.1 or the office or
agency designated by the Company pursuant to Article 12, together with a written
assignment of this Warrant substantially in the form of EXHIBIT B hereto duly
executed by the holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall, subject to Article 9, execute
and deliver a new Warrant or Warrants in the name(s) of the assignee or
assignees and in the denomination(s) specified in such instrument of assignment,
and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be canceled. A Warrant,
if properly assigned in compliance with Article 9, may be exercised by a new
holder for the purchase of shares of Warrant Stock without having a new Warrant
issued.
Section 3.2. DIVISION AND COMBINATION. Subject to Article 9, this
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the holder or its agent or attorney. Subject to compliance with
Section 3.1 and with Article 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
Section 3.3. EXPENSES. The Company shall prepare, issue and
deliver at its own expense (other than transfer taxes) the new Warrant or
Warrants under this Article 3.
Section 3.4. MAINTENANCE OF BOOKS. The Company agrees to
maintain, at its aforesaid office or agencies, books for the registration,
recordation, issuance and the registration of transfer of the Warrants.
ARTICLE 4.
ADJUSTMENTS
The number of shares of Warrant Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this Article 4. The Company shall give the holder notice of any event described
below which requires an adjustment pursuant to this Article 4 at the time of
such event.
Section 4.1. STOCK DIVIDENDS, SUBDIVISIONS, COMBINATIONS AND
RECLASSIFICATIONS. If the Company shall at any time or from time to time
after the Issue Date:
Page 6
<PAGE>
(a) pay a dividend or make a distribution on the outstanding
shares of Common Stock in shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock,
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or
(d) issue by reclassification of its shares of Common Stock any
shares of capital stock of the Company,
then, and in each such case, the number of shares of Warrant Stock issuable upon
exercise of the Warrant evidenced hereby immediately prior to such event or the
record date therefor, whichever is earlier, shall be adjusted so that the holder
of any Warrant evidenced hereby thereafter exercised shall be entitled to
receive the number of shares of Warrant Stock or other securities of the Company
which such holder would have owned or have been entitled to receive after the
happening of any of the events described above, had such Warrant been exercised
immediately prior to the happening of such event or the record date therefor,
whichever is earlier. An adjustment made pursuant to this Section 4.1 shall
become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of shares of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of any such subdivision, reclassification or
combination, at the close of business on the day upon which such corporate
action becomes effective.
Section 4.2. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER
THIS SECTION. The following provisions shall be applicable to the making of
adjustments provided for in this Article 4:
(a) For purposes of this Article 4, the number of shares of Common
Stock at any time outstanding shall not include any shares of Common Stock
then owned or held by or for the account of the Company.
(b) The term "dividend" as used in this Article 4 shall mean a
dividend or other distribution upon stock of the Company except pursuant
to the Rights Agreement dated as of May 22, 1995 (as amended from time to
time, the "Rights Agreement") between the Company and U.S. Stock Transfer
Corporation as rights agent. Notwithstanding anything in this Article 4 to
the contrary, the number of shares of Warrant Stock issuable upon exercise
of the Warrant evidenced hereby shall not be adjusted as a result of any
dividend, distribution or issuance of securities of the Company pursuant
to the Rights Agreement.
Page 7
<PAGE>
(c) Notwithstanding anything in this Article 4 to the contrary, the
Company shall not be required to give effect to any adjustment in the
number of shares of Warrant Stock issuable upon exercise of the Warrant
evidenced hereby unless and until the net effect of one or more
adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change in the number of shares of
Warrant Stock issuable upon exercise of the Warrants evidenced hereby by
at least one-hundredth of one share of Warrant Stock, and when the
cumulative net effect of more than one adjustment so determined shall be
to change the number of shares of Warrant Stock issuable upon exercise of
the Warrant evidenced hereby by at least one-hundredth of one share of
Warrant Stock, such change in the number of shares of Warrant Stock
issuable upon exercise of the Warrant evidenced hereby shall thereupon be
given effect.
(d) If the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then, no adjustment in the number of shares of
Warrant Stock issuable upon exercise of the Warrant evidenced hereby shall
be required by reason of the taking of such record.
(e) There shall be no adjustment of the number of shares of Warrant
Stock issuable upon exercise of the Warrant evidenced hereby in case of
the issuance of any stock of the Company in a merger, reorganization,
acquisition or other similar transaction except as set forth in Section
4.3.
(f) Notwithstanding anything herein to the contrary, the Company
agrees not to enter into any transaction that, by reason of any adjustment
hereunder, would cause the Exercise Price to be less than the par value
per share of the Common Stock.
(g) Upon each adjustment to the number of shares of Warrant Stock
issuable upon exercise of the Warrant pursuant to Section 4.1, the
Exercise Price effective immediately prior to the making of such
adjustment shall thereafter be adjusted to be the amount obtained by (i)
multiplying (A) the applicable number of shares of Warrant Stock issuable
upon exercise of the Warrant immediately prior to such adjustment by (B)
the Exercise Price in effect immediately prior to such adjustment and (ii)
dividing the product so obtained by the number of shares of Warrant Stock
issuable upon exercise of the Warrant immediately after such adjustment.
Section 4.3. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION
OR DISPOSITION OF ASSETS. In case of any reorganization or reclassification of
outstanding shares of Common Stock (other than a reclassification covered by
Section 4.1), or in case of any
Page 8
<PAGE>
consolidation or merger of the Company with or into another corporation, or in
the case of any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety (each of the foregoing
being referred to as a "Transaction"), this Warrant shall thereafter be
exercisable for, in lieu of the Common Stock issuable upon such exercise prior
to consummation of the Transaction, the kind and amount of shares of stock and
other securities and property receivable (including cash) upon the consummation
of the Transaction by a holder of that number of shares of Common Stock issuable
upon exercise of such Warrant immediately prior to the Transaction (including,
on a pro rata basis, the cash, securities or property received by holders of
Common Stock in any tender or exchange offer that is a step in the Transaction).
Section 4.4. NOTICES TO WARRANTHOLDERS. In case at any time or from
time to time, prior to the Expiration Date, the Company shall pay any dividend
or make any other distribution to the holders of its Common Stock, or shall
offer for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or any other right, or there shall be
any capital reorganization or reclassification of the Common Stock of the
Company or consolidation or merger of the Company with or into another
corporation, or any sale or conveyance to another corporation of the property of
the Company as an entirety or substantially as an entirety, or there shall be a
voluntary or involuntary dissolution, liquidation or winding up of the Company,
then, in any one or more of said cases the Company shall give at least 20 days'
prior written notice (the time of mailing of such notice shall be deemed to be
the time of giving thereof) to the registered holder of the Warrant evidenced
hereby at its address as shown on the books of the Company maintained by the
Transfer Agent thereof of the date on which (i) the books of the Company shall
close or a record shall be taken for such stock dividend, distribution or
subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution, liquidation or winding
up shall take place, as the case may be, provided that in the case of any
Transaction to which Section 4.3 applies the Company shall give at least 30
days' prior written notice as aforesaid. Such notice shall also specify the date
as of which the holders of the Common Stock of record shall participate in said
dividend, distribution or subscription rights or shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance or
participate in such dissolution, liquidation or winding up, as the case may be.
Failure to give such notice shall not invalidate any action so taken.
Section 4.5. CERTIFICATES. Upon any adjustment of the number of
shares of Warrant Stock issuable upon exercise of the Warrant evidenced hereby
or of the Exercise Price, then, and in each such case, the Company shall
promptly deliver to the holders of the Warrant a certificate signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Company setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the increased or decreased number
of shares of
Page 9
<PAGE>
Warrant Stock issuable upon exercise of the Warrant evidenced hereby and the
Exercise Price then in effect following such adjustment.
ARTICLE 5.
NO IMPAIRMENT
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities 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 actions as may be necessary or appropriate to protect the rights of the
holder of the Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the Exercise
Price immediately prior to such increase in par value, (b) take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Warrant Stock, free and
clear of any liens, claims, encumbrances and restrictions (other than as
provided herein) upon the exercise of this Warrant, and (c) use its best efforts
to obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.
Upon the request of the holder of the Warrant, the Company will at
any time during the period this Warrant is outstanding acknowledge in writing,
in form satisfactory to the holder of this Warrant, the continuing validity of
this Warrant and the obligations of the Company hereunder.
ARTICLE 6.
RESERVATION AND AUTHORIZATION OF
COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
The Company covenants and agrees that, until the Expiration Date,
the Company shall at all times reserve and keep available for issue upon the
exercise of this Warrant such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full of this
Warrant. All shares of Common Stock which shall be so issuable, when issued upon
exercise of this Warrant and payment therefor in accordance with the terms of
this Warrant, shall be duly and validly issued, fully paid and nonassessable and
free and clear of any liens, claims and restrictions (other than as provided
herein). No stockholder of the Company has or shall have any preemptive rights
to subscribe for such shares of Common Stock.
Page 10
<PAGE>
Before taking any action which would result in an adjustment in the
number of shares of Warrant Stock for which this Warrant is exercisable or in
the Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
ARTICLE 7.
REDEMPTION
Section 7.1. REDEMPTION RIGHT. All (but not less than all) of the
outstanding portion of this Warrant may be redeemed by the Company at any time
after September 8, 2001 at its option upon the notice described in Section 7.2
hereof at a price equal to $54,687 times the quotient of (a) the number of
shares of Warrant Stock for which this Warrant is then exercisable (adjusted as
applicable pursuant to Article 4) divided by (b) 339,062 (subject to adjustment
pursuant to Article 4) (the "Redemption Price"). The Company's redemption right
contained in the preceding sentence is subject to the condition that the Market
Price of the Common Stock is more than $10.00 per share on each of the 30
consecutive Trading Days immediately prior to the date on which the Company
delivers a redemption notice pursuant to Section 7.2 hereof.
Section 7.2. DATE FIXED FOR, AND NOTICE OF, REDEMPTION. In the event
the Company shall elect to redeem the outstanding portion of this Warrant
pursuant to Section 7.1 hereof, the Company shall fix a date for the redemption.
Notice of redemption shall be mailed by first class mail, postage prepaid, by
the Company or the Company's agent at its direction not less than 90 days from
the date fixed for redemption to the registered holders of the outstanding
portion of this Warrant to be redeemed at their last addresses as they appear on
the Company's registration books. Any notice mailed in the manner herein
provided shall be conclusively presumed to have been duly given whether or not
the registered holder received such notice.
Section 7.3. EXERCISE AFTER NOTICE OF REDEMPTION. The outstanding
portion of this Warrant called for redemption may be exercised in accordance
with Article 2 (other than pursuant to Section 2.4) of this Warrant at any time
after notice of redemption is given by the Company pursuant to Section 7.2
hereof and prior to the date fixed for redemption. On and after the redemption
date, the record holders of the outstanding portion of this Warrant shall have
no further rights except to receive, upon surrender of such holder's portion of
this outstanding Warrant, the Redemption Price.
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<PAGE>
ARTICLE 8.
STOCK AND WARRANT TRANSFER BOOKS
The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.
ARTICLE 9.
RESTRICTIONS ON TRANSFERABILITY
This Warrant and the Restricted Stock shall not be transferred
before satisfaction of the conditions specified in this Article 9, which
conditions are, among other things, intended to ensure compliance with the
provisions of the Securities Act and state securities laws with respect to the
transfer of this Warrant or any Restricted Stock. The holder, by acceptance of
this Warrant, agrees to be bound by the provisions of this Article 9.
Section 9.1. RESTRICTIVE LEGEND. (a) Except as otherwise provided in
this Article 9, each certificate for Restricted Stock initially issued upon any
exercise of this Warrant, and each certificate for Restricted Stock issued to
any subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws
of any state and are subject to the conditions specified in a
certain Warrant dated September 8, 1999, originally issued by Iwerks
Entertainment, Inc. The shares represented by this certificate may
not be transferred in violation of such Act and laws, the rules and
regulations thereunder or the provisions of the Warrant. A copy of
the form of said Warrant is on file with the Secretary of Iwerks
Entertainment, Inc. The holder of this certificate, by acceptance of
this certificate, agrees to be bound by the provisions of such
Warrant."
(b) Except as otherwise provided in this Article 9, this Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state and are subject to the conditions
specified herein. This Warrant may not be sold or otherwise
transferred in the absence of such registration or an exemption
therefrom under the
Page 12
<PAGE>
Securities Act of 1933, as amended, and under any such applicable
state laws, or in violation of the provisions of this Warrant."
Section 9.2. TRANSFERS. Prior to any transfer or attempted transfer
of this Warrant or any shares of Restricted Stock, the holder of this Warrant or
Restricted Stock shall give notice (a "Transfer Notice") to the Company of such
holder's intention to effect such transfer, describing the manner and
circumstances of the proposed transfer, and obtain from counsel a written
opinion addressed and reasonably satisfactory to the Company that the proposed
transfer of this Warrant or such Restricted Stock may be effected without
registration under the Securities Act and applicable state securities laws.
After receipt of the Transfer Notice and written opinion, the Company shall,
within two Business Days thereof, so notify the holder of this Warrant or such
Restricted Stock and such holder shall thereupon be entitled to transfer this
Warrant or such Restricted Stock, in accordance with the terms of the Transfer
Notice. Each certificate, if any, evidencing such shares of Restricted Stock
issued upon such transfer shall bear the restrictive legend set forth in Section
9.1(a), and each Warrant issued upon such transfer shall bear the restrictive
legend set forth in Section 9.1(b), unless in the written opinion of counsel
addressed to the Company such legend is not required in order to ensure
compliance with the Securities Act.
Section 9.3. NO TRANSFERS UNTIL SEPTEMBER 8, 2001. In addition to
the restrictions on transfer imposed by Section 9.1 hereof, unless this Warrant
can be exercised pursuant to Section 2.4, no holder of this Warrant may transfer
this Warrant in whole or in part until September 8, 2001, except for transfers
to a holder's Affiliates. The provisions of this Section 9.3 shall not restrict
the transfer of any Warrant Shares issued or issuable upon exercise of this
Warrant.
Section 9.4. TERMINATION OF RESTRICTIONS. Notwithstanding the
foregoing provisions of this Article 9, the restrictions imposed by this Article
9 upon the transferability of this Warrant and the Restricted Stock and the
legend requirements of Section 9.1 shall terminate as to this Warrant or
Restricted Stock (i) as to the Restricted Stock, when and so long as the resale
of such security shall have been effectively registered under the Securities Act
and disposed of pursuant thereto, or (ii) as to the Warrant and Restricted
Stock, when the holder of the Warrant or Restricted Stock shall have delivered
to the Company the written opinion of counsel addressed and reasonably
satisfactory to the Company stating that such legend is not required in order to
ensure compliance with the Securities Act. Whenever the restrictions imposed by
this Article 9 shall terminate as to any share of Restricted Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, at the Company's expense (except for any transfer taxes), a new
certificate representing such Common Stock not bearing the restrictive legend
set forth in Section 9.1(a).
Page 13
<PAGE>
ARTICLE 10.
SUPPLYING INFORMATION
The Company shall cooperate with the holder of this Warrant and the
holder of Restricted Stock in supplying such information as may be reasonably
requested by such holder or reasonably necessary for such holder to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of an exemption from the
Securities Act for the sale of this Warrant or Restricted Stock.
ARTICLE 11.
LOSS OR MUTILATION
Upon receipt by the Company from any holder of evidence reasonably
satisfactory to the Company of the ownership of and the loss, theft, destruction
or mutilation of this Warrant and indemnity reasonably satisfactory to it and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to the holder.
ARTICLE 12.
OFFICE OF THE COMPANY
As long as any portion of this Warrant remains outstanding, the
Company shall maintain an office or agency (which may be the principal executive
offices of the Company) where this Warrant may be presented for exercise,
registration of transfer, division or combination as provided in this Warrant.
ARTICLE 13.
LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by the
holder to purchase shares of Warrant Stock, and no enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
the holder for the purchase price of any Warrant Stock or as a stockholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.
ARTICLE 14.
REPRESENTATION OF HOLDER
The holder represents that it is acquiring the Warrant and the
Warrant Stock for the purpose of investment and not with a view to the resale or
distribution hereof or thereof; PROVIDED, that the disposition of holder's
property shall at all times be and remain within its control.
Page 14
<PAGE>
ARTICLE 15.
MISCELLANEOUS
Section 15.1. NONWAIVER. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the parties shall operate
as a waiver of such right or otherwise prejudice the parties' rights, powers or
remedies.
Section 15.2. NO RIGHTS AS STOCKHOLDER. The Person in whose name
this Warrant is registered shall be deemed the owner hereof and of this Warrant
evidenced hereby for all purposes. The registered holder of this Warrant shall
not be entitled to any rights whatsoever as a stockholder of the Company except
as herein provided.
Section 15.3. NOTICE GENERALLY. Any notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder to be
made pursuant to the provisions of this Warrant shall be sufficiently given or
made if in writing and either delivered in person with receipt acknowledged or
sent by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to the holder, at its last known address appearing on the
books of the Company maintained for such purpose.
(b) If to the Company:
Iwerks Entertainment, Inc.
4540 Valerio Street
Burbank, California 91505
Attention: Charles Goldwater
Fax No.: (818) 840-6192
with a copy to:
Troop Steuber Pasich Reddick & Tobey, LLP
2029 Century Park East, 24th Floor
Los Angeles, California 90067-3010
Attention: C. N. Franklin Reddick, Esq.
Fax No.: (310) 728-2204
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on
Page 15
<PAGE>
which personally delivered, with receipt acknowledged, or three (3) Business
Days after the same shall have been deposited in the United States mail.
Section 15.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of
Section 3.1 and Article 9, (i) this Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and assigns of the holder, and (ii) the provisions of this
Warrant are intended to be for the benefit of all holders from time to time of
this Warrant, and shall be enforceable by any such holders.
Section 15.5. AMENDMENT. This Warrant may be modified or
amended or the provisions thereof waived with the written consent of the
Company and the holders of the majority of the portion of this Warrant then
outstanding.
Section 15.6. SEVERABILITY. Wherever possible, each provision of
this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Warrant.
Section 15.7. HEADINGS. The headings used in this Warrant are
for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
Section 15.8. GOVERNING LAW. This Warrant shall be governed by
and construed in accordance with the laws of the State of California, without
giving effect to conflicts of law principles thereof.
Section 15.10. MUTUAL WAIVER OF JURY TRIAL. Because disputes arising
in connection with complex financial transactions are most quickly and
economically resolved by an experienced and expert person and the parties wish
applicable state and federal laws to apply (rather than arbitration rules), the
parties desire that their disputes be resolved by a judge applying such
applicable laws. Therefore, to achieve the best combination of the benefits of
the judicial system and of arbitration, the Company and the holder waive all
right to trial by jury in any action, suit or proceeding brought to enforce or
defend any rights or remedies under this Warrant.
Page 16
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
Warrant to be duly executed by its authorized officer on September 8, 1999.
IWERKS ENTERTAINMENT, INC.
By /s/ CHARLES GOLDWATER
-----------------------------------
Name: Charles Goldwater
Title: President and Chief
Executive Officer
Page 17
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of _____ Shares of Common Stock (the
"Common Stock") of IWERKS ENTERTAINMENT, INC. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to __________________ whose address is
____________________ and, if such shares of Common Stock shall not include all
of the shares of Common Stock issuable as provided in this Warrant, that a new
Warrant of like tenor and date for the balance of the shares of Common Stock
issuable hereunder be delivered to the undersigned.
(Name of Registered Owner)
- ----------------------
(Signature of Registered owner)
- ----------------------
(Street Address)
- ----------------------
(City) (State) (Zip Code)
- ----------------------
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
and does hereby irrevocably constitute and appoint ____________ attorney-in-fact
to register such transfer on the books of IWERKS ENTERTAINMENT, INC. maintained
for the purpose, with full power of substitution in the premises.
Dated:
------------------------------
Name:
-------------------------------
Signature:
--------------------------
Witness:
----------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
Page 19
Exhibit 4.5
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY SUCH
APPLICABLE STATE LAWS, OR IN VIOLATION OF THE PROVISIONS OF THIS WARRANT.
WARRANT (TRANCHE A)
To Purchase 48,438 Shares of
Common Stock of
IWERKS ENTERTAINMENT, INC.
THIS IS TO CERTIFY THAT The Paul and Judy Schaeffer Living Trust
(the "Schaeffer Trust"), or its registered assigns, is entitled, at any time and
from time to time prior to September 7, 2004 (the "Expiration Date"), to
purchase from Iwerks Entertainment, Inc., a Delaware corporation (the
"Company"), a total of 48,438 shares of Common Stock, par value $0.001 per share
(the "Common Stock"), of the Company, subject to adjustment as provided herein,
at a purchase price of $1.43 per share (the "Exercise Price"), subject to
adjustment as set forth herein, all on the terms and conditions and pursuant to
the provisions hereinafter set forth.
This Warrant was issued to the Schaeffer Trust pursuant to the
Warrant Purchase Agreement dated as of September 8, 1999 (the "Agreement")
between the Company, the Schaeffer Trust and The Guber Family Trust dated
October 20, 1978. Capitalized terms used and not otherwise defined herein shall
have the meanings set forth for such terms in the Agreement.
ARTICLE 1.
DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Affiliate" with respect to any Person shall mean any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. For the
<PAGE>
purpose of this definition, the term "control" as used with respect to any
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise, and
"controlling" and "controlled by" shall have correlative meanings.
"Agreement" shall have the meaning set forth in the first
paragraph hereof.
"Business Day" shall mean any day that is not a Saturday or Sunday
or a day on which banks are required or permitted to be closed in Los Angeles,
California.
"Change of Control" means any of the following transactions or
series of related transactions: (i) the consolidation, merger or other business
combination of the Company with or into another Person (other than pursuant to a
merger effected solely for the purposes of changing the jurisdiction of
incorporation of the Company or a merger in which (x) shareholders of the
Company immediately prior to the closing of such merger continue to own in
excess of 50% of the voting power of the surviving corporation after the merger
and (y) a majority of the directors comprising the board of directors of the
surviving corporation after the closing of the merger were directors of the
Company immediately prior to the merger); (ii) the sale or transfer of all or
substantially all of the Company's assets; or (iii) the consummation of a
purchase, tender or exchange offer made to, and accepted by, the holders of more
than 50% of the economic interest in, or the combined voting power of all
classes of voting stock of, the Company.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock" shall have the meaning set forth in the first
paragraph hereof.
"Company" shall have the meaning set forth in the first paragraph
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exercise Price" shall have the meaning set forth in the first
paragraph hereof.
"Expiration Date" shall have the meaning set forth in the first
paragraph hereof.
"holder" shall mean each Person in whose name this Warrant or any
portion hereof is registered on the books of the Company maintained for such
purpose.
"Issue Date" shall mean September 8, 1999.
Page 2
<PAGE>
"Market Price" of the Common Stock on any Trading Day shall mean the
closing sale price per share of the Common Stock on the Principal Market or, if
the Common Stock is not then traded or quoted on a Principal Market, such other
trading or quotation facility on which the Common Stock is then listed or quoted
for trading. If the Common Stock is not listed or quoted for trading on any
trading or quotation facility, the "Market Price" of the Common Stock on any
Trading Day shall mean the fair market value per share of Common Stock as
determined in good faith by the Board of Directors of the Company.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, corporation or other entity and shall include
any successor (by merger or otherwise) of such entity.
"Principal Market" shall mean the national stock market or trading
facility on which the Common Stock is listed or quoted for trading.
"Restricted Stock" shall mean shares of Warrant Stock which are, or
which upon their issuance on the exercise of this Warrant would be, evidenced by
a certificate bearing the restrictive legend set forth in Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Third Party" means a person who is not related to or affiliated or
associated in any manner with the Schaeffer Trust, any of its affiliates or any
of their respective officers, directors or shareholders.
"Trading Day" means a day on which the Principal Market for the
Common Stock is open for the transaction of business or, if there is no
Principal Market, a Business Day.
"Transaction" shall have the meaning set forth in Section 4.3
hereof.
"Transfer" or "transfer" with respect to this Warrant or any Warrant
Stock shall mean any transfer, sale, encumbrance, hypothecation or other
disposition of this Warrant or any Warrant Stock or of any interest in either
thereof.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
"Warrant Price" shall mean an amount equal to (i) the number of
shares of Warrant Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Exercise Price as of the date of such
exercise.
Page 3
<PAGE>
"Warrant Stock" shall mean the shares of Common Stock purchased by
the holder of this Warrant upon the exercise thereof.
ARTICLE 2.
EXERCISE OF WARRANT
Section 2.1. MANNER OF EXERCISE. From and after the date hereof and
until 5:00 P.M., California time, on the Expiration Date, but subject to SECTION
2.4, the holder may exercise this Warrant for all or any part of the number of
shares of Warrant Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, the holder
shall deliver to the Company at its office at 4540 Valerio Street, Burbank,
California 91505, or at the office or agency designated by the Company pursuant
to Article 12, (i) a written notice of the holder's election to exercise this
Warrant, which notice shall specify the number of shares of Warrant Stock to be
purchased, (ii) payment of the Warrant Price in the manner provided below, and
(iii) this Warrant. Such notice shall be substantially in the form of the
subscription form appearing at the end of this Warrant as EXHIBIT A, duly
executed by or on behalf of the holder. Upon receipt thereof, the Company shall,
as promptly as practicable, and in any event within five (5) Business Days
thereafter, execute or cause to be executed and deliver or cause to be delivered
to the holder a certificate or certificates representing the aggregate number of
full shares of Warrant Stock issuable upon such exercise, together with cash in
lieu of any fraction of a share, as hereinafter provided. The stock certificate
or certificates so delivered shall be, to the extent possible, in such
denomination or denominations as such holder shall request in the notice and
shall be registered in the name of the holder or, subject to Article 9, and such
other name as shall be designated in the notice.
This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the holder
or any other Person so designated to be named therein shall be deemed to have
become a holder of record of such shares of Warrant Stock for all purposes, as
of the date the notice, together with the payment of the Warrant Price and this
Warrant, are received by the Company as described above and all taxes required
to be paid by the holder, if any, pursuant to Section 2.2 prior to the issuance
of such shares of Warrant Stock have been paid. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate
or certificates representing Warrant Stock, deliver to the holder a new Warrant
evidencing the rights of the holder to purchase the unpurchased shares of
Warrant Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of the holder,
appropriate notation may be made on this Warrant and the same returned to the
holder.
Page 4
<PAGE>
Payment of the Warrant Price shall be made at the option of the
holder by (1) cash, (2) wire transfer to an account in a bank located in the
United States designated for such purpose by the Company, (3) certified or
official bank check, (4) transfer to the Company of shares of Common Stock,
including shares to be issued upon the exercise of this Warrant, or (5) any
combination of payment under items (1), (2), (3) or (4). In the event of the
application of shares of Common Stock to the payment of the Warrant Price, the
amount to be credited to the payment of the Warrant Price for each share of
Common Stock so applied shall be the average Market Price of the Common Stock
for the ten Trading Day period ending on the Trading Day immediately prior to
the payment date.
Section 2.2. PAYMENT OF TAXES. The Company shall pay all expenses in
connection with, and all taxes and other governmental charges that may be
imposed with respect to, the issue or delivery of Warrant Stock purchased
hereunder, unless such tax or charge is imposed by law upon the holder, in which
case such taxes or charges shall be paid by the holder. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for shares of Warrant Stock
issuable upon exercise of this Warrant in any name other than that of the
holder, and in such case the Company shall not be required to issue or deliver
any stock certificate until such tax or other charge has been paid or it has
been established to the reasonable satisfaction of the Company that no such tax
or other charge is due.
Section 2.3. FRACTIONAL SHARES. The Company shall not be required to
issue a fractional share of Warrant Stock upon exercise of this Warrant. As to
any fraction of a share which the holder of this Warrant would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to the same fraction of the
average Market Price of the Common Stock for the ten Trading Day period ending
on the Trading Day immediately prior to the payment date.
Section 2.4. RESTRICTION ON EXERCISE. Notwithstanding the provisions
of SECTION 2.1 to the contrary, but subject to SECTION 7.3 and the last sentence
of this SECTION 2.4, by its acceptance of this Warrant the holder hereby agrees
not to exercise this Warrant in whole or in part until September 8, 2001 unless
the Market Price of the Common Stock is at least $4.00 per share on each of the
ten (10) Trading Days immediately preceding the date that the holder delivers
its notice of exercise to the Company in accordance with SECTION 2.1.
Notwithstanding the foregoing sentence, this Warrant shall be exercisable in
whole or in part one Business Day prior to the consummation of a Change of
Control of the Company.
ARTICLE 3.
TRANSFER, DIVISION AND COMBINATION
Section 3.1. TRANSFER. Subject to compliance with Article 9,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the
Page 5
<PAGE>
Company to be maintained for such purpose, upon surrender of this Warrant at the
principal office of the Company referred to in Section 2.1 or the office or
agency designated by the Company pursuant to Article 12, together with a written
assignment of this Warrant substantially in the form of EXHIBIT B hereto duly
executed by the holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall, subject to Article 9, execute
and deliver a new Warrant or Warrants in the name(s) of the assignee or
assignees and in the denomination(s) specified in such instrument of assignment,
and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be canceled. A Warrant,
if properly assigned in compliance with Article 9, may be exercised by a new
holder for the purchase of shares of Warrant Stock without having a new Warrant
issued.
Section 3.2. DIVISION AND COMBINATION. Subject to Article 9, this
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the holder or its agent or attorney. Subject to compliance with
Section 3.1 and with Article 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
Section 3.3. EXPENSES. The Company shall prepare, issue and
deliver at its own expense (other than transfer taxes) the new Warrant or
Warrants under this Article 3.
Section 3.4. MAINTENANCE OF BOOKS. The Company agrees to
maintain, at its aforesaid office or agencies, books for the registration,
recordation, issuance and the registration of transfer of the Warrants.
ARTICLE 4.
ADJUSTMENTS
The number of shares of Warrant Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this Article 4. The Company shall give the holder notice of any event described
below which requires an adjustment pursuant to this Article 4 at the time of
such event.
Section 4.1. STOCK DIVIDENDS, SUBDIVISIONS, COMBINATIONS AND
RECLASSIFICATIONS. If the Company shall at any time or from time to time
after the Issue Date:
Page 6
<PAGE>
(a) pay a dividend or make a distribution on the outstanding
shares of Common Stock in shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock,
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or
(d) issue by reclassification of its shares of Common Stock any
shares of capital stock of the Company,
then, and in each such case, the number of shares of Warrant Stock issuable upon
exercise of the Warrant evidenced hereby immediately prior to such event or the
record date therefor, whichever is earlier, shall be adjusted so that the holder
of any Warrant evidenced hereby thereafter exercised shall be entitled to
receive the number of shares of Warrant Stock or other securities of the Company
which such holder would have owned or have been entitled to receive after the
happening of any of the events described above, had such Warrant been exercised
immediately prior to the happening of such event or the record date therefor,
whichever is earlier. An adjustment made pursuant to this Section 4.1 shall
become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of shares of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of any such subdivision, reclassification or
combination, at the close of business on the day upon which such corporate
action becomes effective.
Section 4.2. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER
THIS SECTION. The following provisions shall be applicable to the making of
adjustments provided for in this Article 4:
(a) For purposes of this Article 4, the number of shares of Common
Stock at any time outstanding shall not include any shares of Common Stock
then owned or held by or for the account of the Company.
(b) The term "dividend" as used in this Article 4 shall mean a
dividend or other distribution upon stock of the Company except pursuant
to the Rights Agreement dated as of May 22, 1995 (as amended from time to
time, the "Rights Agreement") between the Company and U.S. Stock Transfer
Corporation as rights agent. Notwithstanding anything in this Article 4 to
the contrary, the number of shares of Warrant Stock issuable upon exercise
of the Warrant evidenced hereby shall not be adjusted as a result of any
dividend, distribution or issuance of securities of the Company pursuant
to the Rights Agreement.
Page 7
<PAGE>
(c) Notwithstanding anything in this Article 4 to the contrary, the
Company shall not be required to give effect to any adjustment in the
number of shares of Warrant Stock issuable upon exercise of the Warrant
evidenced hereby unless and until the net effect of one or more
adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change in the number of shares of
Warrant Stock issuable upon exercise of the Warrants evidenced hereby by
at least one-hundredth of one share of Warrant Stock, and when the
cumulative net effect of more than one adjustment so determined shall be
to change the number of shares of Warrant Stock issuable upon exercise of
the Warrant evidenced hereby by at least one-hundredth of one share of
Warrant Stock, such change in the number of shares of Warrant Stock
issuable upon exercise of the Warrant evidenced hereby shall thereupon be
given effect.
(d) If the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then, no adjustment in the number of shares of
Warrant Stock issuable upon exercise of the Warrant evidenced hereby shall
be required by reason of the taking of such record.
(e) There shall be no adjustment of the number of shares of Warrant
Stock issuable upon exercise of the Warrant evidenced hereby in case of
the issuance of any stock of the Company in a merger, reorganization,
acquisition or other similar transaction except as set forth in Section
4.3.
(f) Notwithstanding anything herein to the contrary, the Company
agrees not to enter into any transaction that, by reason of any adjustment
hereunder, would cause the Exercise Price to be less than the par value
per share of the Common Stock.
(g) Upon each adjustment to the number of shares of Warrant Stock
issuable upon exercise of the Warrant pursuant to Section 4.1, the
Exercise Price effective immediately prior to the making of such
adjustment shall thereafter be adjusted to be the amount obtained by (i)
multiplying (A) the applicable number of shares of Warrant Stock issuable
upon exercise of the Warrant immediately prior to such adjustment by (B)
the Exercise Price in effect immediately prior to such adjustment and (ii)
dividing the product so obtained by the number of shares of Warrant Stock
issuable upon exercise of the Warrant immediately after such adjustment.
Section 4.3. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION
OR DISPOSITION OF ASSETS. In case of any reorganization or reclassification of
outstanding shares of Common Stock (other than a reclassification covered by
Section 4.1), or in case of any
Page 8
<PAGE>
consolidation or merger of the Company with or into another corporation, or in
the case of any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety (each of the foregoing
being referred to as a "Transaction"), this Warrant shall thereafter be
exercisable for, in lieu of the Common Stock issuable upon such exercise prior
to consummation of the Transaction, the kind and amount of shares of stock and
other securities and property receivable (including cash) upon the consummation
of the Transaction by a holder of that number of shares of Common Stock issuable
upon exercise of such Warrant immediately prior to the Transaction (including,
on a pro rata basis, the cash, securities or property received by holders of
Common Stock in any tender or exchange offer that is a step in the Transaction).
Section 4.4. NOTICES TO WARRANTHOLDERS. In case at any time or from
time to time, prior to the Expiration Date, the Company shall pay any dividend
or make any other distribution to the holders of its Common Stock, or shall
offer for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or any other right, or there shall be
any capital reorganization or reclassification of the Common Stock of the
Company or consolidation or merger of the Company with or into another
corporation, or any sale or conveyance to another corporation of the property of
the Company as an entirety or substantially as an entirety, or there shall be a
voluntary or involuntary dissolution, liquidation or winding up of the Company,
then, in any one or more of said cases the Company shall give at least 20 days'
prior written notice (the time of mailing of such notice shall be deemed to be
the time of giving thereof) to the registered holder of the Warrant evidenced
hereby at its address as shown on the books of the Company maintained by the
Transfer Agent thereof of the date on which (i) the books of the Company shall
close or a record shall be taken for such stock dividend, distribution or
subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution, liquidation or winding
up shall take place, as the case may be, provided that in the case of any
Transaction to which Section 4.3 applies the Company shall give at least 30
days' prior written notice as aforesaid. Such notice shall also specify the date
as of which the holders of the Common Stock of record shall participate in said
dividend, distribution or subscription rights or shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance or
participate in such dissolution, liquidation or winding up, as the case may be.
Failure to give such notice shall not invalidate any action so taken.
Section 4.5. CERTIFICATES. Upon any adjustment of the number of
shares of Warrant Stock issuable upon exercise of the Warrant evidenced hereby
or of the Exercise Price, then, and in each such case, the Company shall
promptly deliver to the holders of the Warrant a certificate signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Company setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the increased or decreased number
of shares of
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<PAGE>
Warrant Stock issuable upon exercise of the Warrant evidenced hereby and the
Exercise Price then in effect following such adjustment.
ARTICLE 5.
NO IMPAIRMENT
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities 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 actions as may be necessary or appropriate to protect the rights of the
holder of the Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the Exercise
Price immediately prior to such increase in par value, (b) take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Warrant Stock, free and
clear of any liens, claims, encumbrances and restrictions (other than as
provided herein) upon the exercise of this Warrant, and (c) use its best efforts
to obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.
Upon the request of the holder of the Warrant, the Company will at
any time during the period this Warrant is outstanding acknowledge in writing,
in form satisfactory to the holder of this Warrant, the continuing validity of
this Warrant and the obligations of the Company hereunder.
ARTICLE 6.
RESERVATION AND AUTHORIZATION OF
COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
The Company covenants and agrees that, until the Expiration Date,
the Company shall at all times reserve and keep available for issue upon the
exercise of this Warrant such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full of this
Warrant. All shares of Common Stock which shall be so issuable, when issued upon
exercise of this Warrant and payment therefor in accordance with the terms of
this Warrant, shall be duly and validly issued, fully paid and nonassessable and
free and clear of any liens, claims and restrictions (other than as provided
herein). No stockholder of the Company has or shall have any preemptive rights
to subscribe for such shares of Common Stock.
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<PAGE>
Before taking any action which would result in an adjustment in the
number of shares of Warrant Stock for which this Warrant is exercisable or in
the Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
ARTICLE 7.
REDEMPTION
Section 7.1. REDEMPTION RIGHT. All (but not less than all) of the
outstanding portion of this Warrant may be redeemed by the Company at any time
after September 8, 2001 at its option upon the notice described in Section 7.2
hereof at a price equal to $7,812 times the quotient of (a) the number of shares
of Warrant Stock for which this Warrant is then exercisable (adjusted as
applicable pursuant to Article 4) divided by (b) 48,438 (subject to adjustment
pursuant to Article 4) (the "Redemption Price"). The Company's redemption right
contained in the preceding sentence is subject to the condition that the Market
Price of the Common Stock is more than $10.00 per share on each of the 30
consecutive Trading Days immediately prior to the date on which the Company
delivers a redemption notice pursuant to Section 7.2 hereof.
Section 7.2. DATE FIXED FOR, AND NOTICE OF, REDEMPTION. In the event
the Company shall elect to redeem the outstanding portion of this Warrant
pursuant to Section 7.1 hereof, the Company shall fix a date for the redemption.
Notice of redemption shall be mailed by first class mail, postage prepaid, by
the Company or the Company's agent at its direction not less than 90 days from
the date fixed for redemption to the registered holders of the outstanding
portion of this Warrant to be redeemed at their last addresses as they appear on
the Company's registration books. Any notice mailed in the manner herein
provided shall be conclusively presumed to have been duly given whether or not
the registered holder received such notice.
Section 7.3. EXERCISE AFTER NOTICE OF REDEMPTION. The outstanding
portion of this Warrant called for redemption may be exercised in accordance
with Article 2 (other than pursuant to Section 2.4) of this Warrant at any time
after notice of redemption is given by the Company pursuant to Section 7.2
hereof and prior to the date fixed for redemption. On and after the redemption
date, the record holders of the outstanding portion of this Warrant shall have
no further rights except to receive, upon surrender of such holder's portion of
this outstanding Warrant, the Redemption Price.
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<PAGE>
ARTICLE 8.
STOCK AND WARRANT TRANSFER BOOKS
The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.
ARTICLE 9.
RESTRICTIONS ON TRANSFERABILITY
This Warrant and the Restricted Stock shall not be transferred
before satisfaction of the conditions specified in this Article 9, which
conditions are, among other things, intended to ensure compliance with the
provisions of the Securities Act and state securities laws with respect to the
transfer of this Warrant or any Restricted Stock. The holder, by acceptance of
this Warrant, agrees to be bound by the provisions of this Article 9.
Section 9.1. RESTRICTIVE LEGEND. (a) Except as otherwise provided in
this Article 9, each certificate for Restricted Stock initially issued upon any
exercise of this Warrant, and each certificate for Restricted Stock issued to
any subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws
of any state and are subject to the conditions specified in a
certain Warrant dated September 8, 1999, originally issued by Iwerks
Entertainment, Inc. The shares represented by this certificate may
not be transferred in violation of such Act and laws, the rules and
regulations thereunder or the provisions of the Warrant. A copy of
the form of said Warrant is on file with the Secretary of Iwerks
Entertainment, Inc. The holder of this certificate, by acceptance of
this certificate, agrees to be bound by the provisions of such
Warrant."
(b) Except as otherwise provided in this Article 9, this Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state and are subject to the conditions
specified herein. This Warrant may not be sold or otherwise
transferred in the absence of such registration or an exemption
therefrom under the
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<PAGE>
Securities Act of 1933, as amended, and under any such applicable
state laws, or in violation of the provisions of this Warrant."
Section 9.2. TRANSFERS. Prior to any transfer or attempted transfer
of this Warrant or any shares of Restricted Stock, the holder of this Warrant or
Restricted Stock shall give notice (a "Transfer Notice") to the Company of such
holder's intention to effect such transfer, describing the manner and
circumstances of the proposed transfer, and obtain from counsel a written
opinion addressed and reasonably satisfactory to the Company that the proposed
transfer of this Warrant or such Restricted Stock may be effected without
registration under the Securities Act and applicable state securities laws.
After receipt of the Transfer Notice and written opinion, the Company shall,
within two Business Days thereof, so notify the holder of this Warrant or such
Restricted Stock and such holder shall thereupon be entitled to transfer this
Warrant or such Restricted Stock, in accordance with the terms of the Transfer
Notice. Each certificate, if any, evidencing such shares of Restricted Stock
issued upon such transfer shall bear the restrictive legend set forth in Section
9.1(a), and each Warrant issued upon such transfer shall bear the restrictive
legend set forth in Section 9.1(b), unless in the written opinion of counsel
addressed to the Company such legend is not required in order to ensure
compliance with the Securities Act.
Section 9.3. NO TRANSFERS UNTIL SEPTEMBER 8, 2001. In addition to
the restrictions on transfer imposed by Section 9.1 hereof, unless this Warrant
can be exercised pursuant to Section 2.4, no holder of this Warrant may transfer
this Warrant in whole or in part until September 8, 2001, except for transfers
to a holder's Affiliates. The provisions of this Section 9.3 shall not restrict
the transfer of any Warrant Shares issued or issuable upon exercise of this
Warrant.
Section 9.4. TERMINATION OF RESTRICTIONS. Notwithstanding the
foregoing provisions of this Article 9, the restrictions imposed by this Article
9 upon the transferability of this Warrant and the Restricted Stock and the
legend requirements of Section 9.1 shall terminate as to this Warrant or
Restricted Stock (i) as to the Restricted Stock, when and so long as the resale
of such security shall have been effectively registered under the Securities Act
and disposed of pursuant thereto, or (ii) as to the Warrant and Restricted
Stock, when the holder of the Warrant or Restricted Stock shall have delivered
to the Company the written opinion of counsel addressed and reasonably
satisfactory to the Company stating that such legend is not required in order to
ensure compliance with the Securities Act. Whenever the restrictions imposed by
this Article 9 shall terminate as to any share of Restricted Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, at the Company's expense (except for any transfer taxes), a new
certificate representing such Common Stock not bearing the restrictive legend
set forth in Section 9.1(a).
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<PAGE>
ARTICLE 10.
SUPPLYING INFORMATION
The Company shall cooperate with the holder of this Warrant and the
holder of Restricted Stock in supplying such information as may be reasonably
requested by such holder or reasonably necessary for such holder to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of an exemption from the
Securities Act for the sale of this Warrant or Restricted Stock.
ARTICLE 11.
LOSS OR MUTILATION
Upon receipt by the Company from any holder of evidence reasonably
satisfactory to the Company of the ownership of and the loss, theft, destruction
or mutilation of this Warrant and indemnity reasonably satisfactory to it and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to the holder.
ARTICLE 12.
OFFICE OF THE COMPANY
As long as any portion of this Warrant remains outstanding, the
Company shall maintain an office or agency (which may be the principal executive
offices of the Company) where this Warrant may be presented for exercise,
registration of transfer, division or combination as provided in this Warrant.
ARTICLE 13.
LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by the
holder to purchase shares of Warrant Stock, and no enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
the holder for the purchase price of any Warrant Stock or as a stockholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.
ARTICLE 14.
REPRESENTATION OF HOLDER
The holder represents that it is acquiring the Warrant and the
Warrant Stock for the purpose of investment and not with a view to the resale or
distribution hereof or thereof; PROVIDED, that the disposition of holder's
property shall at all times be and remain within its control.
Page 14
<PAGE>
ARTICLE 15.
MISCELLANEOUS
Section 15.1. NONWAIVER. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the parties shall operate
as a waiver of such right or otherwise prejudice the parties' rights, powers or
remedies.
Section 15.2. NO RIGHTS AS STOCKHOLDER. The Person in whose name
this Warrant is registered shall be deemed the owner hereof and of this Warrant
evidenced hereby for all purposes. The registered holder of this Warrant shall
not be entitled to any rights whatsoever as a stockholder of the Company except
as herein provided.
Section 15.3. NOTICE GENERALLY. Any notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder to be
made pursuant to the provisions of this Warrant shall be sufficiently given or
made if in writing and either delivered in person with receipt acknowledged or
sent by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to the holder, at its last known address appearing on the
books of the Company maintained for such purpose.
(b) If to the Company:
Iwerks Entertainment, Inc.
4540 Valerio Street
Burbank, California 91505
Attention: Charles Goldwater
Fax No.: (818) 840-6192
with a copy to:
Troop Steuber Pasich Reddick & Tobey, LLP
2029 Century Park East, 24th Floor
Los Angeles, California 90067-3010
Attention: C. N. Franklin Reddick, Esq.
Fax No.: (310) 728-2204
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on
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<PAGE>
which personally delivered, with receipt acknowledged, or three (3) Business
Days after the same shall have been deposited in the United States mail.
Section 15.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of
Section 3.1 and Article 9, (i) this Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and assigns of the holder, and (ii) the provisions of this
Warrant are intended to be for the benefit of all holders from time to time of
this Warrant, and shall be enforceable by any such holders.
Section 15.5. AMENDMENT. This Warrant may be modified or
amended or the provisions thereof waived with the written consent of the
Company and the holders of the majority of the portion of this Warrant then
outstanding.
Section 15.6. SEVERABILITY. Wherever possible, each provision of
this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Warrant.
Section 15.7. HEADINGS. The headings used in this Warrant are
for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
Section 15.8. GOVERNING LAW. This Warrant shall be governed by
and construed in accordance with the laws of the State of California, without
giving effect to conflicts of law principles thereof.
Section 15.10. MUTUAL WAIVER OF JURY TRIAL. Because disputes arising
in connection with complex financial transactions are most quickly and
economically resolved by an experienced and expert person and the parties wish
applicable state and federal laws to apply (rather than arbitration rules), the
parties desire that their disputes be resolved by a judge applying such
applicable laws. Therefore, to achieve the best combination of the benefits of
the judicial system and of arbitration, the Company and the holder waive all
right to trial by jury in any action, suit or proceeding brought to enforce or
defend any rights or remedies under this Warrant.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer on September 8, 1999.
IWERKS ENTERTAINMENT, INC.
By /s/ CHARLES GOLDWATER
----------------------------------
Name: Charles Goldwater
Title: President and Chief
Executive Officer
Page 17
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of _____ Shares of Common Stock (the
"Common Stock") of IWERKS ENTERTAINMENT, INC. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to __________________ whose address is
____________________ and, if such shares of Common Stock shall not include all
of the shares of Common Stock issuable as provided in this Warrant, that a new
Warrant of like tenor and date for the balance of the shares of Common Stock
issuable hereunder be delivered to the undersigned.
(Name of Registered Owner)
- ----------------------
(Signature of Registered owner)
- ----------------------
(Street Address)
- ----------------------
(City) (State) (Zip Code)
- ----------------------
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
and does hereby irrevocably constitute and appoint ____________ attorney-in-fact
to register such transfer on the books of IWERKS ENTERTAINMENT, INC. maintained
for the purpose, with full power of substitution in the premises.
Dated:
------------------------------
Name:
-------------------------------
Signature:
--------------------------
Witness:
----------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
Page 19
Exhibit 4.6
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY SUCH
APPLICABLE STATE LAWS, OR IN VIOLATION OF THE PROVISIONS OF THIS WARRANT.
WARRANT (TRANCHE B)
To Purchase 48,438 Shares of
Common Stock of
IWERKS ENTERTAINMENT, INC.
THIS IS TO CERTIFY THAT The Paul and Judy Schaeffer Living Trust
(the "Schaeffer Trust"), or its registered assigns, is entitled, at any time and
from time to time prior to September 7, 2004 (the "Expiration Date"), to
purchase from Iwerks Entertainment, Inc., a Delaware corporation (the
"Company"), a total of 48,438 shares of Common Stock, par value $0.001 per share
(the "Common Stock"), of the Company, subject to adjustment as provided herein,
at a purchase price of $1.50 per share (the "Exercise Price"), subject to
adjustment as set forth herein, all on the terms and conditions and pursuant to
the provisions hereinafter set forth.
This Warrant was issued to the Schaeffer Trust pursuant to the
Warrant Purchase Agreement dated as of September 8, 1999 (the "Agreement")
between the Company, the Schaeffer Trust and The Guber Family Trust dated
October 20, 1978. Capitalized terms used and not otherwise defined herein shall
have the meanings set forth for such terms in the Agreement.
ARTICLE 1.
DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Affiliate" with respect to any Person shall mean any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. For the
<PAGE>
purpose of this definition, the term "control" as used with respect to any
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise, and
"controlling" and "controlled by" shall have correlative meanings.
"Agreement" shall have the meaning set forth in the first
paragraph hereof.
"Business Day" shall mean any day that is not a Saturday or Sunday
or a day on which banks are required or permitted to be closed in Los Angeles,
California.
"Change of Control" means any of the following transactions or
series of related transactions: (i) the consolidation, merger or other business
combination of the Company with or into another Person (other than pursuant to a
merger effected solely for the purposes of changing the jurisdiction of
incorporation of the Company or a merger in which (x) shareholders of the
Company immediately prior to the closing of such merger continue to own in
excess of 50% of the voting power of the surviving corporation after the merger
and (y) a majority of the directors comprising the board of directors of the
surviving corporation after the closing of the merger were directors of the
Company immediately prior to the merger); (ii) the sale or transfer of all or
substantially all of the Company's assets; or (iii) the consummation of a
purchase, tender or exchange offer made to, and accepted by, the holders of more
than 50% of the economic interest in, or the combined voting power of all
classes of voting stock of, the Company.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock" shall have the meaning set forth in the first
paragraph hereof.
"Company" shall have the meaning set forth in the first paragraph
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exercise Price" shall have the meaning set forth in the first
paragraph hereof.
"Expiration Date" shall have the meaning set forth in the first
paragraph hereof.
"holder" shall mean each Person in whose name this Warrant or any
portion hereof is registered on the books of the Company maintained for such
purpose.
"Issue Date" shall mean September 8, 1999.
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<PAGE>
"Market Price" of the Common Stock on any Trading Day shall mean the
closing sale price per share of the Common Stock on the Principal Market or, if
the Common Stock is not then traded or quoted on a Principal Market, such other
trading or quotation facility on which the Common Stock is then listed or quoted
for trading. If the Common Stock is not listed or quoted for trading on any
trading or quotation facility, the "Market Price" of the Common Stock on any
Trading Day shall mean the fair market value per share of Common Stock as
determined in good faith by the Board of Directors of the Company.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, corporation or other entity and shall include
any successor (by merger or otherwise) of such entity.
"Principal Market" shall mean the national stock market or trading
facility on which the Common Stock is listed or quoted for trading.
"Restricted Stock" shall mean shares of Warrant Stock which are, or
which upon their issuance on the exercise of this Warrant would be, evidenced by
a certificate bearing the restrictive legend set forth in Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Third Party" means a person who is not related to or affiliated or
associated in any manner with the Schaeffer Trust, any of its affiliates or any
of their respective officers, directors or shareholders.
"Trading Day" means a day on which the Principal Market for the
Common Stock is open for the transaction of business or, if there is no
Principal Market, a Business Day.
"Transaction" shall have the meaning set forth in Section 4.3
hereof.
"Transfer" or "transfer" with respect to this Warrant or any Warrant
Stock shall mean any transfer, sale, encumbrance, hypothecation or other
disposition of this Warrant or any Warrant Stock or of any interest in either
thereof.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
"Warrant Price" shall mean an amount equal to (i) the number of
shares of Warrant Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Exercise Price as of the date of such
exercise.
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<PAGE>
"Warrant Stock" shall mean the shares of Common Stock purchased by
the holder of this Warrant upon the exercise thereof.
ARTICLE 2.
EXERCISE OF WARRANT
Section 2.1. MANNER OF EXERCISE. From and after the date hereof and
until 5:00 P.M., California time, on the Expiration Date, but subject to SECTION
2.4, the holder may exercise this Warrant for all or any part of the number of
shares of Warrant Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, the holder
shall deliver to the Company at its office at 4540 Valerio Street, Burbank,
California 91505, or at the office or agency designated by the Company pursuant
to Article 12, (i) a written notice of the holder's election to exercise this
Warrant, which notice shall specify the number of shares of Warrant Stock to be
purchased, (ii) payment of the Warrant Price in the manner provided below, and
(iii) this Warrant. Such notice shall be substantially in the form of the
subscription form appearing at the end of this Warrant as EXHIBIT A, duly
executed by or on behalf of the holder. Upon receipt thereof, the Company shall,
as promptly as practicable, and in any event within five (5) Business Days
thereafter, execute or cause to be executed and deliver or cause to be delivered
to the holder a certificate or certificates representing the aggregate number of
full shares of Warrant Stock issuable upon such exercise, together with cash in
lieu of any fraction of a share, as hereinafter provided. The stock certificate
or certificates so delivered shall be, to the extent possible, in such
denomination or denominations as such holder shall request in the notice and
shall be registered in the name of the holder or, subject to Article 9, and such
other name as shall be designated in the notice.
This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the holder
or any other Person so designated to be named therein shall be deemed to have
become a holder of record of such shares of Warrant Stock for all purposes, as
of the date the notice, together with the payment of the Warrant Price and this
Warrant, are received by the Company as described above and all taxes required
to be paid by the holder, if any, pursuant to Section 2.2 prior to the issuance
of such shares of Warrant Stock have been paid. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate
or certificates representing Warrant Stock, deliver to the holder a new Warrant
evidencing the rights of the holder to purchase the unpurchased shares of
Warrant Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of the holder,
appropriate notation may be made on this Warrant and the same returned to the
holder.
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<PAGE>
Payment of the Warrant Price shall be made at the option of the
holder by (1) cash, (2) wire transfer to an account in a bank located in the
United States designated for such purpose by the Company, (3) certified or
official bank check, (4) transfer to the Company of shares of Common Stock,
including shares to be issued upon the exercise of this Warrant, or (5) any
combination of payment under items (1), (2), (3) or (4). In the event of the
application of shares of Common Stock to the payment of the Warrant Price, the
amount to be credited to the payment of the Warrant Price for each share of
Common Stock so applied shall be the average Market Price of the Common Stock
for the ten Trading Day period ending on the Trading Day immediately prior to
the payment date.
Section 2.2. PAYMENT OF TAXES. The Company shall pay all expenses in
connection with, and all taxes and other governmental charges that may be
imposed with respect to, the issue or delivery of Warrant Stock purchased
hereunder, unless such tax or charge is imposed by law upon the holder, in which
case such taxes or charges shall be paid by the holder. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for shares of Warrant Stock
issuable upon exercise of this Warrant in any name other than that of the
holder, and in such case the Company shall not be required to issue or deliver
any stock certificate until such tax or other charge has been paid or it has
been established to the reasonable satisfaction of the Company that no such tax
or other charge is due.
Section 2.3. FRACTIONAL SHARES. The Company shall not be required to
issue a fractional share of Warrant Stock upon exercise of this Warrant. As to
any fraction of a share which the holder of this Warrant would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to the same fraction of the
average Market Price of the Common Stock for the ten Trading Day period ending
on the Trading Day immediately prior to the payment date.
Section 2.4. RESTRICTION ON EXERCISE. Notwithstanding the provisions
of SECTION 2.1 to the contrary, but subject to SECTION 7.3 and the last sentence
of this SECTION 2.4, by its acceptance of this Warrant the holder hereby agrees
not to exercise this Warrant in whole or in part until September 8, 2001 unless
the Market Price of the Common Stock is at least $4.00 per share on each of the
ten (10) Trading Days immediately preceding the date that the holder delivers
its notice of exercise to the Company in accordance with SECTION 2.1.
Notwithstanding the foregoing sentence, this Warrant shall be exercisable in
whole or in part one Business Day prior to the consummation of a Change of
Control of the Company.
ARTICLE 3.
TRANSFER, DIVISION AND COMBINATION
Section 3.1. TRANSFER. Subject to compliance with Article 9,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the
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Company to be maintained for such purpose, upon surrender of this Warrant at the
principal office of the Company referred to in Section 2.1 or the office or
agency designated by the Company pursuant to Article 12, together with a written
assignment of this Warrant substantially in the form of EXHIBIT B hereto duly
executed by the holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall, subject to Article 9, execute
and deliver a new Warrant or Warrants in the name(s) of the assignee or
assignees and in the denomination(s) specified in such instrument of assignment,
and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be canceled. A Warrant,
if properly assigned in compliance with Article 9, may be exercised by a new
holder for the purchase of shares of Warrant Stock without having a new Warrant
issued.
Section 3.2. DIVISION AND COMBINATION. Subject to Article 9, this
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the holder or its agent or attorney. Subject to compliance with
Section 3.1 and with Article 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
Section 3.3. EXPENSES. The Company shall prepare, issue and
deliver at its own expense (other than transfer taxes) the new Warrant or
Warrants under this Article 3.
Section 3.4. MAINTENANCE OF BOOKS. The Company agrees to
maintain, at its aforesaid office or agencies, books for the registration,
recordation, issuance and the registration of transfer of the Warrants.
ARTICLE 4.
ADJUSTMENTS
The number of shares of Warrant Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this Article 4. The Company shall give the holder notice of any event described
below which requires an adjustment pursuant to this Article 4 at the time of
such event.
Section 4.1. STOCK DIVIDENDS, SUBDIVISIONS, COMBINATIONS AND
RECLASSIFICATIONS. If the Company shall at any time or from time to time
after the Issue Date:
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(a) pay a dividend or make a distribution on the outstanding
shares of Common Stock in shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock,
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or
(d) issue by reclassification of its shares of Common Stock any
shares of capital stock of the Company,
then, and in each such case, the number of shares of Warrant Stock issuable upon
exercise of the Warrant evidenced hereby immediately prior to such event or the
record date therefor, whichever is earlier, shall be adjusted so that the holder
of any Warrant evidenced hereby thereafter exercised shall be entitled to
receive the number of shares of Warrant Stock or other securities of the Company
which such holder would have owned or have been entitled to receive after the
happening of any of the events described above, had such Warrant been exercised
immediately prior to the happening of such event or the record date therefor,
whichever is earlier. An adjustment made pursuant to this Section 4.1 shall
become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of shares of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of any such subdivision, reclassification or
combination, at the close of business on the day upon which such corporate
action becomes effective.
Section 4.2. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER
THIS SECTION. The following provisions shall be applicable to the making of
adjustments provided for in this Article 4:
(a) For purposes of this Article 4, the number of shares of Common
Stock at any time outstanding shall not include any shares of Common Stock
then owned or held by or for the account of the Company.
(b) The term "dividend" as used in this Article 4 shall mean a
dividend or other distribution upon stock of the Company except pursuant
to the Rights Agreement dated as of May 22, 1995 (as amended from time to
time, the "Rights Agreement") between the Company and U.S. Stock Transfer
Corporation as rights agent. Notwithstanding anything in this Article 4 to
the contrary, the number of shares of Warrant Stock issuable upon exercise
of the Warrant evidenced hereby shall not be adjusted as a result of any
dividend, distribution or issuance of securities of the Company pursuant
to the Rights Agreement.
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(c) Notwithstanding anything in this Article 4 to the contrary, the
Company shall not be required to give effect to any adjustment in the
number of shares of Warrant Stock issuable upon exercise of the Warrant
evidenced hereby unless and until the net effect of one or more
adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change in the number of shares of
Warrant Stock issuable upon exercise of the Warrants evidenced hereby by
at least one-hundredth of one share of Warrant Stock, and when the
cumulative net effect of more than one adjustment so determined shall be
to change the number of shares of Warrant Stock issuable upon exercise of
the Warrant evidenced hereby by at least one-hundredth of one share of
Warrant Stock, such change in the number of shares of Warrant Stock
issuable upon exercise of the Warrant evidenced hereby shall thereupon be
given effect.
(d) If the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then, no adjustment in the number of shares of
Warrant Stock issuable upon exercise of the Warrant evidenced hereby shall
be required by reason of the taking of such record.
(e) There shall be no adjustment of the number of shares of Warrant
Stock issuable upon exercise of the Warrant evidenced hereby in case of
the issuance of any stock of the Company in a merger, reorganization,
acquisition or other similar transaction except as set forth in Section
4.3.
(f) Notwithstanding anything herein to the contrary, the Company
agrees not to enter into any transaction that, by reason of any adjustment
hereunder, would cause the Exercise Price to be less than the par value
per share of the Common Stock.
(g) Upon each adjustment to the number of shares of Warrant Stock
issuable upon exercise of the Warrant pursuant to Section 4.1, the
Exercise Price effective immediately prior to the making of such
adjustment shall thereafter be adjusted to be the amount obtained by (i)
multiplying (A) the applicable number of shares of Warrant Stock issuable
upon exercise of the Warrant immediately prior to such adjustment by (B)
the Exercise Price in effect immediately prior to such adjustment and (ii)
dividing the product so obtained by the number of shares of Warrant Stock
issuable upon exercise of the Warrant immediately after such adjustment.
Section 4.3. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION
OR DISPOSITION OF ASSETS. In case of any reorganization or reclassification of
outstanding shares of Common Stock (other than a reclassification covered by
Section 4.1), or in case of any
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consolidation or merger of the Company with or into another corporation, or in
the case of any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety (each of the foregoing
being referred to as a "Transaction"), this Warrant shall thereafter be
exercisable for, in lieu of the Common Stock issuable upon such exercise prior
to consummation of the Transaction, the kind and amount of shares of stock and
other securities and property receivable (including cash) upon the consummation
of the Transaction by a holder of that number of shares of Common Stock issuable
upon exercise of such Warrant immediately prior to the Transaction (including,
on a pro rata basis, the cash, securities or property received by holders of
Common Stock in any tender or exchange offer that is a step in the Transaction).
Section 4.4. NOTICES TO WARRANTHOLDERS. In case at any time or from
time to time, prior to the Expiration Date, the Company shall pay any dividend
or make any other distribution to the holders of its Common Stock, or shall
offer for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or any other right, or there shall be
any capital reorganization or reclassification of the Common Stock of the
Company or consolidation or merger of the Company with or into another
corporation, or any sale or conveyance to another corporation of the property of
the Company as an entirety or substantially as an entirety, or there shall be a
voluntary or involuntary dissolution, liquidation or winding up of the Company,
then, in any one or more of said cases the Company shall give at least 20 days'
prior written notice (the time of mailing of such notice shall be deemed to be
the time of giving thereof) to the registered holder of the Warrant evidenced
hereby at its address as shown on the books of the Company maintained by the
Transfer Agent thereof of the date on which (i) the books of the Company shall
close or a record shall be taken for such stock dividend, distribution or
subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution, liquidation or winding
up shall take place, as the case may be, provided that in the case of any
Transaction to which Section 4.3 applies the Company shall give at least 30
days' prior written notice as aforesaid. Such notice shall also specify the date
as of which the holders of the Common Stock of record shall participate in said
dividend, distribution or subscription rights or shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance or
participate in such dissolution, liquidation or winding up, as the case may be.
Failure to give such notice shall not invalidate any action so taken.
Section 4.5. CERTIFICATES. Upon any adjustment of the number of
shares of Warrant Stock issuable upon exercise of the Warrant evidenced hereby
or of the Exercise Price, then, and in each such case, the Company shall
promptly deliver to the holders of the Warrant a certificate signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Company setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the increased or decreased number
of shares of
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Warrant Stock issuable upon exercise of the Warrant evidenced hereby and the
Exercise Price then in effect following such adjustment.
ARTICLE 5.
NO IMPAIRMENT
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities 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 actions as may be necessary or appropriate to protect the rights of the
holder of the Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the Exercise
Price immediately prior to such increase in par value, (b) take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Warrant Stock, free and
clear of any liens, claims, encumbrances and restrictions (other than as
provided herein) upon the exercise of this Warrant, and (c) use its best efforts
to obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.
Upon the request of the holder of the Warrant, the Company will at
any time during the period this Warrant is outstanding acknowledge in writing,
in form satisfactory to the holder of this Warrant, the continuing validity of
this Warrant and the obligations of the Company hereunder.
ARTICLE 6.
RESERVATION AND AUTHORIZATION OF
COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
The Company covenants and agrees that, until the Expiration Date,
the Company shall at all times reserve and keep available for issue upon the
exercise of this Warrant such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full of this
Warrant. All shares of Common Stock which shall be so issuable, when issued upon
exercise of this Warrant and payment therefor in accordance with the terms of
this Warrant, shall be duly and validly issued, fully paid and nonassessable and
free and clear of any liens, claims and restrictions (other than as provided
herein). No stockholder of the Company has or shall have any preemptive rights
to subscribe for such shares of Common Stock.
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Before taking any action which would result in an adjustment in the
number of shares of Warrant Stock for which this Warrant is exercisable or in
the Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
ARTICLE 7.
REDEMPTION
Section 7.1. REDEMPTION RIGHT. All (but not less than all) of the
outstanding portion of this Warrant may be redeemed by the Company at any time
after September 8, 2001 at its option upon the notice described in Section 7.2
hereof at a price equal to $7,812 times the quotient of (a) the number of shares
of Warrant Stock for which this Warrant is then exercisable (adjusted as
applicable pursuant to Article 4) divided by (b) 48,438 (subject to adjustment
pursuant to Article 4) (the "Redemption Price"). The Company's redemption right
contained in the preceding sentence is subject to the condition that the Market
Price of the Common Stock is more than $10.00 per share on each of the 30
consecutive Trading Days immediately prior to the date on which the Company
delivers a redemption notice pursuant to Section 7.2 hereof.
Section 7.2. DATE FIXED FOR, AND NOTICE OF, REDEMPTION. In the event
the Company shall elect to redeem the outstanding portion of this Warrant
pursuant to Section 7.1 hereof, the Company shall fix a date for the redemption.
Notice of redemption shall be mailed by first class mail, postage prepaid, by
the Company or the Company's agent at its direction not less than 90 days from
the date fixed for redemption to the registered holders of the outstanding
portion of this Warrant to be redeemed at their last addresses as they appear on
the Company's registration books. Any notice mailed in the manner herein
provided shall be conclusively presumed to have been duly given whether or not
the registered holder received such notice.
Section 7.3. EXERCISE AFTER NOTICE OF REDEMPTION. The outstanding
portion of this Warrant called for redemption may be exercised in accordance
with Article 2 (other than pursuant to Section 2.4) of this Warrant at any time
after notice of redemption is given by the Company pursuant to Section 7.2
hereof and prior to the date fixed for redemption. On and after the redemption
date, the record holders of the outstanding portion of this Warrant shall have
no further rights except to receive, upon surrender of such holder's portion of
this outstanding Warrant, the Redemption Price.
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ARTICLE 8.
STOCK AND WARRANT TRANSFER BOOKS
The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.
ARTICLE 9.
RESTRICTIONS ON TRANSFERABILITY
This Warrant and the Restricted Stock shall not be transferred
before satisfaction of the conditions specified in this Article 9, which
conditions are, among other things, intended to ensure compliance with the
provisions of the Securities Act and state securities laws with respect to the
transfer of this Warrant or any Restricted Stock. The holder, by acceptance of
this Warrant, agrees to be bound by the provisions of this Article 9.
Section 9.1. RESTRICTIVE LEGEND. (a) Except as otherwise provided in
this Article 9, each certificate for Restricted Stock initially issued upon any
exercise of this Warrant, and each certificate for Restricted Stock issued to
any subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws
of any state and are subject to the conditions specified in a
certain Warrant dated September 8, 1999, originally issued by Iwerks
Entertainment, Inc. The shares represented by this certificate may
not be transferred in violation of such Act and laws, the rules and
regulations thereunder or the provisions of the Warrant. A copy of
the form of said Warrant is on file with the Secretary of Iwerks
Entertainment, Inc. The holder of this certificate, by acceptance of
this certificate, agrees to be bound by the provisions of such
Warrant."
(b) Except as otherwise provided in this Article 9, this Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state and are subject to the conditions
specified herein. This Warrant may not be sold or otherwise
transferred in the absence of such registration or an exemption
therefrom under the
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Securities Act of 1933, as amended, and under any such applicable
state laws, or in violation of the provisions of this Warrant."
Section 9.2. TRANSFERS. Prior to any transfer or attempted transfer
of this Warrant or any shares of Restricted Stock, the holder of this Warrant or
Restricted Stock shall give notice (a "Transfer Notice") to the Company of such
holder's intention to effect such transfer, describing the manner and
circumstances of the proposed transfer, and obtain from counsel a written
opinion addressed and reasonably satisfactory to the Company that the proposed
transfer of this Warrant or such Restricted Stock may be effected without
registration under the Securities Act and applicable state securities laws.
After receipt of the Transfer Notice and written opinion, the Company shall,
within two Business Days thereof, so notify the holder of this Warrant or such
Restricted Stock and such holder shall thereupon be entitled to transfer this
Warrant or such Restricted Stock, in accordance with the terms of the Transfer
Notice. Each certificate, if any, evidencing such shares of Restricted Stock
issued upon such transfer shall bear the restrictive legend set forth in Section
9.1(a), and each Warrant issued upon such transfer shall bear the restrictive
legend set forth in Section 9.1(b), unless in the written opinion of counsel
addressed to the Company such legend is not required in order to ensure
compliance with the Securities Act.
Section 9.3. NO TRANSFERS UNTIL SEPTEMBER 8, 2001. In addition to
the restrictions on transfer imposed by Section 9.1 hereof, unless this Warrant
can be exercised pursuant to Section 2.4, no holder of this Warrant may transfer
this Warrant in whole or in part until September 8, 2001, except for transfers
to a holder's Affiliates. The provisions of this Section 9.3 shall not restrict
the transfer of any Warrant Shares issued or issuable upon exercise of this
Warrant.
Section 9.4. TERMINATION OF RESTRICTIONS. Notwithstanding the
foregoing provisions of this Article 9, the restrictions imposed by this Article
9 upon the transferability of this Warrant and the Restricted Stock and the
legend requirements of Section 9.1 shall terminate as to this Warrant or
Restricted Stock (i) as to the Restricted Stock, when and so long as the resale
of such security shall have been effectively registered under the Securities Act
and disposed of pursuant thereto, or (ii) as to the Warrant and Restricted
Stock, when the holder of the Warrant or Restricted Stock shall have delivered
to the Company the written opinion of counsel addressed and reasonably
satisfactory to the Company stating that such legend is not required in order to
ensure compliance with the Securities Act. Whenever the restrictions imposed by
this Article 9 shall terminate as to any share of Restricted Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, at the Company's expense (except for any transfer taxes), a new
certificate representing such Common Stock not bearing the restrictive legend
set forth in Section 9.1(a).
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ARTICLE 10.
SUPPLYING INFORMATION
The Company shall cooperate with the holder of this Warrant and the
holder of Restricted Stock in supplying such information as may be reasonably
requested by such holder or reasonably necessary for such holder to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of an exemption from the
Securities Act for the sale of this Warrant or Restricted Stock.
ARTICLE 11.
LOSS OR MUTILATION
Upon receipt by the Company from any holder of evidence reasonably
satisfactory to the Company of the ownership of and the loss, theft, destruction
or mutilation of this Warrant and indemnity reasonably satisfactory to it and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to the holder.
ARTICLE 12.
OFFICE OF THE COMPANY
As long as any portion of this Warrant remains outstanding, the
Company shall maintain an office or agency (which may be the principal executive
offices of the Company) where this Warrant may be presented for exercise,
registration of transfer, division or combination as provided in this Warrant.
ARTICLE 13.
LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by the
holder to purchase shares of Warrant Stock, and no enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
the holder for the purchase price of any Warrant Stock or as a stockholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.
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ARTICLE 14.
REPRESENTATION OF HOLDER
The holder represents that it is acquiring the Warrant and the
Warrant Stock for the purpose of investment and not with a view to the resale or
distribution hereof or thereof; PROVIDED, that the disposition of holder's
property shall at all times be and remain within its control.
ARTICLE 15.
MISCELLANEOUS
Section 15.1. NONWAIVER. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the parties shall operate
as a waiver of such right or otherwise prejudice the parties' rights, powers or
remedies.
Section 15.2. NO RIGHTS AS STOCKHOLDER. The Person in whose name
this Warrant is registered shall be deemed the owner hereof and of this Warrant
evidenced hereby for all purposes. The registered holder of this Warrant shall
not be entitled to any rights whatsoever as a stockholder of the Company except
as herein provided.
Section 15.3. NOTICE GENERALLY. Any notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder to be
made pursuant to the provisions of this Warrant shall be sufficiently given or
made if in writing and either delivered in person with receipt acknowledged or
sent by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to the holder, at its last known address appearing on the
books of the Company maintained for such purpose.
(b) If to the Company:
Iwerks Entertainment, Inc.
4540 Valerio Street
Burbank, California 91505
Attention: Charles Goldwater
Fax No.: (818) 840-6192
with a copy to:
Troop Steuber Pasich Reddick & Tobey, LLP
2029 Century Park East, 24th Floor
Los Angeles, California 90067-3010
Attention: C. N. Franklin Reddick, Esq.
Fax No.: (310) 728-2204
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on
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which personally delivered, with receipt acknowledged, or three (3) Business
Days after the same shall have been deposited in the United States mail.
Section 15.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of
Section 3.1 and Article 9, (i) this Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and assigns of the holder, and (ii) the provisions of this
Warrant are intended to be for the benefit of all holders from time to time of
this Warrant, and shall be enforceable by any such holders.
Section 15.5. AMENDMENT. This Warrant may be modified or
amended or the provisions thereof waived with the written consent of the
Company and the holders of the majority of the portion of this Warrant then
outstanding.
Section 15.6. SEVERABILITY. Wherever possible, each provision of
this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Warrant.
Section 15.7. HEADINGS. The headings used in this Warrant are
for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
Section 15.8. GOVERNING LAW. This Warrant shall be governed by
and construed in accordance with the laws of the State of California, without
giving effect to conflicts of law principles thereof.
Section 15.10. MUTUAL WAIVER OF JURY TRIAL. Because disputes arising
in connection with complex financial transactions are most quickly and
economically resolved by an experienced and expert person and the parties wish
applicable state and federal laws to apply (rather than arbitration rules), the
parties desire that their disputes be resolved by a judge applying such
applicable laws. Therefore, to achieve the best combination of the benefits of
the judicial system and of arbitration, the Company and the holder waive all
right to trial by jury in any action, suit or proceeding brought to enforce or
defend any rights or remedies under this Warrant.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer on September 8, 1999.
IWERKS ENTERTAINMENT, INC.
By /s/ CHARLES GOLDWATER
-----------------------------------
Name: Charles Goldwater
Title: President and Chief
Executive Officer
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EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of _____ Shares of Common Stock (the
"Common Stock") of IWERKS ENTERTAINMENT, INC. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to __________________ whose address is
____________________ and, if such shares of Common Stock shall not include all
of the shares of Common Stock issuable as provided in this Warrant, that a new
Warrant of like tenor and date for the balance of the shares of Common Stock
issuable hereunder be delivered to the undersigned.
(Name of Registered Owner)
- ----------------------
(Signature of Registered owner)
- ----------------------
(Street Address)
- ----------------------
(City) (State) (Zip Code)
- ----------------------
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
and does hereby irrevocably constitute and appoint ____________ attorney-in-fact
to register such transfer on the books of IWERKS ENTERTAINMENT, INC. maintained
for the purpose, with full power of substitution in the premises.
Dated:
------------------------------
Name:
-------------------------------
Signature:
--------------------------
Witness:
----------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
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Exhibit 4.7
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY SUCH
APPLICABLE STATE LAWS, OR IN VIOLATION OF THE PROVISIONS OF THIS WARRANT.
WARRANT (TRANCHE C)
To Purchase 48,437 Shares of
Common Stock of
IWERKS ENTERTAINMENT, INC.
THIS IS TO CERTIFY THAT The Paul and Judy Schaeffer Living Trust
(the "Schaeffer Trust"), or its registered assigns, is entitled, at any time and
from time to time prior to September 7, 2004 (the "Expiration Date"), to
purchase from Iwerks Entertainment, Inc., a Delaware corporation (the
"Company"), a total of 48,437 shares of Common Stock, par value $0.001 per share
(the "Common Stock"), of the Company, subject to adjustment as provided herein,
at a purchase price of $1.69 per share (the "Exercise Price"), subject to
adjustment as set forth herein, all on the terms and conditions and pursuant to
the provisions hereinafter set forth.
This Warrant was issued to the Schaeffer Trust pursuant to the
Warrant Purchase Agreement dated as of September 8, 1999 (the "Agreement")
between the Company, the Schaeffer Trust and The Guber Family Trust dated
October 20, 1978. Capitalized terms used and not otherwise defined herein shall
have the meanings set forth for such terms in the Agreement.
ARTICLE 1.
DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Affiliate" with respect to any Person shall mean any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. For the
<PAGE>
purpose of this definition, the term "control" as used with respect to any
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise, and
"controlling" and "controlled by" shall have correlative meanings.
"Agreement" shall have the meaning set forth in the first
paragraph hereof.
"Business Day" shall mean any day that is not a Saturday or Sunday
or a day on which banks are required or permitted to be closed in Los Angeles,
California.
"Change of Control" means any of the following transactions or
series of related transactions: (i) the consolidation, merger or other business
combination of the Company with or into another Person (other than pursuant to a
merger effected solely for the purposes of changing the jurisdiction of
incorporation of the Company or a merger in which (x) shareholders of the
Company immediately prior to the closing of such merger continue to own in
excess of 50% of the voting power of the surviving corporation after the merger
and (y) a majority of the directors comprising the board of directors of the
surviving corporation after the closing of the merger were directors of the
Company immediately prior to the merger); (ii) the sale or transfer of all or
substantially all of the Company's assets; or (iii) the consummation of a
purchase, tender or exchange offer made to, and accepted by, the holders of more
than 50% of the economic interest in, or the combined voting power of all
classes of voting stock of, the Company.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock" shall have the meaning set forth in the first
paragraph hereof.
"Company" shall have the meaning set forth in the first paragraph
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exercise Price" shall have the meaning set forth in the first
paragraph hereof.
"Expiration Date" shall have the meaning set forth in the first
paragraph hereof.
"holder" shall mean each Person in whose name this Warrant or any
portion hereof is registered on the books of the Company maintained for such
purpose.
"Issue Date" shall mean September 8, 1999.
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<PAGE>
"Market Price" of the Common Stock on any Trading Day shall mean the
closing sale price per share of the Common Stock on the Principal Market or, if
the Common Stock is not then traded or quoted on a Principal Market, such other
trading or quotation facility on which the Common Stock is then listed or quoted
for trading. If the Common Stock is not listed or quoted for trading on any
trading or quotation facility, the "Market Price" of the Common Stock on any
Trading Day shall mean the fair market value per share of Common Stock as
determined in good faith by the Board of Directors of the Company.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, corporation or other entity and shall include
any successor (by merger or otherwise) of such entity.
"Principal Market" shall mean the national stock market or trading
facility on which the Common Stock is listed or quoted for trading.
"Restricted Stock" shall mean shares of Warrant Stock which are, or
which upon their issuance on the exercise of this Warrant would be, evidenced by
a certificate bearing the restrictive legend set forth in Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Third Party" means a person who is not related to or affiliated or
associated in any manner with the Schaeffer Trust, any of its affiliates or any
of their respective officers, directors or shareholders.
"Trading Day" means a day on which the Principal Market for the
Common Stock is open for the transaction of business or, if there is no
Principal Market, a Business Day.
"Transaction" shall have the meaning set forth in Section 4.3
hereof.
"Transfer" or "transfer" with respect to this Warrant or any Warrant
Stock shall mean any transfer, sale, encumbrance, hypothecation or other
disposition of this Warrant or any Warrant Stock or of any interest in either
thereof.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
"Warrant Price" shall mean an amount equal to (i) the number of
shares of Warrant Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Exercise Price as of the date of such
exercise.
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<PAGE>
"Warrant Stock" shall mean the shares of Common Stock purchased by
the holder of this Warrant upon the exercise thereof.
ARTICLE 2.
EXERCISE OF WARRANT
Section 2.1. MANNER OF EXERCISE. From and after the date hereof and
until 5:00 P.M., California time, on the Expiration Date, but subject to SECTION
2.4, the holder may exercise this Warrant for all or any part of the number of
shares of Warrant Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, the holder
shall deliver to the Company at its office at 4540 Valerio Street, Burbank,
California 91505, or at the office or agency designated by the Company pursuant
to Article 12, (i) a written notice of the holder's election to exercise this
Warrant, which notice shall specify the number of shares of Warrant Stock to be
purchased, (ii) payment of the Warrant Price in the manner provided below, and
(iii) this Warrant. Such notice shall be substantially in the form of the
subscription form appearing at the end of this Warrant as EXHIBIT A, duly
executed by or on behalf of the holder. Upon receipt thereof, the Company shall,
as promptly as practicable, and in any event within five (5) Business Days
thereafter, execute or cause to be executed and deliver or cause to be delivered
to the holder a certificate or certificates representing the aggregate number of
full shares of Warrant Stock issuable upon such exercise, together with cash in
lieu of any fraction of a share, as hereinafter provided. The stock certificate
or certificates so delivered shall be, to the extent possible, in such
denomination or denominations as such holder shall request in the notice and
shall be registered in the name of the holder or, subject to Article 9, and such
other name as shall be designated in the notice.
This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the holder
or any other Person so designated to be named therein shall be deemed to have
become a holder of record of such shares of Warrant Stock for all purposes, as
of the date the notice, together with the payment of the Warrant Price and this
Warrant, are received by the Company as described above and all taxes required
to be paid by the holder, if any, pursuant to Section 2.2 prior to the issuance
of such shares of Warrant Stock have been paid. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate
or certificates representing Warrant Stock, deliver to the holder a new Warrant
evidencing the rights of the holder to purchase the unpurchased shares of
Warrant Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of the holder,
appropriate notation may be made on this Warrant and the same returned to the
holder.
Page 4
<PAGE>
Payment of the Warrant Price shall be made at the option of the
holder by (1) cash, (2) wire transfer to an account in a bank located in the
United States designated for such purpose by the Company, (3) certified or
official bank check, (4) transfer to the Company of shares of Common Stock,
including shares to be issued upon the exercise of this Warrant, or (5) any
combination of payment under items (1), (2), (3) or (4). In the event of the
application of shares of Common Stock to the payment of the Warrant Price, the
amount to be credited to the payment of the Warrant Price for each share of
Common Stock so applied shall be the average Market Price of the Common Stock
for the ten Trading Day period ending on the Trading Day immediately prior to
the payment date.
Section 2.2. PAYMENT OF TAXES. The Company shall pay all expenses in
connection with, and all taxes and other governmental charges that may be
imposed with respect to, the issue or delivery of Warrant Stock purchased
hereunder, unless such tax or charge is imposed by law upon the holder, in which
case such taxes or charges shall be paid by the holder. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for shares of Warrant Stock
issuable upon exercise of this Warrant in any name other than that of the
holder, and in such case the Company shall not be required to issue or deliver
any stock certificate until such tax or other charge has been paid or it has
been established to the reasonable satisfaction of the Company that no such tax
or other charge is due.
Section 2.3. FRACTIONAL SHARES. The Company shall not be required to
issue a fractional share of Warrant Stock upon exercise of this Warrant. As to
any fraction of a share which the holder of this Warrant would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to the same fraction of the
average Market Price of the Common Stock for the ten Trading Day period ending
on the Trading Day immediately prior to the payment date.
Section 2.4. RESTRICTION ON EXERCISE. Notwithstanding the provisions
of SECTION 2.1 to the contrary, but subject to SECTION 7.3 and the last sentence
of this SECTION 2.4, by its acceptance of this Warrant the holder hereby agrees
not to exercise this Warrant in whole or in part until September 8, 2001 unless
the Market Price of the Common Stock is at least $4.00 per share on each of the
ten (10) Trading Days immediately preceding the date that the holder delivers
its notice of exercise to the Company in accordance with SECTION 2.1.
Notwithstanding the foregoing sentence, this Warrant shall be exercisable in
whole or in part one Business Day prior to the consummation of a Change of
Control of the Company.
ARTICLE 3.
TRANSFER, DIVISION AND COMBINATION
Section 3.1. TRANSFER. Subject to compliance with Article 9,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the
Page 5
<PAGE>
Company to be maintained for such purpose, upon surrender of this Warrant at the
principal office of the Company referred to in Section 2.1 or the office or
agency designated by the Company pursuant to Article 12, together with a written
assignment of this Warrant substantially in the form of EXHIBIT B hereto duly
executed by the holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall, subject to Article 9, execute
and deliver a new Warrant or Warrants in the name(s) of the assignee or
assignees and in the denomination(s) specified in such instrument of assignment,
and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be canceled. A Warrant,
if properly assigned in compliance with Article 9, may be exercised by a new
holder for the purchase of shares of Warrant Stock without having a new Warrant
issued.
Section 3.2. DIVISION AND COMBINATION. Subject to Article 9, this
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the holder or its agent or attorney. Subject to compliance with
Section 3.1 and with Article 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
Section 3.3. EXPENSES. The Company shall prepare, issue and
deliver at its own expense (other than transfer taxes) the new Warrant or
Warrants under this Article 3.
Section 3.4. MAINTENANCE OF BOOKS. The Company agrees to
maintain, at its aforesaid office or agencies, books for the registration,
recordation, issuance and the registration of transfer of the Warrants.
ARTICLE 4.
ADJUSTMENTS
The number of shares of Warrant Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this Article 4. The Company shall give the holder notice of any event described
below which requires an adjustment pursuant to this Article 4 at the time of
such event.
Section 4.1. STOCK DIVIDENDS, SUBDIVISIONS, COMBINATIONS AND
RECLASSIFICATIONS. If the Company shall at any time or from time to time
after the Issue Date:
Page 6
<PAGE>
(a) pay a dividend or make a distribution on the outstanding
shares of Common Stock in shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock,
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or
(d) issue by reclassification of its shares of Common Stock any
shares of capital stock of the Company,
then, and in each such case, the number of shares of Warrant Stock issuable upon
exercise of the Warrant evidenced hereby immediately prior to such event or the
record date therefor, whichever is earlier, shall be adjusted so that the holder
of any Warrant evidenced hereby thereafter exercised shall be entitled to
receive the number of shares of Warrant Stock or other securities of the Company
which such holder would have owned or have been entitled to receive after the
happening of any of the events described above, had such Warrant been exercised
immediately prior to the happening of such event or the record date therefor,
whichever is earlier. An adjustment made pursuant to this Section 4.1 shall
become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of shares of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of any such subdivision, reclassification or
combination, at the close of business on the day upon which such corporate
action becomes effective.
Section 4.2. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER
THIS SECTION. The following provisions shall be applicable to the making of
adjustments provided for in this Article 4:
(a) For purposes of this Article 4, the number of shares of Common
Stock at any time outstanding shall not include any shares of Common Stock
then owned or held by or for the account of the Company.
(b) The term "dividend" as used in this Article 4 shall mean a
dividend or other distribution upon stock of the Company except pursuant
to the Rights Agreement dated as of May 22, 1995 (as amended from time to
time, the "Rights Agreement") between the Company and U.S. Stock Transfer
Corporation as rights agent. Notwithstanding anything in this Article 4 to
the contrary, the number of shares of Warrant Stock issuable upon exercise
of the Warrant evidenced hereby shall not be adjusted as a result of any
dividend, distribution or issuance of securities of the Company pursuant
to the Rights Agreement.
Page 7
<PAGE>
(c) Notwithstanding anything in this Article 4 to the contrary, the
Company shall not be required to give effect to any adjustment in the
number of shares of Warrant Stock issuable upon exercise of the Warrant
evidenced hereby unless and until the net effect of one or more
adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change in the number of shares of
Warrant Stock issuable upon exercise of the Warrants evidenced hereby by
at least one-hundredth of one share of Warrant Stock, and when the
cumulative net effect of more than one adjustment so determined shall be
to change the number of shares of Warrant Stock issuable upon exercise of
the Warrant evidenced hereby by at least one-hundredth of one share of
Warrant Stock, such change in the number of shares of Warrant Stock
issuable upon exercise of the Warrant evidenced hereby shall thereupon be
given effect.
(d) If the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then, no adjustment in the number of shares of
Warrant Stock issuable upon exercise of the Warrant evidenced hereby shall
be required by reason of the taking of such record.
(e) There shall be no adjustment of the number of shares of Warrant
Stock issuable upon exercise of the Warrant evidenced hereby in case of
the issuance of any stock of the Company in a merger, reorganization,
acquisition or other similar transaction except as set forth in Section
4.3.
(f) Notwithstanding anything herein to the contrary, the Company
agrees not to enter into any transaction that, by reason of any adjustment
hereunder, would cause the Exercise Price to be less than the par value
per share of the Common Stock.
(g) Upon each adjustment to the number of shares of Warrant Stock
issuable upon exercise of the Warrant pursuant to Section 4.1, the
Exercise Price effective immediately prior to the making of such
adjustment shall thereafter be adjusted to be the amount obtained by (i)
multiplying (A) the applicable number of shares of Warrant Stock issuable
upon exercise of the Warrant immediately prior to such adjustment by (B)
the Exercise Price in effect immediately prior to such adjustment and (ii)
dividing the product so obtained by the number of shares of Warrant Stock
issuable upon exercise of the Warrant immediately after such adjustment.
Section 4.3. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION
OR DISPOSITION OF ASSETS. In case of any reorganization or reclassification of
outstanding shares of Common Stock (other than a reclassification covered by
Section 4.1), or in case of any
Page 8
<PAGE>
consolidation or merger of the Company with or into another corporation, or in
the case of any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety (each of the foregoing
being referred to as a "Transaction"), this Warrant shall thereafter be
exercisable for, in lieu of the Common Stock issuable upon such exercise prior
to consummation of the Transaction, the kind and amount of shares of stock and
other securities and property receivable (including cash) upon the consummation
of the Transaction by a holder of that number of shares of Common Stock issuable
upon exercise of such Warrant immediately prior to the Transaction (including,
on a pro rata basis, the cash, securities or property received by holders of
Common Stock in any tender or exchange offer that is a step in the Transaction).
Section 4.4. NOTICES TO WARRANTHOLDERS. In case at any time or from
time to time, prior to the Expiration Date, the Company shall pay any dividend
or make any other distribution to the holders of its Common Stock, or shall
offer for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or any other right, or there shall be
any capital reorganization or reclassification of the Common Stock of the
Company or consolidation or merger of the Company with or into another
corporation, or any sale or conveyance to another corporation of the property of
the Company as an entirety or substantially as an entirety, or there shall be a
voluntary or involuntary dissolution, liquidation or winding up of the Company,
then, in any one or more of said cases the Company shall give at least 20 days'
prior written notice (the time of mailing of such notice shall be deemed to be
the time of giving thereof) to the registered holder of the Warrant evidenced
hereby at its address as shown on the books of the Company maintained by the
Transfer Agent thereof of the date on which (i) the books of the Company shall
close or a record shall be taken for such stock dividend, distribution or
subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution, liquidation or winding
up shall take place, as the case may be, provided that in the case of any
Transaction to which Section 4.3 applies the Company shall give at least 30
days' prior written notice as aforesaid. Such notice shall also specify the date
as of which the holders of the Common Stock of record shall participate in said
dividend, distribution or subscription rights or shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance or
participate in such dissolution, liquidation or winding up, as the case may be.
Failure to give such notice shall not invalidate any action so taken.
Section 4.5. CERTIFICATES. Upon any adjustment of the number of
shares of Warrant Stock issuable upon exercise of the Warrant evidenced hereby
or of the Exercise Price, then, and in each such case, the Company shall
promptly deliver to the holders of the Warrant a certificate signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Company setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the increased or decreased number
of shares of
Page 9
<PAGE>
Warrant Stock issuable upon exercise of the Warrant evidenced hereby and the
Exercise Price then in effect following such adjustment.
ARTICLE 5.
NO IMPAIRMENT
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities 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 actions as may be necessary or appropriate to protect the rights of the
holder of the Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the Exercise
Price immediately prior to such increase in par value, (b) take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Warrant Stock, free and
clear of any liens, claims, encumbrances and restrictions (other than as
provided herein) upon the exercise of this Warrant, and (c) use its best efforts
to obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.
Upon the request of the holder of the Warrant, the Company will at
any time during the period this Warrant is outstanding acknowledge in writing,
in form satisfactory to the holder of this Warrant, the continuing validity of
this Warrant and the obligations of the Company hereunder.
ARTICLE 6.
RESERVATION AND AUTHORIZATION OF
COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
The Company covenants and agrees that, until the Expiration Date,
the Company shall at all times reserve and keep available for issue upon the
exercise of this Warrant such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full of this
Warrant. All shares of Common Stock which shall be so issuable, when issued upon
exercise of this Warrant and payment therefor in accordance with the terms of
this Warrant, shall be duly and validly issued, fully paid and nonassessable and
free and clear of any liens, claims and restrictions (other than as provided
herein). No stockholder of the Company has or shall have any preemptive rights
to subscribe for such shares of Common Stock.
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<PAGE>
Before taking any action which would result in an adjustment in the
number of shares of Warrant Stock for which this Warrant is exercisable or in
the Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
ARTICLE 7.
REDEMPTION
Section 7.1. REDEMPTION RIGHT. All (but not less than all) of the
outstanding portion of this Warrant may be redeemed by the Company at any time
after September 8, 2001 at its option upon the notice described in Section 7.2
hereof at a price equal to $7,812 times the quotient of (a) the number of shares
of Warrant Stock for which this Warrant is then exercisable (adjusted as
applicable pursuant to Article 4) divided by (b) 48,437 (subject to adjustment
pursuant to Article 4) (the "Redemption Price"). The Company's redemption right
contained in the preceding sentence is subject to the condition that the Market
Price of the Common Stock is more than $10.00 per share on each of the 30
consecutive Trading Days immediately prior to the date on which the Company
delivers a redemption notice pursuant to Section 7.2 hereof.
Section 7.2. DATE FIXED FOR, AND NOTICE OF, REDEMPTION. In the event
the Company shall elect to redeem the outstanding portion of this Warrant
pursuant to Section 7.1 hereof, the Company shall fix a date for the redemption.
Notice of redemption shall be mailed by first class mail, postage prepaid, by
the Company or the Company's agent at its direction not less than 90 days from
the date fixed for redemption to the registered holders of the outstanding
portion of this Warrant to be redeemed at their last addresses as they appear on
the Company's registration books. Any notice mailed in the manner herein
provided shall be conclusively presumed to have been duly given whether or not
the registered holder received such notice.
Section 7.3. EXERCISE AFTER NOTICE OF REDEMPTION. The outstanding
portion of this Warrant called for redemption may be exercised in accordance
with Article 2 (other than pursuant to Section 2.4) of this Warrant at any time
after notice of redemption is given by the Company pursuant to Section 7.2
hereof and prior to the date fixed for redemption. On and after the redemption
date, the record holders of the outstanding portion of this Warrant shall have
no further rights except to receive, upon surrender of such holder's portion of
this outstanding Warrant, the Redemption Price.
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<PAGE>
ARTICLE 8.
STOCK AND WARRANT TRANSFER BOOKS
The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.
ARTICLE 9.
RESTRICTIONS ON TRANSFERABILITY
This Warrant and the Restricted Stock shall not be transferred
before satisfaction of the conditions specified in this Article 9, which
conditions are, among other things, intended to ensure compliance with the
provisions of the Securities Act and state securities laws with respect to the
transfer of this Warrant or any Restricted Stock. The holder, by acceptance of
this Warrant, agrees to be bound by the provisions of this Article 9.
Section 9.1. RESTRICTIVE LEGEND. (a) Except as otherwise provided in
this Article 9, each certificate for Restricted Stock initially issued upon any
exercise of this Warrant, and each certificate for Restricted Stock issued to
any subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws
of any state and are subject to the conditions specified in a
certain Warrant dated September 8, 1999, originally issued by Iwerks
Entertainment, Inc. The shares represented by this certificate may
not be transferred in violation of such Act and laws, the rules and
regulations thereunder or the provisions of the Warrant. A copy of
the form of said Warrant is on file with the Secretary of Iwerks
Entertainment, Inc. The holder of this certificate, by acceptance of
this certificate, agrees to be bound by the provisions of such
Warrant."
(b) Except as otherwise provided in this Article 9, this Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state and are subject to the conditions
specified herein. This Warrant may not be sold or otherwise
transferred in the absence of such registration or an exemption
therefrom under the
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Securities Act of 1933, as amended, and under any such applicable
state laws, or in violation of the provisions of this Warrant."
Section 9.2. TRANSFERS. Prior to any transfer or attempted transfer
of this Warrant or any shares of Restricted Stock, the holder of this Warrant or
Restricted Stock shall give notice (a "Transfer Notice") to the Company of such
holder's intention to effect such transfer, describing the manner and
circumstances of the proposed transfer, and obtain from counsel a written
opinion addressed and reasonably satisfactory to the Company that the proposed
transfer of this Warrant or such Restricted Stock may be effected without
registration under the Securities Act and applicable state securities laws.
After receipt of the Transfer Notice and written opinion, the Company shall,
within two Business Days thereof, so notify the holder of this Warrant or such
Restricted Stock and such holder shall thereupon be entitled to transfer this
Warrant or such Restricted Stock, in accordance with the terms of the Transfer
Notice. Each certificate, if any, evidencing such shares of Restricted Stock
issued upon such transfer shall bear the restrictive legend set forth in Section
9.1(a), and each Warrant issued upon such transfer shall bear the restrictive
legend set forth in Section 9.1(b), unless in the written opinion of counsel
addressed to the Company such legend is not required in order to ensure
compliance with the Securities Act.
Section 9.3. NO TRANSFERS UNTIL SEPTEMBER 8, 2001. In addition to
the restrictions on transfer imposed by Section 9.1 hereof, unless this Warrant
can be exercised pursuant to Section 2.4, no holder of this Warrant may transfer
this Warrant in whole or in part until September 8, 2001, except for transfers
to a holder's Affiliates. The provisions of this Section 9.3 shall not restrict
the transfer of any Warrant Shares issued or issuable upon exercise of this
Warrant.
Section 9.4. TERMINATION OF RESTRICTIONS. Notwithstanding the
foregoing provisions of this Article 9, the restrictions imposed by this Article
9 upon the transferability of this Warrant and the Restricted Stock and the
legend requirements of Section 9.1 shall terminate as to this Warrant or
Restricted Stock (i) as to the Restricted Stock, when and so long as the resale
of such security shall have been effectively registered under the Securities Act
and disposed of pursuant thereto, or (ii) as to the Warrant and Restricted
Stock, when the holder of the Warrant or Restricted Stock shall have delivered
to the Company the written opinion of counsel addressed and reasonably
satisfactory to the Company stating that such legend is not required in order to
ensure compliance with the Securities Act. Whenever the restrictions imposed by
this Article 9 shall terminate as to any share of Restricted Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, at the Company's expense (except for any transfer taxes), a new
certificate representing such Common Stock not bearing the restrictive legend
set forth in Section 9.1(a).
Page 13
<PAGE>
ARTICLE 10.
SUPPLYING INFORMATION
The Company shall cooperate with the holder of this Warrant and the
holder of Restricted Stock in supplying such information as may be reasonably
requested by such holder or reasonably necessary for such holder to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of an exemption from the
Securities Act for the sale of this Warrant or Restricted Stock.
ARTICLE 11.
LOSS OR MUTILATION
Upon receipt by the Company from any holder of evidence reasonably
satisfactory to the Company of the ownership of and the loss, theft, destruction
or mutilation of this Warrant and indemnity reasonably satisfactory to it and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to the holder.
ARTICLE 12.
OFFICE OF THE COMPANY
As long as any portion of this Warrant remains outstanding, the
Company shall maintain an office or agency (which may be the principal executive
offices of the Company) where this Warrant may be presented for exercise,
registration of transfer, division or combination as provided in this Warrant.
ARTICLE 13.
LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by the
holder to purchase shares of Warrant Stock, and no enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
the holder for the purchase price of any Warrant Stock or as a stockholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.
ARTICLE 14.
REPRESENTATION OF HOLDER
The holder represents that it is acquiring the Warrant and the
Warrant Stock for the purpose of investment and not with a view to the resale or
distribution hereof or thereof; PROVIDED, that the disposition of holder's
property shall at all times be and remain within its control.
Page 14
<PAGE>
ARTICLE 15.
MISCELLANEOUS
Section 15.1. NONWAIVER. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the parties shall operate
as a waiver of such right or otherwise prejudice the parties' rights, powers or
remedies.
Section 15.2. NO RIGHTS AS STOCKHOLDER. The Person in whose name
this Warrant is registered shall be deemed the owner hereof and of this Warrant
evidenced hereby for all purposes. The registered holder of this Warrant shall
not be entitled to any rights whatsoever as a stockholder of the Company except
as herein provided.
Section 15.3. NOTICE GENERALLY. Any notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder to be
made pursuant to the provisions of this Warrant shall be sufficiently given or
made if in writing and either delivered in person with receipt acknowledged or
sent by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to the holder, at its last known address appearing on the
books of the Company maintained for such purpose.
(b) If to the Company:
Iwerks Entertainment, Inc.
4540 Valerio Street
Burbank, California 91505
Attention: Charles Goldwater
Fax No.: (818) 840-6192
with a copy to:
Troop Steuber Pasich Reddick & Tobey, LLP
2029 Century Park East, 24th Floor
Los Angeles, California 90067-3010
Attention: C. N. Franklin Reddick, Esq.
Fax No.: (310) 728-2204
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on
Page 15
<PAGE>
which personally delivered, with receipt acknowledged, or three (3) Business
Days after the same shall have been deposited in the United States mail.
Section 15.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of
Section 3.1 and Article 9, (i) this Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and assigns of the holder, and (ii) the provisions of this
Warrant are intended to be for the benefit of all holders from time to time of
this Warrant, and shall be enforceable by any such holders.
Section 15.5. AMENDMENT. This Warrant may be modified or
amended or the provisions thereof waived with the written consent of the
Company and the holders of the majority of the portion of this Warrant then
outstanding.
Section 15.6. SEVERABILITY. Wherever possible, each provision of
this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Warrant.
Section 15.7. HEADINGS. The headings used in this Warrant are
for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
Section 15.8. GOVERNING LAW. This Warrant shall be governed by
and construed in accordance with the laws of the State of California, without
giving effect to conflicts of law principles thereof.
Section 15.10. MUTUAL WAIVER OF JURY TRIAL. Because disputes arising
in connection with complex financial transactions are most quickly and
economically resolved by an experienced and expert person and the parties wish
applicable state and federal laws to apply (rather than arbitration rules), the
parties desire that their disputes be resolved by a judge applying such
applicable laws. Therefore, to achieve the best combination of the benefits of
the judicial system and of arbitration, the Company and the holder waive all
right to trial by jury in any action, suit or proceeding brought to enforce or
defend any rights or remedies under this Warrant.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer on September 8, 1999.
IWERKS ENTERTAINMENT, INC.
By /s/ CHARLES GOLDWATER
-----------------------------------
Name: Charles Goldwater
Title: President and Chief
Executive Officer
Page 17
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of _____ Shares of Common Stock (the
"Common Stock") of IWERKS ENTERTAINMENT, INC. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to __________________ whose address is
____________________ and, if such shares of Common Stock shall not include all
of the shares of Common Stock issuable as provided in this Warrant, that a new
Warrant of like tenor and date for the balance of the shares of Common Stock
issuable hereunder be delivered to the undersigned.
(Name of Registered Owner)
- ----------------------
(Signature of Registered owner)
- ----------------------
(Street Address)
- ----------------------
(City) (State) (Zip Code)
- ----------------------
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
and does hereby irrevocably constitute and appoint ____________ attorney-in-fact
to register such transfer on the books of IWERKS ENTERTAINMENT, INC. maintained
for the purpose, with full power of substitution in the premises.
Dated:
------------------------------
Name:
-------------------------------
Signature:
--------------------------
Witness:
----------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
Page 19
Exhibit 4.8
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY SUCH
APPLICABLE STATE LAWS, OR IN VIOLATION OF THE PROVISIONS OF THIS WARRANT.
WARRANT (TRANCHE D)
To Purchase 48,437 Shares of
Common Stock of
IWERKS ENTERTAINMENT, INC.
THIS IS TO CERTIFY THAT The Paul and Judy Schaeffer Living Trust
(the "Schaeffer Trust"), or its registered assigns, is entitled, at any time and
from time to time prior to September 7, 2004 (the "Expiration Date"), to
purchase from Iwerks Entertainment, Inc., a Delaware corporation (the
"Company"), a total of 48,437 shares of Common Stock, par value $0.001 per share
(the "Common Stock"), of the Company, subject to adjustment as provided herein,
at a purchase price of $3.00 per share (the "Exercise Price"), subject to
adjustment as set forth herein, all on the terms and conditions and pursuant to
the provisions hereinafter set forth.
This Warrant was issued to the Schaeffer Trust pursuant to the
Warrant Purchase Agreement dated as of September 8, 1999 (the "Agreement")
between the Company, the Schaeffer Trust and The Guber Family Trust dated
October 20, 1978. Capitalized terms used and not otherwise defined herein shall
have the meanings set forth for such terms in the Agreement.
ARTICLE 1.
DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Affiliate" with respect to any Person shall mean any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. For the
<PAGE>
purpose of this definition, the term "control" as used with respect to any
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise, and
"controlling" and "controlled by" shall have correlative meanings.
"Agreement" shall have the meaning set forth in the first
paragraph hereof.
"Business Day" shall mean any day that is not a Saturday or Sunday
or a day on which banks are required or permitted to be closed in Los Angeles,
California.
"Change of Control" means any of the following transactions or
series of related transactions: (i) the consolidation, merger or other business
combination of the Company with or into another Person (other than pursuant to a
merger effected solely for the purposes of changing the jurisdiction of
incorporation of the Company or a merger in which (x) shareholders of the
Company immediately prior to the closing of such merger continue to own in
excess of 50% of the voting power of the surviving corporation after the merger
and (y) a majority of the directors comprising the board of directors of the
surviving corporation after the closing of the merger were directors of the
Company immediately prior to the merger); (ii) the sale or transfer of all or
substantially all of the Company's assets; or (iii) the consummation of a
purchase, tender or exchange offer made to, and accepted by, the holders of more
than 50% of the economic interest in, or the combined voting power of all
classes of voting stock of, the Company.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock" shall have the meaning set forth in the first
paragraph hereof.
"Company" shall have the meaning set forth in the first paragraph
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exercise Price" shall have the meaning set forth in the first
paragraph hereof.
"Expiration Date" shall have the meaning set forth in the first
paragraph hereof.
"holder" shall mean each Person in whose name this Warrant or any
portion hereof is registered on the books of the Company maintained for such
purpose.
"Issue Date" shall mean September 8, 1999.
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<PAGE>
"Market Price" of the Common Stock on any Trading Day shall mean the
closing sale price per share of the Common Stock on the Principal Market or, if
the Common Stock is not then traded or quoted on a Principal Market, such other
trading or quotation facility on which the Common Stock is then listed or quoted
for trading. If the Common Stock is not listed or quoted for trading on any
trading or quotation facility, the "Market Price" of the Common Stock on any
Trading Day shall mean the fair market value per share of Common Stock as
determined in good faith by the Board of Directors of the Company.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, corporation or other entity and shall include
any successor (by merger or otherwise) of such entity.
"Principal Market" shall mean the national stock market or trading
facility on which the Common Stock is listed or quoted for trading.
"Restricted Stock" shall mean shares of Warrant Stock which are, or
which upon their issuance on the exercise of this Warrant would be, evidenced by
a certificate bearing the restrictive legend set forth in Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Third Party" means a person who is not related to or affiliated or
associated in any manner with the Schaeffer Trust, any of its affiliates or any
of their respective officers, directors or shareholders.
"Trading Day" means a day on which the Principal Market for the
Common Stock is open for the transaction of business or, if there is no
Principal Market, a Business Day.
"Transaction" shall have the meaning set forth in Section 4.3
hereof.
"Transfer" or "transfer" with respect to this Warrant or any Warrant
Stock shall mean any transfer, sale, encumbrance, hypothecation or other
disposition of this Warrant or any Warrant Stock or of any interest in either
thereof.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
"Warrant Price" shall mean an amount equal to (i) the number of
shares of Warrant Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Exercise Price as of the date of such
exercise.
Page 3
<PAGE>
"Warrant Stock" shall mean the shares of Common Stock purchased by
the holder of this Warrant upon the exercise thereof.
ARTICLE 2.
EXERCISE OF WARRANT
Section 2.1. MANNER OF EXERCISE. From and after the date hereof and
until 5:00 P.M., California time, on the Expiration Date, but subject to SECTION
2.4, the holder may exercise this Warrant for all or any part of the number of
shares of Warrant Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, the holder
shall deliver to the Company at its office at 4540 Valerio Street, Burbank,
California 91505, or at the office or agency designated by the Company pursuant
to Article 12, (i) a written notice of the holder's election to exercise this
Warrant, which notice shall specify the number of shares of Warrant Stock to be
purchased, (ii) payment of the Warrant Price in the manner provided below, and
(iii) this Warrant. Such notice shall be substantially in the form of the
subscription form appearing at the end of this Warrant as EXHIBIT A, duly
executed by or on behalf of the holder. Upon receipt thereof, the Company shall,
as promptly as practicable, and in any event within five (5) Business Days
thereafter, execute or cause to be executed and deliver or cause to be delivered
to the holder a certificate or certificates representing the aggregate number of
full shares of Warrant Stock issuable upon such exercise, together with cash in
lieu of any fraction of a share, as hereinafter provided. The stock certificate
or certificates so delivered shall be, to the extent possible, in such
denomination or denominations as such holder shall request in the notice and
shall be registered in the name of the holder or, subject to Article 9, and such
other name as shall be designated in the notice.
This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the holder
or any other Person so designated to be named therein shall be deemed to have
become a holder of record of such shares of Warrant Stock for all purposes, as
of the date the notice, together with the payment of the Warrant Price and this
Warrant, are received by the Company as described above and all taxes required
to be paid by the holder, if any, pursuant to Section 2.2 prior to the issuance
of such shares of Warrant Stock have been paid. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate
or certificates representing Warrant Stock, deliver to the holder a new Warrant
evidencing the rights of the holder to purchase the unpurchased shares of
Warrant Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of the holder,
appropriate notation may be made on this Warrant and the same returned to the
holder.
Page 4
<PAGE>
Payment of the Warrant Price shall be made at the option of the
holder by (1) cash, (2) wire transfer to an account in a bank located in the
United States designated for such purpose by the Company, (3) certified or
official bank check, (4) transfer to the Company of shares of Common Stock,
including shares to be issued upon the exercise of this Warrant, or (5) any
combination of payment under items (1), (2), (3) or (4). In the event of the
application of shares of Common Stock to the payment of the Warrant Price, the
amount to be credited to the payment of the Warrant Price for each share of
Common Stock so applied shall be the average Market Price of the Common Stock
for the ten Trading Day period ending on the Trading Day immediately prior to
the payment date.
Section 2.2. PAYMENT OF TAXES. The Company shall pay all expenses in
connection with, and all taxes and other governmental charges that may be
imposed with respect to, the issue or delivery of Warrant Stock purchased
hereunder, unless such tax or charge is imposed by law upon the holder, in which
case such taxes or charges shall be paid by the holder. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for shares of Warrant Stock
issuable upon exercise of this Warrant in any name other than that of the
holder, and in such case the Company shall not be required to issue or deliver
any stock certificate until such tax or other charge has been paid or it has
been established to the reasonable satisfaction of the Company that no such tax
or other charge is due.
Section 2.3. FRACTIONAL SHARES. The Company shall not be required to
issue a fractional share of Warrant Stock upon exercise of this Warrant. As to
any fraction of a share which the holder of this Warrant would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to the same fraction of the
average Market Price of the Common Stock for the ten Trading Day period ending
on the Trading Day immediately prior to the payment date.
Section 2.4. RESTRICTION ON EXERCISE. Notwithstanding the provisions
of SECTION 2.1 to the contrary, but subject to SECTION 7.3 and the last sentence
of this SECTION 2.4, by its acceptance of this Warrant the holder hereby agrees
not to exercise this Warrant in whole or in part until September 8, 2001 unless
the Market Price of the Common Stock is at least $4.00 per share on each of the
ten (10) Trading Days immediately preceding the date that the holder delivers
its notice of exercise to the Company in accordance with SECTION 2.1.
Notwithstanding the foregoing sentence, this Warrant shall be exercisable in
whole or in part one Business Day prior to the consummation of a Change of
Control of the Company.
ARTICLE 3.
TRANSFER, DIVISION AND COMBINATION
Section 3.1. TRANSFER. Subject to compliance with Article 9,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the
Page 5
<PAGE>
Company to be maintained for such purpose, upon surrender of this Warrant at the
principal office of the Company referred to in Section 2.1 or the office or
agency designated by the Company pursuant to Article 12, together with a written
assignment of this Warrant substantially in the form of EXHIBIT B hereto duly
executed by the holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall, subject to Article 9, execute
and deliver a new Warrant or Warrants in the name(s) of the assignee or
assignees and in the denomination(s) specified in such instrument of assignment,
and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be canceled. A Warrant,
if properly assigned in compliance with Article 9, may be exercised by a new
holder for the purchase of shares of Warrant Stock without having a new Warrant
issued.
Section 3.2. DIVISION AND COMBINATION. Subject to Article 9, this
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the holder or its agent or attorney. Subject to compliance with
Section 3.1 and with Article 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
Section 3.3. EXPENSES. The Company shall prepare, issue and
deliver at its own expense (other than transfer taxes) the new Warrant or
Warrants under this Article 3.
Section 3.4. MAINTENANCE OF BOOKS. The Company agrees to
maintain, at its aforesaid office or agencies, books for the registration,
recordation, issuance and the registration of transfer of the Warrants.
ARTICLE 4.
ADJUSTMENTS
The number of shares of Warrant Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this Article 4. The Company shall give the holder notice of any event described
below which requires an adjustment pursuant to this Article 4 at the time of
such event.
Section 4.1. STOCK DIVIDENDS, SUBDIVISIONS, COMBINATIONS AND
RECLASSIFICATIONS. If the Company shall at any time or from time to time
after the Issue Date:
Page 6
<PAGE>
(a) pay a dividend or make a distribution on the outstanding
shares of Common Stock in shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock,
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or
(d) issue by reclassification of its shares of Common Stock any
shares of capital stock of the Company,
then, and in each such case, the number of shares of Warrant Stock issuable upon
exercise of the Warrant evidenced hereby immediately prior to such event or the
record date therefor, whichever is earlier, shall be adjusted so that the holder
of any Warrant evidenced hereby thereafter exercised shall be entitled to
receive the number of shares of Warrant Stock or other securities of the Company
which such holder would have owned or have been entitled to receive after the
happening of any of the events described above, had such Warrant been exercised
immediately prior to the happening of such event or the record date therefor,
whichever is earlier. An adjustment made pursuant to this Section 4.1 shall
become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of shares of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of any such subdivision, reclassification or
combination, at the close of business on the day upon which such corporate
action becomes effective.
Section 4.2. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER
THIS SECTION. The following provisions shall be applicable to the making of
adjustments provided for in this Article 4:
(a) For purposes of this Article 4, the number of shares of Common
Stock at any time outstanding shall not include any shares of Common Stock
then owned or held by or for the account of the Company.
(b) The term "dividend" as used in this Article 4 shall mean a
dividend or other distribution upon stock of the Company except pursuant
to the Rights Agreement dated as of May 22, 1995 (as amended from time to
time, the "Rights Agreement") between the Company and U.S. Stock Transfer
Corporation as rights agent. Notwithstanding anything in this Article 4 to
the contrary, the number of shares of Warrant Stock issuable upon exercise
of the Warrant evidenced hereby shall not be adjusted as a result of any
dividend, distribution or issuance of securities of the Company pursuant
to the Rights Agreement.
Page 7
<PAGE>
(c) Notwithstanding anything in this Article 4 to the contrary, the
Company shall not be required to give effect to any adjustment in the
number of shares of Warrant Stock issuable upon exercise of the Warrant
evidenced hereby unless and until the net effect of one or more
adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change in the number of shares of
Warrant Stock issuable upon exercise of the Warrants evidenced hereby by
at least one-hundredth of one share of Warrant Stock, and when the
cumulative net effect of more than one adjustment so determined shall be
to change the number of shares of Warrant Stock issuable upon exercise of
the Warrant evidenced hereby by at least one-hundredth of one share of
Warrant Stock, such change in the number of shares of Warrant Stock
issuable upon exercise of the Warrant evidenced hereby shall thereupon be
given effect.
(d) If the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then, no adjustment in the number of shares of
Warrant Stock issuable upon exercise of the Warrant evidenced hereby shall
be required by reason of the taking of such record.
(e) There shall be no adjustment of the number of shares of Warrant
Stock issuable upon exercise of the Warrant evidenced hereby in case of
the issuance of any stock of the Company in a merger, reorganization,
acquisition or other similar transaction except as set forth in Section
4.3.
(f) Notwithstanding anything herein to the contrary, the Company
agrees not to enter into any transaction that, by reason of any adjustment
hereunder, would cause the Exercise Price to be less than the par value
per share of the Common Stock.
(g) Upon each adjustment to the number of shares of Warrant Stock
issuable upon exercise of the Warrant pursuant to Section 4.1, the
Exercise Price effective immediately prior to the making of such
adjustment shall thereafter be adjusted to be the amount obtained by (i)
multiplying (A) the applicable number of shares of Warrant Stock issuable
upon exercise of the Warrant immediately prior to such adjustment by (B)
the Exercise Price in effect immediately prior to such adjustment and (ii)
dividing the product so obtained by the number of shares of Warrant Stock
issuable upon exercise of the Warrant immediately after such adjustment.
Section 4.3. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION
OR DISPOSITION OF ASSETS. In case of any reorganization or reclassification of
outstanding shares of Common Stock (other than a reclassification covered by
Section 4.1), or in case of any
Page 8
<PAGE>
consolidation or merger of the Company with or into another corporation, or in
the case of any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety (each of the foregoing
being referred to as a "Transaction"), this Warrant shall thereafter be
exercisable for, in lieu of the Common Stock issuable upon such exercise prior
to consummation of the Transaction, the kind and amount of shares of stock and
other securities and property receivable (including cash) upon the consummation
of the Transaction by a holder of that number of shares of Common Stock issuable
upon exercise of such Warrant immediately prior to the Transaction (including,
on a pro rata basis, the cash, securities or property received by holders of
Common Stock in any tender or exchange offer that is a step in the Transaction).
Section 4.4. NOTICES TO WARRANTHOLDERS. In case at any time or from
time to time, prior to the Expiration Date, the Company shall pay any dividend
or make any other distribution to the holders of its Common Stock, or shall
offer for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or any other right, or there shall be
any capital reorganization or reclassification of the Common Stock of the
Company or consolidation or merger of the Company with or into another
corporation, or any sale or conveyance to another corporation of the property of
the Company as an entirety or substantially as an entirety, or there shall be a
voluntary or involuntary dissolution, liquidation or winding up of the Company,
then, in any one or more of said cases the Company shall give at least 20 days'
prior written notice (the time of mailing of such notice shall be deemed to be
the time of giving thereof) to the registered holder of the Warrant evidenced
hereby at its address as shown on the books of the Company maintained by the
Transfer Agent thereof of the date on which (i) the books of the Company shall
close or a record shall be taken for such stock dividend, distribution or
subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution, liquidation or winding
up shall take place, as the case may be, provided that in the case of any
Transaction to which Section 4.3 applies the Company shall give at least 30
days' prior written notice as aforesaid. Such notice shall also specify the date
as of which the holders of the Common Stock of record shall participate in said
dividend, distribution or subscription rights or shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance or
participate in such dissolution, liquidation or winding up, as the case may be.
Failure to give such notice shall not invalidate any action so taken.
Section 4.5. CERTIFICATES. Upon any adjustment of the number of
shares of Warrant Stock issuable upon exercise of the Warrant evidenced hereby
or of the Exercise Price, then, and in each such case, the Company shall
promptly deliver to the holders of the Warrant a certificate signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Company setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the increased or decreased number
of shares of
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Warrant Stock issuable upon exercise of the Warrant evidenced hereby and the
Exercise Price then in effect following such adjustment.
ARTICLE 5.
NO IMPAIRMENT
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities 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 actions as may be necessary or appropriate to protect the rights of the
holder of the Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the Exercise
Price immediately prior to such increase in par value, (b) take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Warrant Stock, free and
clear of any liens, claims, encumbrances and restrictions (other than as
provided herein) upon the exercise of this Warrant, and (c) use its best efforts
to obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.
Upon the request of the holder of the Warrant, the Company will at
any time during the period this Warrant is outstanding acknowledge in writing,
in form satisfactory to the holder of this Warrant, the continuing validity of
this Warrant and the obligations of the Company hereunder.
ARTICLE 6.
RESERVATION AND AUTHORIZATION OF
COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
The Company covenants and agrees that, until the Expiration Date,
the Company shall at all times reserve and keep available for issue upon the
exercise of this Warrant such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full of this
Warrant. All shares of Common Stock which shall be so issuable, when issued upon
exercise of this Warrant and payment therefor in accordance with the terms of
this Warrant, shall be duly and validly issued, fully paid and nonassessable and
free and clear of any liens, claims and restrictions (other than as provided
herein). No stockholder of the Company has or shall have any preemptive rights
to subscribe for such shares of Common Stock.
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Before taking any action which would result in an adjustment in the
number of shares of Warrant Stock for which this Warrant is exercisable or in
the Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
ARTICLE 7.
REDEMPTION
Section 7.1. REDEMPTION RIGHT. All (but not less than all) of the
outstanding portion of this Warrant may be redeemed by the Company at any time
after September 8, 2001 at its option upon the notice described in Section 7.2
hereof at a price equal to $7,812 times the quotient of (a) the number of shares
of Warrant Stock for which this Warrant is then exercisable (adjusted as
applicable pursuant to Article 4) divided by (b) 48,437 (subject to adjustment
pursuant to Article 4) (the "Redemption Price"). The Company's redemption right
contained in the preceding sentence is subject to the condition that the Market
Price of the Common Stock is more than $10.00 per share on each of the 30
consecutive Trading Days immediately prior to the date on which the Company
delivers a redemption notice pursuant to Section 7.2 hereof.
Section 7.2. DATE FIXED FOR, AND NOTICE OF, REDEMPTION. In the event
the Company shall elect to redeem the outstanding portion of this Warrant
pursuant to Section 7.1 hereof, the Company shall fix a date for the redemption.
Notice of redemption shall be mailed by first class mail, postage prepaid, by
the Company or the Company's agent at its direction not less than 90 days from
the date fixed for redemption to the registered holders of the outstanding
portion of this Warrant to be redeemed at their last addresses as they appear on
the Company's registration books. Any notice mailed in the manner herein
provided shall be conclusively presumed to have been duly given whether or not
the registered holder received such notice.
Section 7.3. EXERCISE AFTER NOTICE OF REDEMPTION. The outstanding
portion of this Warrant called for redemption may be exercised in accordance
with Article 2 (other than pursuant to Section 2.4) of this Warrant at any time
after notice of redemption is given by the Company pursuant to Section 7.2
hereof and prior to the date fixed for redemption. On and after the redemption
date, the record holders of the outstanding portion of this Warrant shall have
no further rights except to receive, upon surrender of such holder's portion of
this outstanding Warrant, the Redemption Price.
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ARTICLE 8.
STOCK AND WARRANT TRANSFER BOOKS
The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.
ARTICLE 9.
RESTRICTIONS ON TRANSFERABILITY
This Warrant and the Restricted Stock shall not be transferred
before satisfaction of the conditions specified in this Article 9, which
conditions are, among other things, intended to ensure compliance with the
provisions of the Securities Act and state securities laws with respect to the
transfer of this Warrant or any Restricted Stock. The holder, by acceptance of
this Warrant, agrees to be bound by the provisions of this Article 9.
Section 9.1. RESTRICTIVE LEGEND. (a) Except as otherwise provided in
this Article 9, each certificate for Restricted Stock initially issued upon any
exercise of this Warrant, and each certificate for Restricted Stock issued to
any subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws
of any state and are subject to the conditions specified in a
certain Warrant dated September 8, 1999, originally issued by Iwerks
Entertainment, Inc. The shares represented by this certificate may
not be transferred in violation of such Act and laws, the rules and
regulations thereunder or the provisions of the Warrant. A copy of
the form of said Warrant is on file with the Secretary of Iwerks
Entertainment, Inc. The holder of this certificate, by acceptance of
this certificate, agrees to be bound by the provisions of such
Warrant."
(b) Except as otherwise provided in this Article 9, this Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state and are subject to the conditions
specified herein. This Warrant may not be sold or otherwise
transferred in the absence of such registration or an exemption
therefrom under the
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Securities Act of 1933, as amended, and under any such applicable
state laws, or in violation of the provisions of this Warrant."
Section 9.2. TRANSFERS. Prior to any transfer or attempted transfer
of this Warrant or any shares of Restricted Stock, the holder of this Warrant or
Restricted Stock shall give notice (a "Transfer Notice") to the Company of such
holder's intention to effect such transfer, describing the manner and
circumstances of the proposed transfer, and obtain from counsel a written
opinion addressed and reasonably satisfactory to the Company that the proposed
transfer of this Warrant or such Restricted Stock may be effected without
registration under the Securities Act and applicable state securities laws.
After receipt of the Transfer Notice and written opinion, the Company shall,
within two Business Days thereof, so notify the holder of this Warrant or such
Restricted Stock and such holder shall thereupon be entitled to transfer this
Warrant or such Restricted Stock, in accordance with the terms of the Transfer
Notice. Each certificate, if any, evidencing such shares of Restricted Stock
issued upon such transfer shall bear the restrictive legend set forth in Section
9.1(a), and each Warrant issued upon such transfer shall bear the restrictive
legend set forth in Section 9.1(b), unless in the written opinion of counsel
addressed to the Company such legend is not required in order to ensure
compliance with the Securities Act.
Section 9.3. NO TRANSFERS UNTIL SEPTEMBER 8, 2001. In addition to
the restrictions on transfer imposed by Section 9.1 hereof, unless this Warrant
can be exercised pursuant to Section 2.4, no holder of this Warrant may transfer
this Warrant in whole or in part until September 8, 2001, except for transfers
to a holder's Affiliates. The provisions of this Section 9.3 shall not restrict
the transfer of any Warrant Shares issued or issuable upon exercise of this
Warrant.
Section 9.4. TERMINATION OF RESTRICTIONS. Notwithstanding the
foregoing provisions of this Article 9, the restrictions imposed by this Article
9 upon the transferability of this Warrant and the Restricted Stock and the
legend requirements of Section 9.1 shall terminate as to this Warrant or
Restricted Stock (i) as to the Restricted Stock, when and so long as the resale
of such security shall have been effectively registered under the Securities Act
and disposed of pursuant thereto, or (ii) as to the Warrant and Restricted
Stock, when the holder of the Warrant or Restricted Stock shall have delivered
to the Company the written opinion of counsel addressed and reasonably
satisfactory to the Company stating that such legend is not required in order to
ensure compliance with the Securities Act. Whenever the restrictions imposed by
this Article 9 shall terminate as to any share of Restricted Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, at the Company's expense (except for any transfer taxes), a new
certificate representing such Common Stock not bearing the restrictive legend
set forth in Section 9.1(a).
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ARTICLE 10.
SUPPLYING INFORMATION
The Company shall cooperate with the holder of this Warrant and the
holder of Restricted Stock in supplying such information as may be reasonably
requested by such holder or reasonably necessary for such holder to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of an exemption from the
Securities Act for the sale of this Warrant or Restricted Stock.
ARTICLE 11.
LOSS OR MUTILATION
Upon receipt by the Company from any holder of evidence reasonably
satisfactory to the Company of the ownership of and the loss, theft, destruction
or mutilation of this Warrant and indemnity reasonably satisfactory to it and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to the holder.
ARTICLE 12.
OFFICE OF THE COMPANY
As long as any portion of this Warrant remains outstanding, the
Company shall maintain an office or agency (which may be the principal executive
offices of the Company) where this Warrant may be presented for exercise,
registration of transfer, division or combination as provided in this Warrant.
ARTICLE 13.
LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by the
holder to purchase shares of Warrant Stock, and no enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
the holder for the purchase price of any Warrant Stock or as a stockholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.
ARTICLE 14.
REPRESENTATION OF HOLDER
The holder represents that it is acquiring the Warrant and the
Warrant Stock for the purpose of investment and not with a view to the resale or
distribution hereof or thereof; PROVIDED, that the disposition of holder's
property shall at all times be and remain within its control.
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<PAGE>
ARTICLE 15.
MISCELLANEOUS
Section 15.1. NONWAIVER. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the parties shall operate
as a waiver of such right or otherwise prejudice the parties' rights, powers or
remedies.
Section 15.2. NO RIGHTS AS STOCKHOLDER. The Person in whose name
this Warrant is registered shall be deemed the owner hereof and of this Warrant
evidenced hereby for all purposes. The registered holder of this Warrant shall
not be entitled to any rights whatsoever as a stockholder of the Company except
as herein provided.
Section 15.3. NOTICE GENERALLY. Any notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder to be
made pursuant to the provisions of this Warrant shall be sufficiently given or
made if in writing and either delivered in person with receipt acknowledged or
sent by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to the holder, at its last known address appearing on the
books of the Company maintained for such purpose.
(b) If to the Company:
Iwerks Entertainment, Inc.
4540 Valerio Street
Burbank, California 91505
Attention: Charles Goldwater
Fax No.: (818) 840-6192
with a copy to:
Troop Steuber Pasich Reddick & Tobey, LLP
2029 Century Park East, 24th Floor
Los Angeles, California 90067-3010
Attention: C. N. Franklin Reddick, Esq.
Fax No.: (310) 728-2204
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on
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which personally delivered, with receipt acknowledged, or three (3) Business
Days after the same shall have been deposited in the United States mail.
Section 15.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of
Section 3.1 and Article 9, (i) this Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and assigns of the holder, and (ii) the provisions of this
Warrant are intended to be for the benefit of all holders from time to time of
this Warrant, and shall be enforceable by any such holders.
Section 15.5. AMENDMENT. This Warrant may be modified or
amended or the provisions thereof waived with the written consent of the
Company and the holders of the majority of the portion of this Warrant then
outstanding.
Section 15.6. SEVERABILITY. Wherever possible, each provision of
this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Warrant.
Section 15.7. HEADINGS. The headings used in this Warrant are
for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
Section 15.8. GOVERNING LAW. This Warrant shall be governed by
and construed in accordance with the laws of the State of California, without
giving effect to conflicts of law principles thereof.
Section 15.10. MUTUAL WAIVER OF JURY TRIAL. Because disputes arising
in connection with complex financial transactions are most quickly and
economically resolved by an experienced and expert person and the parties wish
applicable state and federal laws to apply (rather than arbitration rules), the
parties desire that their disputes be resolved by a judge applying such
applicable laws. Therefore, to achieve the best combination of the benefits of
the judicial system and of arbitration, the Company and the holder waive all
right to trial by jury in any action, suit or proceeding brought to enforce or
defend any rights or remedies under this Warrant.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer on September 8, 1999.
IWERKS ENTERTAINMENT, INC.
By /s/ CHARLES GOLDWATER
------------------------------------
Name: Charles Goldwater
Title: President and Chief
Executive Officer
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EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of _____ Shares of Common Stock (the
"Common Stock") of IWERKS ENTERTAINMENT, INC. and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to __________________ whose address is
____________________ and, if such shares of Common Stock shall not include all
of the shares of Common Stock issuable as provided in this Warrant, that a new
Warrant of like tenor and date for the balance of the shares of Common Stock
issuable hereunder be delivered to the undersigned.
(Name of Registered Owner)
- ----------------------
(Signature of Registered owner)
- ----------------------
(Street Address)
- ----------------------
(City) (State) (Zip Code)
- ----------------------
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
and does hereby irrevocably constitute and appoint ____________ attorney-in-fact
to register such transfer on the books of IWERKS ENTERTAINMENT, INC. maintained
for the purpose, with full power of substitution in the premises.
Dated:
------------------------------
Name:
-------------------------------
Signature:
--------------------------
Witness:
----------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
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