-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HW8pA41TbDVYozUWcFHNDbb2EL0COj3ZjcuQwLrNyqk5CymRWFiSMm9lgW7pVMak Fg2L6mfGyVckT2SAnFurZQ== 0000944209-99-001915.txt : 19991217 0000944209-99-001915.hdr.sgml : 19991217 ACCESSION NUMBER: 0000944209-99-001915 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19991216 GROUP MEMBERS: ROBERT T. WALSTON GROUP MEMBERS: TECHNICAL SERVICES PARTNERS LP GROUP MEMBERS: TRIPLE BOGEY, INC. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: FOUR MEDIA CO CENTRAL INDEX KEY: 0001023388 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ALLIED TO MOTION PICTURE PRODUCTION [7819] IRS NUMBER: 954599440 STATE OF INCORPORATION: DE FISCAL YEAR END: 0804 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-51075 FILM NUMBER: 99775766 BUSINESS ADDRESS: STREET 1: 2813 W ALAMEDA CITY: BURBANK STATE: CA ZIP: 91505-4455 BUSINESS PHONE: 8188407000 MAIL ADDRESS: STREET 1: 2813 WEST ALAMEDA CITY: BURBANK STATE: CA ZIP: 91505-4455 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TECHNICAL SERVICES PARTNERS LP CENTRAL INDEX KEY: 0001056000 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133744173 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 625 ARIZONA AVE CITY: SANTA MONICA STATE: CA ZIP: 90401 BUSINESS PHONE: 3035871227 MAIL ADDRESS: STREET 1: 625 ARIZONA AVE CITY: SANTA MONICA STATE: CA ZIP: 90401 SC 13D 1 SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 FOUR MEDIA COMPANY (Name of Issuer) Common Stock, par value $.01 per share (Title of Class of Securities) 350872 10 7 (CUSIP Number) Robert T. Walston Technical Services Partners, L.P. 9010 Briarcrest Lane Beverly Hills, California 90210 (310) 275-3582 with a copy to: Lance Jon Kimmel, Esq. Alschuler Grossman Stein & Kahan, LLP 2049 Century Park East Los Angeles, California 90067 (310) 277-1226 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 6, 1999 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of (S)(S)(S)(S)240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. [X] Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See (S)(S)240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 350872 10 7 ----------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). Technical Services Partners, L.P. ------------------------------------------------------------------ 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) [X] ------------------------------------------------------------- (b) [_] ------------------------------------------------------------- 3. SEC Use Only------------------------------------------------------ 4. Source of Funds (See Instructions) 00 -------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ----------------------------------------------------------------- 6. Citizenship or Place of Organization Delaware ------------------------------ Number of 7. Sole Voting Power 0 ----------------------------------------- Shares Beneficially 8. Shared Voting Power 1,432,875 shares of common stock --------------------------------------- Owned by Each 9. Sole Dispositive Power 0 ------------------------------------ Reporting Person With 10. Shared Dispositive Power 1,432,875 shares of common stock ---------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 1,432,875 ----------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)----------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 7.28% --------------- 14. Type of Reporting Person (See Instructions) PN ----------------------------------------------------------------- ----------------------------------------------------------------- ----------------------------------------------------------------- ----------------------------------------------------------------- ----------------------------------------------------------------- CUSIP No. 350872 10 7 ---------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). Triple Bogey, Inc. ------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) [X] --------------------------------------------------------------- (b) [ ] --------------------------------------------------------------- 3. SEC Use Only------------------------------------------------------- 4. Source of Funds (See Instructions) 00 --------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ------------------------------------------------------------------- 6. Citizenship or Place of Organization California ------------------------------- Number of 7. Sole Voting Power 0 -------------------------------------------- Shares Beneficially 8. Shared Voting Power 1,432,875 shares of common stock ------------------------------------------ Owned by Each 9. Sole Dispositive Power 0 --------------------------------------- Reporting Person With 10. Shared Dispositive Power 1,432,875 shares of common stock ------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 1,432,875 ------------------------------------------------------------------ 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)------------------------------------------------ 13. Percent of Class Represented by Amount in Row (11) 7.28% ---------------- 14. Type of Reporting Person (See Instructions) CO ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ CUSIP No. 350872 10 7 ---------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). Robert T. Walston ------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) [X] --------------------------------------------------------------- (b) [ ] --------------------------------------------------------------- 3. SEC Use Only------------------------------------------------------- 4. Source of Funds (See Instructions) 00 --------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ------------------------------------------------------------------- 6. Citizenship or Place of Organization US ------------------------------- Number of 7. Sole Voting Power 500,000 shares of common stock -------------------------------------------- Shares Beneficially 8. Shared Voting Power 1,432,875 shares of common stock ------------------------------------------ Owned by Each 9. Sole Dispositive Power 500,000 shares of common stock --------------------------------------- Reporting Person With 10. Shared Dispositive Power 1,432,875 shares of common stock ------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 1,932,875 ------------------------------------------------------------------ 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)------------------------------------------------ 13. Percent of Class Represented by Amount in Row (11) 9.57% ---------------- 14. Type of Reporting Person (See Instructions) IN ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ Item 1. Security and Issuer This statement on Schedule 13D relates to the common stock, par value $0.01 per share, of Four Media Company (the "Company"). The address of the principal executive offices of the Company is 2813 West Alameda Avenue, Burbank, California 91505. Item 2. Identity and Background This statement is filed by Technical Services Partners, L.P. ("TSP"), Triple Bogey, Inc. ("TBI"), and Robert T. Walston ("Walston"), an individual (TSP, TBI and Walston, collectively, the "Reporting Persons"). TBI is the general partner of TSP, and Walston is the sole shareholder of TBI. Walston is the sole shareholder, director and officer of TBI, and the sole limited partner of TSP. The business and office addresses of each of the Reporting Persons are 9010 Briarcrest Lane, Beverly Hills, CA 90210, Attn: Robert T. Walston. The business address of Four Media Company is 2813 West Alameda Avenue, Burbank, California 91505. Walston is Chairman and Chief Executive Officer of Four Media Company, a leading provider of technical and creative services to producers and distributors of television programming, television commercials, feature films and other entertainment content, as well as to owners of film and television libraries. TBI is in the business of serving as general partner of TSP. TSP is in the business of holding securities for its partners. None of the Reporting Persons has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). None of the Reporting Persons has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Walston is a United States citizen. TBI is organized under the laws of the state of California. TSP is organized under the laws of the state of Delaware. Item 3. Source and Amount of Funds or Other Consideration Not applicable. Item 4. Purpose of Transaction Pursuant to an agreement dated January 18, 1999 (the "Warburg Agreement"), TSP transferred 3,119,627 of its 4,552,502 shares of common stock, par value $.01 per share, of the Company (the "Common Stock") to Warburg, Pincus Equity Partners, Warburg, Pincus Netherlands Equity Partners I, C.V., Warburg, Pincus Netherlands Equity Partners II, C.V. and Warburg, Pincus Netherlands Equity Partners III, C.V. (collectively, the "Warburg Entities"). The proceeds of such sale were used by TSP to redeem the interests of all of TSP's partners except Walston. Thereafter, TBI, an S Corporation solely owned by Walston, was appointed general partner of TSP. In connection with the transaction that was the subject of the Warburg Agreement, and as part of that transaction, each of Walston and TSP entered into voting agreements with the Warburg Entities to vote in favor of the approval and adoption of the transactions being effected thereby. The agreement with Walston further provided that so long as the Warburg Entities were entitled to designate directors pursuant to the transaction documents, Walston agreed to vote the securities beneficially owned by him in favor of the Warburg Entities' designees. The Warburg Entities, in return, agreed that so long as Walston remained the Company's Chief Executive Officer pursuant to his employment agreement, the Warburg Entities would vote their shares in favor of the election of Walston to the Company's Board of Directors. The voting provisions with respect to the election of directors survive termination of the voting agreements. On December 6, 1999 the Company announced that it had entered into a definitive agreement (the "Merger Agreement") to sell 100% of the Company's issued and outstanding common stock to Liberty Media Corporation ("Liberty"). Liberty will acquire each issued and outstanding share of the Company's Common Stock for a combination of $6.25 of cash and approximately 0.1613 of a share of Class A Liberty Media Group Stock, par value $1.00 ("LMG.A" share(s)), in a taxable exchange. The Reporting Persons understand that closing is anticipated to occur in the first quarter of 2000. The Reporting Persons are not parties to the Merger Agreement. Effective the date of the Merger Agreement, TSP entered into a Voting Agreement (the "Voting Agreement") with the Company and Liberty, pursuant to which TSP granted Liberty a proxy to vote all shares beneficially owned by TSP in favor of approval and adoption of the Merger Agreement, and against any action which could interfere, delay, impede, postpone or adversely affect the transactions contemplated by the Merger Agreement. The proxy and related power of attorney is a proxy and power coupled with an interest, and is irrevocable during and for the term of the Voting Agreement. The Voting Agreement represents a change in intent on the part of the Reporting Persons, from a passive investment to an investment held with a purpose or effect of changing or influencing control of the Company or in connection with any transaction having that purpose or effect. The Reporting Persons will continue to evaluate their ownership and voting position in the Company and may consider the following future courses of action (subject to the restrictions set forth in the Voting Agreement): (i) continue to hold the Company's Common Stock for investment; (ii) disposing of all or a portion of the Company's Common Stock in open market sales or in privately-negotiated transactions; or (iii) acquiring additional shares of Common Stock in open market or in privately-negotiated transactions. The Reporting Persons do not have any current intention of acquiring additional shares of the Company's Common Stock. Except as set forth herein, the Reporting Persons have no current intent or proposals that relate to or would result in: (i) the acquisition by any person of additional securities of the Company, or the disposition of securities of the Company; (ii) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (iii) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (iv) any change in the present Board of Directors or management of the Company, including any plans or proposals to change the number or term of Directors or to fill any vacancies on the Board; (v) any material change in the present capitalization or dividend policy of the Company; (vi) any other material change in the Company's business or corporate structure; (vii) changes in the Company's charter, bylaws or instruments corresponding thereto or actions which may impede the acquisition of the control of the Company by any person; (viii) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (ix) a class of equity securities of the Company becoming eligible for termination of a registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended; or (x) any action similar to those enumerated above. The Reporting Persons reserve the right to determine in the future whether to change the purpose or purposes described above or whether to adopt plans or proposals of the type specified above. Item 5. Interest in Securities of the Issuer As of the close of business on December 6, 1999, TSP and TBI each beneficially own 1,432,875 shares of Common Stock of the Company. Based upon the information available in the Company's Annual Report on Form 10-K for the year ended August 1, 1999, as filed with the Securities and Exchange Commission on November 1, 1999, as amended on Form 10-K/A on November 29, 1999, these shares represent 7.28% of the Company's Common Stock. As of December 6, 1999, Walston also holds an option for the purchase of 2,500,000 shares of Common Stock of the Company, which option is subject to a five-year vesting schedule (subject to acceleration upon the occurrence of certain events). Effective on January 1, 2000, and assuming Walston's continued employment with the Company, the option will vest with respect to 500,000 of these shares. Under the applicable rules of the Securities Exchange Act of 1934, as amended, Walston is deemed to be the beneficial owner of these 500,000 shares, and an aggregate 1,932,875 shares of the Company's Common Stock, which represents 9.57% of the Company's issued and outstanding stock. Walston, TSP and TBI have shared voting and dispositive power over 1,432,875 shares of the Company's Common Stock. Walston will have sole voting and dispositive power over the 500,000 shares of the Company's Common Stock which would be issued upon exercise of the vested portion of the option described above. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer In connection with the transaction that was the subject of the Warburg Agreement, and as part of that transaction, each of Walston and TSP entered into voting agreements with the Warburg Entities to vote in favor of the approval and adoption of the transactions being effected thereby. The agreement with Walston further provided that so long as the Warburg Entities were entitled to designate directors pursuant to the transaction documents, Walston agreed to vote the securities beneficially owned by him in favor of the Warburg Entities' designees. The Warburg Entities, in return, agreed that so long as Walston remained the Company's Chief Executive Officer pursuant to his employment agreement, the Warburg Entities would vote their shares in favor of the election of Walston to the Company's Board of Directors. The voting provisions with respect to the election of directors survive termination of the voting agreements. Effective the date of the Merger Agreement, TSP entered into the Voting Agreement with the Company and Liberty, pursuant to which TSP granted Liberty a proxy to vote all shares beneficially owned by TSP in favor of approval and adoption of the Merger Agreement, and against any action which could interfere, delay, impede, postpone or adversely affect the transactions contemplated by the Merger Agreement. The proxy and related power of attorney is a proxy and power coupled with an interest, and is irrevocable during and for the term of the Voting Agreement. The Voting Agreement represents a change in intent on the part of the Reporting Persons, from a passive investment to an investment held with a purpose or effect of changing or influencing control of the Company or in connection with any transaction having that purpose or effect. TBI is the general partner of TSP, and Walston is the sole shareholder of TBI. Walston is the sole shareholder, director and officer of TBI, and the sole limited partner of TSP. Item 7. Material to Be Filed as Exhibits 1.1 Voting Agreement by and among Robert T. Walston, Technical Services Partners, L.P., Warburg, Pincus Equity Partners, L.P., Warburg, Pincus Netherlands Equity Partners I, C.V., Warburg, Pincus Netherlands Equity Partners II, C.V., and Warburg, Pincus Netherlands Equity Partners III, C.V., dated as of January 18, 1999. 1.2 Voting and Option Agreement by and among Technical Services Partners, L.P., Warburg, Pincus Equity Partners, L.P., Warburg, Pincus Netherlands Equity Partners I, C.V., Warburg, Pincus Netherlands Equity Partners II, C.V. and Warburg, Pincus Netherlands Equity Partners III, C.V., dated as of January 18, 1999. 1.3 Voting Agreement by and among Four Media Company, Technical Services Partners, L.P. and Liberty Media Corporation, dated as of December 6, 1999. SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: December 16, 1999 TECHNICAL SERVICES PARTNERS, L.P. By: Triple Bogey, Inc. General Partner By: /s/ Robert T. Walston --------------------------- Robert T. Walston President TRIPLE BOGEY, INC. By: /s/ Robert T. Walston --------------------------- Robert T. Walston President ROBERT T. WALSTON /s/ Robert T. Walston - -------------------------------- EX-1.1 2 VOTING AGMT DATED 01/18/1999 EXHIBIT 1.1 ================================================================================ VOTING AGREEMENT by and among ROBERT T. WALSTON TECHNICAL SERVICES PARTNERS, L.P., WARBURG, PINCUS EQUITY PARTNERS, L.P., WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS I, C.V., WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS II, C.V. and WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS III, C.V. dated as of January 18, 1999 ================================================================================ TABLE OF CONTENTS
Page ---- ARTICLE I. Section 1.1. Representations and Warranties of the Stockholder .................. 2 Section 1.2. Representations and Warranties of TSP .............................. 3 Section 1.3. Representations and Warranties of Purchasers ....................... 3 ARTICLE II. Section 2.1. Transfer of the Shares ............................................. 4 Section 2.2. Adjustments ........................................................ 5 ARTICLE III. Section 3.1. Voting Agreement ................................................... 5 Section 3.2. No Solicitation .................................................... 6 Section 3.3 Directors .......................................................... 7 ARTICLE IV. Section 4.1. Termination ........................................................ 8 Section 4.2. Expenses ........................................................... 8 Section 4.3. Further Assurances ................................................. 8 Section 4.4. Publicity .......................................................... 8 Section 4.5. Enforcement of the Agreement ....................................... 8 Section 4.6. Miscellaneous ...................................................... 9
(i) SCHEDULE 1.1(b) Additional Securities Beneficially Owned by Stockholder SCHEDULE 1.1(c) Convertible Securities Beneficially Owned by Stockholder SCHEDULE 2.1 Unencumbered Shares of Stockholder (ii) TABLE OF DEFINED TERMS
Page ---- Agreement ........................................................................ 1 Closing Date ..................................................................... 2 Common Stock ..................................................................... 1 Company Purchase Agreement ....................................................... 1 Exchange Act ..................................................................... 2 Lien ............................................................................. 2 Purchaser ........................................................................ 1 Purchaser Designees .............................................................. 7 Purchasers ....................................................................... 1 Shares ........................................................................... 1 Stockholder ...................................................................... 1 TSP .............................................................................. 1 TSP Purchase Agreement ........................................................... 1 TSP Shares ....................................................................... 1 TSP/Walston Agreement ............................................................ 1
(ii) VOTING AGREEMENT, dated as of January 18, 1999 (this "Agreement"), by and among Warburg, Pincus Equity Partners, L.P., a Delaware --------- limited partnership, Warburg, Pincus Netherlands Equity Partners I, C.V., a Dutch limited partnership, Warburg, Pincus Netherlands Equity Partners II, C.V., a Dutch limited partnership and Warburg, Pincus Netherlands Equity Partners III, C.V., a Dutch limited partnership (each, a "Purchaser", and collectively, --------- "Purchasers"), Robert T. Walston, an individual (the "Stockholder") and ---------- ----------- Technical Services Partnership, L.P., a Delaware limited partnership ("TSP"). --- WHEREAS, TSP is the record and beneficial owner of 4,552,502 shares (the "TSP Shares") of common stock, $.01 par value per share (the "Common ---------- ------ Stock") of Four Media Company, a Delaware corporation (the "Company"); and - ----- ------- WHEREAS, pursuant to an agreement with TSP (the "TSP/Walston ----------- Agreement"), the Stockholder has beneficial ownership of 1,432,875 of the TSP - --------- Shares (the "Shares"); and ------ WHEREAS, Purchasers and the Company have entered into a Securities Purchase Agreement, dated as of the date hereof (the "Company ------- Purchase Agreement"), which provides, among other things, that, upon the terms - ------------------ and subject to the conditions therein, Purchasers will purchase from the Company and the Company will sell to Purchasers 6,582,607 shares of Common Stock and will issue to Purchasers a warrant to purchase an additional 1,100,000 shares of Common Stock; and WHEREAS, Purchasers and TSP have entered into a Stock Purchase Agreement, dated as of the date hereof (the "TSP Purchase Agreement"), which ---------------------- provides, among other things, that, upon the terms and subject to the conditions therein, Purchasers will purchase from TSP, and TSP will sell to Purchasers, a total number of shares of Common Stock representing the difference between the TSP Shares and the Shares; and WHEREAS, as a condition to the willingness of Purchasers to enter into the Company Purchase Agreement, Purchasers have requested that the Stockholder agree, and in order to induce Purchasers to enter into the Company Purchase Agreement, the Stockholder has agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and subject to the terms and conditions set forth herein, the parties hereto hereby agree as follows: ARTICLE I. Section 1.1. Representations and Warranties of the Stockholder. The ------------------------------------------------- Stockholder represents and warrants to Purchasers, as of the date hereof and as of the closing under the Company Purchase Agreement (the "Closing Date"), as follows: ------------ (a) Pursuant to the TSP/Walston Agreement, the Stockholder shares beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which meaning will apply for all ------------ purposes of this Agreement) with TSP of, and (subject to such shared beneficial ownership) has good title to, all of the Shares, free and clear of any mortgage, pledge, hypothecation, rights of others, claim, security interest, charge, encumbrance, title defect, title retention agreement, voting trust agreement, interest, option, lien, charge or similar restriction or limitation (each, a "Lien") (including any restriction on the right to vote, sell or otherwise ---- dispose of the Shares) except for immaterial Liens which shall not materially affect the Stockholder's ability to perform his obligations under this Agreement. (b) Except as set forth on Schedule 1.1(b), the Shares constitute all of the securities (as defined in Section 3(10) of the Exchange Act, which definition will apply for all purposes of this Agreement) of the Company beneficially owned, directly or indirectly, by the Stockholder (excluding any securities beneficially owned by any of his affiliates or associates (as such terms are defined in Rule 12b-2 under the Exchange Act, which definitions will apply for all purposes of this Agreement) as to which he does not have voting or investment power); provided, however, that the Stockholder does not have any voting power with respect to the Shares which voting power is held exclusively by TSP. (c) Except as set forth on Schedule 1.1(c), and except for the Shares, the Stockholder does not, directly or indirectly, beneficially own or have any option, warrant or other right to acquire any securities of the Company that are or may by their terms become entitled to vote or any securities that are convertible or exchangeable into or exercisable for any securities of the Company that are or may by their terms become entitled to vote, nor is the Stockholder subject to any contract, commitment, arrangement, understanding or relationship (whether or not legally enforceable), other than this Agreement and the TSP/Walston Agreement, that allows or obligates him to vote or acquire any securities of the Company. The Stockholder holds no power to vote the Shares and has not granted a proxy to any other Person (as defined in the Company Purchase Agreement, which definition will apply for all purposes of this Agreement) to vote the Shares, subject to the limitations set forth in this Agreement. -2- (d) This Agreement has been duly executed and delivered by the Stockholder and, assuming due authorization, execution and delivery of this Agreement by Purchasers, is a valid and binding obligation of the Stockholder enforceable against the Stockholder in accordance with its terms, except that (i) the enforceability hereof may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereinafter in effect, affecting creditors' rights generally, and (ii) the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any proceeding therefor may be brought. (e) Neither the execution and delivery of this Agreement nor the performance by the Stockholder of his obligations hereunder will conflict with, result in a violation or breach of, or constitute a default (or an event that, with notice or lapse of time or both, would result in a default) or give rise to any right of termination, amendment, cancellation, or acceleration or result in the creation of any Lien on any Shares under (collectively, a "Conflict"), (i) -------- any contract, commitment, agreement, understanding, arrangement or restriction of any kind to which the Stockholder is a party or by which the Stockholder is bound, to the extent such Conflict would be reasonably likely to affect the Stockholder's ability to consummate the transactions contemplated hereby or (ii) any injunction, judgment, writ, decree, order or ruling applicable to the Stockholder, to the extent such Conflict would be reasonably likely to affect the Stockholder's ability to consummate the transactions contemplated hereby. (f) To the Stockholder's actual knowledge, the representations and warranties of TSP contained in Sections 2.1(b), 2.1(c) and 2.1(d) of the TSP Purchase Agreement are true and correct in all material respects. Section 1.2. Representations and Warranties of TSP. TSP represents and ------------------------------------- warrants to Purchasers, as of the date hereof and as of the Closing Date, as follows: (a) To its knowledge, pursuant to the TSP/Walston Agreement and by virtue of his shared beneficial ownership of the Shares, the Stockholder holds no power to vote the Shares which power is held exclusively by TSP; the Stockholder has the power to enter into this Agreement, and for so long as this Agreement shall remain in full force and effect, TSP shall have exclusive rights with respect to voting the Shares, but no other rights with respect to the Shares, and may not amend in any way the terms of this Agreement without Purchasers' written consent. Section 1.3. Representations and Warranties of Purchasers. Each Purchaser -------------------------------------------- jointly and severally represents and warrants to the Stockholder and the Company, as of the date hereof and as of the Closing Date, as follows: -3- (a) Each Purchaser is a limited partnership duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and each Purchaser has the requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and has taken all necessary action to authorize the execution, delivery and performance of this Agreement. (b) This Agreement and the other Transaction Documents to which it is a party has been duly executed and delivered by each Purchaser and, assuming the due execution and delivery of this Agreement by the Stockholder and of such other Transaction Documents by the other parties thereto, are the valid and binding obligations of each Purchaser, enforceable against each Purchaser in accordance with their respective terms, except that (i) the enforceability hereof and thereof may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereinafter in effect, affecting creditors' rights generally, and (ii) the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any proceeding therefor may be brought. (c) Neither the execution and delivery of this Agreement nor the performance by each Purchaser of its obligations hereunder will Conflict with (i) its certificate of limited partnership, partnership agreement or comparable instrument, (ii) any contract, commitment, agreement, understanding, arrangement or restriction of any kind to which such Purchaser is a party or by which such Purchaser is bound to the extent such Conflict would materially affect such Purchaser's ability to consummate the transactions contemplated under this Agreement or the Company Purchase Agreement or (iii) any judgment, writ, decree, order or ruling applicable to such Purchaser to the extent such Conflict would materially affect such Purchaser's ability to consummate the transactions contemplated under this Agreement or the Company Purchase Agreement. (d) Neither the execution and delivery of this Agreement nor the performance by each Purchaser of its obligations hereunder will violate any law, decree, statute, rule or regulation applicable to such Purchaser or require any order, consent, authorization or approval of, filing or registration with, or declaration or notice to, any corporation, Person, firm, Governmental Entity (as such term is defined in the Company Purchase Agreement) or public or judicial authority, other than any required notices or filings with the Federal Communications Commission or pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder or the federal securities laws. -4- ARTICLE II. Section 2.1. Transfer of the Shares. Except as set forth in Schedule ---------------------- -------- 2.1, during the term of this Agreement the Stockholder will not (a) tender into - --- any tender or exchange offer or otherwise sell, transfer, pledge, assign, hypothecate or otherwise dispose of, or encumber with any Lien, any of the Shares, (b) acquire any shares of Common Stock or other securities of the Company (otherwise than in connection with a transaction of the type described in Section 2.2 of this Agreement or in connection with the grant of 2,500,000 options to be granted to the Stockholder under the Company's amended 1997 Stock Option Plan), (c) deposit the Shares into a voting trust, enter into a voting agreement or arrangement with respect to the Shares or grant any proxy or power of attorney with respect to the Shares, (d) enter into any contract, option or other arrangement or undertaking with respect to the direct or indirect acquisition or sale, transfer, pledge, assignment, hypothecation or other disposition of any interest in or the voting of any shares of Common Stock or any other securities of the Company or (e) amend, modify or terminate or cause any amendment, modification or termination of the TSP/Walston Agreement. Section 2.2. Adjustments. ----------- (a) In the event (i) of any stock dividend, stock split, recapitalization, reclassification, combination or exchange of shares of capital stock or other securities of the Company on, of or affecting the Shares or the like or any other action that would have the effect of changing the Stockholder's ownership of the Company's capital stock or other securities or (ii) the Stockholder becomes the beneficial owner of any additional shares of Common Stock or other securities of the Company, then the terms of this Agreement will apply to the shares of capital stock held by the Stockholder immediately following the effectiveness of the events described in clause (i) or the Stockholder becoming the beneficial owner thereof, as described in clause (ii), as though they were Shares hereunder. (b) The Stockholder hereby agrees, while this Agreement is in effect, promptly to notify Purchasers of the number of any new shares of the Common Stock acquired by the Stockholder, if any, after the date hereof. ARTICLE III. Section 3.1. Voting Agreement. The Stockholder, by this ---------------- Agreement, does hereby constitute and appoint Purchasers, or any nominee thereof, with full power of substitution, during and for the term of this Agreement, as his true and lawful attorney and proxy for and in his name, place and stead, to vote all the Shares Stockholder beneficially owns at the time of such vote, at any annual, special or adjourned meeting of the stockholders of the Company (and this appointment will include the right to sign -5- his name (as stockholder) to any consent, certificate or other document relating to the Company that laws of the State of Delaware may require or permit) (x) in favor of approval and adoption of the Company Purchase Agreement, the Company Voting Matters (as defined in the Company Purchase Agreement) and the other transactions contemplated thereby and (y) against (a) any Takeover Proposal (as defined in the Company Purchase Agreement), (b) any action or agreement that would result in a breach in any respect of any covenant, agreement, representation or warranty of the Company under the Company Purchase Agreement and (c) the following actions (other than the other transactions contemplated by the Company Purchase Agreement): (i) any extraordinary corporate transaction, such as a merger, consolidation or other business combination involving the Company or its subsidiaries; (ii) a sale, lease or transfer of a substantial amount of assets of the Company or one of its subsidiaries, or a reorganization, recapitalization, dissolution or liquidation of the Company or its Subsidiaries; (iii) (A) any change in a majority of the persons who constitute the Board of Directors of the Company as of the date hereof; (B) any change in the present capitalization of the Company or any amendment of the Certificate of Incorporation or Bylaws of the Company, as amended through the date hereof; (C) any other material change in the Company's corporate structure or business; or (D) any other action that, in the case of each of the matters referred to in clauses (iii)(A), (B) and (C) is intended, or could reasonably be expected, to impede, interfere with, delay, postpone, or adversely affect the transactions contemplated by this Agreement and the Company Purchase Agreement. This proxy and power of attorney is a proxy and power coupled with an interest, and the Stockholder declares that it is irrevocable during and for the term of this Agreement. The Stockholder hereby revokes all and any other proxies with respect to the Shares that he may have heretofore made or granted and agrees that no other writing or instrument shall be required in order to grant the proxy and rights to Purchasers granted hereby. For Shares as to which the Stockholder is the beneficial but not the record owner, the Stockholder shall use his reasonable best efforts to cause any record owner of such Shares including, without limitation, TSP with respect to the TSP Shares, to grant to Purchasers a proxy to the same effect as that contained herein. Section 3.2. No Solicitation. The Stockholder will not, directly or --------------- indirectly, through any agent, financial advisor, attorney, accountant or other representative or otherwise, (i) solicit, initiate or encourage submission of proposals or offers from any Person relating to, or that could reasonably be expected to lead to, a sale or transfer of any of the Shares or a Takeover Proposal or (ii) participate in any negotiations or discussions regarding, or furnish to any other Person any information with respect to, or otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other Person to do or seek a sale or transfer of any of the Shares or a Takeover -6- Proposal. The Stockholder shall immediately advise Purchasers in writing of the receipt of request for information or any inquiries or proposals relating to a sale or transfer of any of the Shares or a Takeover Proposal. Notwithstanding the foregoing, this Section 3.2 shall not restrict the Stockholder from fulfilling his fiduciary duties as a director of the Company pursuant to Section 5 of the Company Purchase Agreement. Section 3.3. Directors. --------- (a) The Stockholder agrees to vote (i) all of the Shares, (ii) any additional shares of Common Stock issued to him upon exercise of any outstanding or future issued stock options or warrants to purchase Common Stock (including, without limitation, the options to purchase 2,500,000 shares of Common Stock to be granted to the Stockholder under the Company's amended 1997 Stock Option Plan) and (iii) any other securities of the Company issued to him, including securities issued to him in connection with a transaction of the type described in Section 2.2, in each case in favor of any nominees of Purchasers for election to the Board of Directors of the Company pursuant to Section 6.11 of the Company Purchase Agreement (the "Purchaser Designees"), at each meeting of the ------------------- stockholders of the Company at which the stockholders are voting on the election of directors to the Board of Directors of the Company or any action so taken by written consent; provided, however, that the Stockholder shall only be required -------- ------- to vote such securities in favor of the Purchaser Designees for so long as Purchasers shall be entitled, pursuant to Section 6.11 of the Company Purchase Agreement, to designate directors for election to the Board of Directors of the Company. (b) Purchasers agree to vote all of the shares of Common Stock purchased by them pursuant to the Company Purchase Agreement and the Additional Purchase Agreements (as defined in the Company Purchase Agreement) and the shares of Common Stock issued to them upon exercise of the Warrant and any other securities of the Company issued to them, in each case in favor of the Stockholder for election to the Board of Directors of the Company, at each meeting of the stockholders of the Company at which the stockholders are voting on the election of directors to the Board of Directors of the Company or any action so taken by written consent; provided, however, that Purchasers shall -------- ------- only be required to vote such securities in favor of the Stockholder for so long as the Stockholder shall be the Company's Chief Executive Officer pursuant to the terms of the employment agreement, dated as of the date of this Agreement, between the Company and the Stockholder. This Section 3.3 and the agreement set forth herein shall expressly survive the termination of this Agreement. -7- ARTICLE IV. Section 4.1. Termination. This Agreement will terminate on the ----------- earliest to occur of (A) the termination of the Company Purchase Agreement, (B) the Closing Date, (C) the mutual agreement of the Stockholder, the Company and Purchasers to so terminate and (D) the Expiration Date (or, if applicable, the Extended Expiration Date) (each as defined in the Company Purchase Agreement). Section 4.2. Expenses. Except as otherwise expressly provided -------- in the Company Purchase Agreement, all costs and expenses incurred by any of the parties hereto will be borne by the party incurring such costs and expenses. Purchasers, on the one hand, and the Stockholder, on the other hand, will indemnify and hold harmless the other from and against any and all claims or liabilities for finder's fees or brokerage commissions or other like payments incurred by reason of action taken by him, it or any of them, as the case may be. Section 4.3. Further Assurances. Each party hereto will execute and ------------------ deliver all such further documents and instruments and take all such further action as may be necessary in order to consummate the transactions contemplated hereby. Section 4.4. Publicity. Purchasers and the Stockholder shall --------- consult with each other and the Company before issuing any press release or otherwise making any public statements with respect to this Agreement or the Company Purchase Agreement or the other transactions contemplated hereby or thereby and shall not issue any such press release or make any such public statement before such consultation, except as may be required by law or applicable stock exchange rules. The Company shall be an express third party beneficiary of this Section 4.4. Section 4.5. Enforcement of the Agreement. The Stockholder, ---------------------------- Purchasers and TSP acknowledge that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that each party hereto will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. -8- Section 4.6. Miscellaneous. ------------- (a) All representations and warranties contained herein will terminate upon the termination hereof. The covenants and agreements made herein will survive the Closing Date in accordance with their respective terms. (b) Any provision of this Agreement may be waived at any time by the party that is entitled to the benefits thereof. No such waiver, amendment or supplement will be effective unless in writing and signed by the party or parties sought to be bound thereby. Any waiver by any party of a breach of any provision of this Agreement will not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement or one or more sections hereof will not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. (c) This Agreement, the other Transaction Documents and the other agreements attached as Exhibits to the Company Purchase Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof, and supersede all prior agreements among such parties with respect to such matters. This Agreement may not be amended, changed, supplemented, waived or otherwise modified, except upon the delivery of a written agreement executed by the parties hereto. (d) This Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of laws principles thereof. (e) With respect to any suit, action or proceeding initiated by a party to this Agreement arising out of, under or in connection with this Agreement, the Stockholder and Purchasers each hereby submit to the exclusive jurisdiction of any state or federal court sitting in the State of California and irrevocably waive, to the fullest extent permitted by law, any objection that they may now have or hereafter obtain to the laying of venue in any such court in any such suit, action or proceeding. (f) The descriptive headings contained herein are for convenience and reference only and will not affect in any way the meaning or interpretation of this Agreement. (g) All notices and other communications hereunder will be in writing and will be given (and will be deemed to have been duly given upon receipt) by delivery in person, by telecopy, or by registered or certified mail, postage prepaid, return receipt requested, addressed as follows: -9- If to any of Purchasers to: Warburg, Pincus Equity Partners, L.P. 466 Lexington Avenue New York, NY 10017 Attention: David E. Libowitz Telecopier: (212) 878-9351 With a copy to: Willkie Farr & Gallagher 787 Seventh Avenue New York, New York 10019 Attention: Neil Novikoff, Esq. Telecopier: (212) 728-8111 If to the Stockholder to: Robert T. Walston c/o Four Media Company 625 Arizona Avenue Santa Monica, CA 90401 Attention: William E. Niles, Esq. Facsimile: 310-587-1277 With a copy to: Alschuler Grossman Pines Stein & Kahan LLP 2049 Century Park East, 39th Floor Los Angeles, California 90067-3123 Attention: Robert Kahan, Esq. Telecopier: 310-552-6077 If to TSP to: Technical Services Partners, L.P. c/o Steinhardt Partners 605 Third Avenue New York, New York 10158 Attention: Shimon Topor Telecopier: With a copy to: Schulte Roth & Zabel LLP 900 Third Avenue New York, NY 10022 Attention: Stuart D. Freedman, Esq. Telecopier: 212-593-5955 or to such other address as any party may have furnished to the other parties in writing in accordance herewith. -10- (h) This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original, but all of which together will constitute one agreement. (i) This Agreement and each of the other Transaction Documents (as such term is defined in the Company Purchase Agreement) shall (i) be executed simultaneously and at such time shall be valid and binding obligations of each of the parties and signatories thereto and (ii) simultaneously be consummated at the Closing. (j) Neither this Agreement nor any of the rights or obligations of any party hereto may be assigned without the prior written consent of the other parties hereto, except that Purchasers may, without such consent, assign this Agreement and any of such rights and obligations to one or more of their affiliates. Any such assignment shall not, however, act as a release of the assigning Person. Subject to the foregoing, this Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, and no other Person shall have any right, benefit or obligation hereunder. (k) If any term or provision of this Agreement is determined to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms and provisions of this Agreement will nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party hereto. Upon any such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto will negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated by this Agreement are consummated to the extent possible. (l) All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity will be cumulative and not alternative, and the exercise of any thereof by either party will not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. (m) All representations and warranties of Purchasers hereunder shall be joint and several obligations. [The remainder of this page is intentionally left blank.] -11- IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the date first above written. WARBURG, PINCUS EQUITY PARTNERS, L.P. By: Warburg, Pincus & Co., its general partner By: /s/ David E. Libowitz ---------------------------------------------- Name: David E. Libowitz Title: Managing Director WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS I, C.V. By: Warburg, Pincus & Co., its general partner By: /s/ David E. Libowitz ---------------------------------------------- Name: David E. Libowitz Title: Managing Director WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS II, C.V. By: Warburg, Pincus & Co., its general partner By: /s/ David E. Libowitz ---------------------------------------------- Name: David E. Libowitz Title: Managing Director WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS III, C.V. By: Warburg, Pincus & Co., its general partner By: /s/ David E. Libowitz ---------------------------------------------- Name: David E. Libowitz Title: Managing Director /s/ Robert T. Walston ------------------------------------------------- Robert T. Walston S-1 TECHNICAL SERVICES PARTNERS, L.P. By: Technical Service Holding, its general partner By: /s/ Edward Kirtman ------------------------------------------ Name: EDWARD KIRTMAN Title VICE PRESIDENT S-2 SCHEDULE 1.1(b) ADDITIONAL SECURITIES BENEFICIALLY OWNED BY STOCKHOLDER ------------------------------------------------------- See Schedule 1.1 (c) 1 of 1 SCHEDULE 1.1(c) CONVERTIBLE SECURITIES BENEFICIALLY OWNED BY STOCKHOLDER -------------------------------------------------------- The shares are subject to a Lockup Agreement entered into in connection with the initial public offering of the Company's securities. Stockholder is receiving a grant of 2,500,000 options under the Company's amended 1997 Stock Option Plan pursuant to the Employment Agreement and associated documents entered into concurrently herewith. 1 of 1 SCHEDULE 2.1 UNENCUMBERED SHARES OF STOCKHOLDER ---------------------------------- See Schedule 1.1 (c) 1 of 1 EX-1.2 3 VOTING & OPTION AGMT DATED 01/18/1999 EXHIBIT 1.2 =============================================================================== VOTING AND OPTION AGREEMENT by and among TECHNICAL SERVICES PARTNERS, L.P., WARBURG, PINCUS EQUITY PARTNERS, L.P., WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS I, C.V., WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS II, C.V. and WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS III, C.V. dated as of January 18, 1999 =============================================================================== TABLE OF CONTENTS
Page ---- ARTICLE I. Section 1.1. Representations and Warranties of the Stockholder............................................. 1 Section 1.2. Representations and Warranties of Purchasers.................................................. 2 ARTICLE II. Section 2.1. Transfer of the Shares........................................................................ 4 Section 2.2. Adjustments .................................................................................. 4 ARTICLE III. Section 3.1. Voting Agreement ............................................................................. 4 Section 3.2. No Solicitation .............................................................................. 5 ARTICLE IV. Section 4.1. Grant of Option............................................................................... 6 Section 4.2. Exercise of Option............................................................................ 6 Section 4.3. Termination of Option......................................................................... 7 Section 4.4. Conditions to Closing......................................................................... 7 Section 4.5. Closing ...................................................................................... 8 Section 4.6. Registration Rights........................................................................... 8 ARTICLE V. Section 5.1. Termination .................................................................................. 9 Section 5.2. Expenses ..................................................................................... 9 Section 5.3. Further Assurances............................................................................ 9 Section 5.4. Publicity .................................................................................... 9 Section 5.5. Enforcement of the Agreement.................................................................. 9 Section 5.6. Miscellaneous ............................................................................... 9
(i) TABLE OF DEFINED TERMS
Page ---- Agreement ................................................................................................. 1 Closing ................................................................................................... 6 Closing Date .............................................................................................. 1 Common Stock .............................................................................................. 1 Company Purchase Agreement ................................................................................ 1 Exercise Notice ........................................................................................... 6 Exercise Price ............................................................................................ 6 HSR Act ................................................................................................... 2 Lien....................................................................................................... 2 Manager.................................................................................................... 8 Per Share Amount........................................................................................... 6 Permitted Offering......................................................................................... 8 Purchaser.................................................................................................. 1 Purchaser Conflict ........................................................................................ 3 Purchaser Option .......................................................................................... 6 Purchaser Owned Shares .................................................................................... 8 Purchasers ................................................................................................ 1 Registrable Securities .................................................................................... 8 Registration Notice ....................................................................................... 8 Securities Act ............................................................................................ 4 Shares .................................................................................................... 1 Stockholder ............................................................................................... 1 Stockholder Conflict ...................................................................................... 2 Stockholder Purchase Agreement ............................................................................ 1 Subject Shares ............................................................................................ 1 Trigger Event ............................................................................................. 6 TSP ....................................................................................................... 1 TSP/Walston Agreement ..................................................................................... 1 Walston Shares ............................................................................................ 1
(ii) VOTING AND OPTION AGREEMENT, dated as of January 18, 1999 (this "Agreement"), by and among Warburg, Pincus Equity Partners, L.P., a Delaware - ---------- limited partnership, Warburg, Pincus Netherlands Equity Partners I, C.V., a Dutch limited partnership, Warburg, Pincus Netherlands Equity Partners II, C.V., a Dutch limited partnership and Warburg, Pincus Netherlands Equity Partners III, C.V., a Dutch limited partnership (each, a "Purchaser", and collectively, --------- "Purchasers"), and Technical Services Partners, L.P., a Delaware limited - ----------- partnership ("TSP") (the "Stockholder"). --- ----------- WHEREAS, the Stockholder is the record and beneficial owner of 4,552,502 shares (the "Shares") of common stock, $.01 par value per share (the ------ "Common Stock"), of Four Media Company, a Delaware corporation (the "Company"); ------------ ------- and WHEREAS, pursuant to an agreement with Robert T. Walston (the "TSP/Walston Agreement"), Mr. Walston is the beneficial owner of 1,432,875 of --------------------- the Shares (the "Walston Shares"; the Shares excluding the Walston Shares are -------------- referred to herein as the "Subject Shares"); and -------------- WHEREAS, Purchasers and the Company have entered into a Securities Purchase Agreement, dated as of the date hereof (the "Company Purchase ---------------- Agreement"), which provides, among other things, that, upon the terms and - --------- subject to the conditions therein, Purchasers will purchase from the Company and the Company will sell to Purchasers 6,582,607 shares of Common Stock and will issue a warrant to purchase an additional 1,100,000 shares of Common Stock; and WHEREAS, Purchasers and the Stockholder have entered into a Stock Purchase Agreement, dated as of the date hereof (the "Stockholder Purchase -------------------- Agreement"), which provides, among other things, that upon the terms and subject - --------- to the conditions therein, Purchasers will purchase from the Stockholder and the Stockholder will sell to Purchasers the Subject Shares. NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and subject to the terms and conditions set forth herein, the parties hereto hereby agree as follows: ARTICLE I. Section 1.1. Representations and Warranties of the Stockholder. The ------------------------------------------------- Stockholder represents and warrants to Purchasers, as of the date hereof and as of the closing under the Company Purchase Agreement (the "Closing Date"), as ------------ follows: (a) This Agreement has been duly executed and delivered by the Stockholder and, assuming due authorization, execution and delivery of this Agreement by Purchasers and the Company, is a valid and binding obligation of the Stockholder enforceable against the Stockholder in accordance with its terms, except that (i) the enforceability hereof may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereinafter in effect, affecting creditors' rights generally, and (ii) the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any proceeding therefor may be brought. (b) Neither the execution and delivery of this Agreement nor the performance by the Stockholder of its obligations hereunder will conflict with, result in a violation or breach of, or constitute a default (or an event that, with notice or lapse of time or both, would result in a default) or give rise to any right of termination, amendment, cancellation, or acceleration or result in the creation of any mortgage, pledge, hypothecation, rights of others, claim, security interest, charge, encumbrance, title defect, title retention agreement, voting trust agreement, interest, option, lien, charge or similar restriction or limitation (each, a "Lien") on any Shares (collectively, a "Stockholder ---- ----------- Conflict") under, (i) any contract, commitment, agreement, understanding, - -------- arrangement or restriction of any kind to which the Stockholder is a party or by which the Stockholder is bound, to the extent such Stockholder Conflict would be reasonably likely to affect the Stockholder's ability to consummate the transactions contemplated hereby or (ii) any injunction, judgment, writ, decree, order or ruling applicable to the Stockholder, to the extent such Stockholder Conflict would be reasonably likely to affect the Stockholder's ability to consummate the transactions contemplated hereby. (c) To the knowledge of the Stockholder, neither the execution and delivery of this Agreement nor the performance by the Stockholder of its obligations hereunder will violate any law, decree, statute, rule or regulation applicable to the Stockholder or require any order, consent, authorization or approval of, filing or registration with, or declaration or notice to, any court, administrative agency or other governmental body or authority, other than any required notices or filings pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the "HSR Act") or the federal securities laws. ------- Section 1.2. Representations and Warranties of Purchasers. Each -------------------------------------------- Purchaser jointly and severally represents and warrants to the Stockholder and the Company, as of the date hereof and as of the Closing Date, as follows: (a) Each Purchaser is a limited partnership duly organized, validly existing and in good standing under the laws -2- of the jurisdiction of its organization, and each Purchaser has the requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and has taken all necessary action to authorize the execution, delivery and performance of this Agreement. (b) This Agreement and the other Transaction Documents to which it is a party has been duly executed and delivered by each Purchaser and, assuming the due execution and delivery of this Agreement by the Stockholder and of such other Transaction Documents by the other parties thereto, are the valid and binding obligations of each Purchaser, enforceable against each Purchaser in accordance with their respective terms, except that (i) the enforceability hereof and thereof may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereinafter in effect, affecting creditors' rights generally, and (ii) the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any proceeding therefor may be brought. (c) Neither the execution and delivery of this Agreement nor the performance by each Purchaser of its obligations hereunder will conflict with, result in a violation or breach of, or constitute a default (or an event that, with notice or lapse of time or both, would result in a default) or give rise to any right of termination, amendment, cancellation, or acceleration under (collectively, a "Purchaser Conflict"), (i) its certificate of limited ------------------ partnership, partnership agreement or comparable instrument, (ii) any contract, commitment, agreement, understanding, arrangement or restriction of any kind to which such Purchaser is a party or by which such Purchaser is bound to the extent such Purchaser Conflict would materially affect such Purchaser's ability to consummate the transactions contemplated under this Agreement or the Stockholder Purchase Agreement or (iii) any injunction, judgment, writ, decree, order or ruling applicable to such Purchaser to the extent such Purchaser Conflict would materially affect such Purchaser's ability to consummate the transactions contemplated under this Agreement or the Stockholder Purchase Agreement. (d) Neither the execution and delivery of this Agreement nor the performance by each Purchaser of its obligations hereunder will violate any law, decree, statute, rule or regulation applicable to such Purchaser or require any order, consent, authorization or approval of, filing or registration with, or declaration or notice to, any corporation, Person, firm, Governmental Entity (as such term is defined in the Company Purchase Agreement) or public or judicial authority, other than any required notices or filings with the Federal Communications Commission or pursuant to the HSR Act or the federal securities laws. -3- (e) Any Subject Shares acquired upon exercise of the Purchaser Option (as defined in Section 4.1 of this Agreement) will be acquired for such Purchaser's own account, for investment purposes only and will not be, and the Purchaser Option is not being, acquired by such Purchaser with a view to public distribution thereof in violation of any applicable provisions of the Securities Act of 1933, as amended (the "Securities Act"). -------------- ARTICLE II. Section 2.1. Transfer of the Shares. During the term of this ---------------------- Agreement, except as otherwise provided herein or in the Stockholder Purchase Agreement, the Stockholder will not (a) tender into any tender or exchange offer or otherwise sell, transfer, pledge, assign, hypothecate or otherwise dispose of, or encumber with any Lien, any of the Subject Shares, (b) acquire any shares of Common Stock or other securities of the Company (otherwise than in connection with a transaction of the type described in Section 2.2 of this Agreement), (c) deposit the Subject Shares into a voting trust, enter into a voting agreement or arrangement with respect to the Subject Shares or grant any proxy or power of attorney with respect to the Subject Shares, (d) enter into any contract, option or other arrangement or undertaking with respect to the direct or indirect acquisition or sale, transfer, pledge, assignment, hypothecation or other disposition of any interest in or the voting of any shares of Common Stock or any other securities of the Company or (e) amend, modify or terminate or cause any amendment, modification or termination of the TSP/Walston Agreement. Section 2.2. Adjustments. ----------- (a) In the event (i) of any stock dividend, stock split, recapitalization, reclassification, combination or exchange of shares of capital stock or other securities of the Company on, of or affecting the Subject Shares or the like or any other action that would have the effect of changing the Stockholder's ownership of the Company's capital stock or other securities or (ii) the Stockholder becomes the beneficial owner of any additional shares of Common Stock or other securities of the Company, then the terms of this Agreement will apply to the shares of capital stock held by the Stockholder immediately following the effectiveness of the events described in clause (i) or the Stockholder becoming the beneficial owner thereof, as described in clause (ii), as though they were Subject Shares hereunder. (b) The Stockholder hereby agrees, while this Agreement is in effect, promptly to notify Purchasers of the number of any new shares of the Common Stock acquired by the Stockholder, if any, after the date hereof. -4- ARTICLE III. Section 3.1. Voting Agreement. The Stockholder, by this Agreement, ---------------- does hereby constitute and appoint Purchasers, or any nominee thereof, with full power of substitution, during and for the term of this Agreement, as its true and lawful attorney and proxy for and in its name, place and stead, to vote all of the Shares and any other shares of Common Stock beneficially owned at the time of such vote, at any annual, special or adjourned meeting of the stockholders of the Company (and this appointment will include the right to sign its name (as stockholder) to any consent, certificate or other document relating to the Company that the laws of the State of Delaware may require or permit) (x) in favor of approval and adoption of the Company Purchase Agreement, the Company Voting Matters (as defined in the Company Purchase Agreement) and the other transactions contemplated thereby and (y) against (a) any Takeover Proposal (as defined in the Company Purchase Agreement), (b) any action or agreement that would result in a breach in any respect of any covenant, agreement, representation or warranty of the Company under the Company Purchase Agreement and (c) the following actions (other than the other transactions contemplated by the Company Purchase Agreement): (i) any extraordinary corporate transaction, such as a merger, consolidation or other business combination involving the Company or its subsidiaries; (ii) a sale, lease or transfer of a substantial amount of assets of the Company or one of its subsidiaries, or a reorganization, recapitalization, dissolution or liquidation of the Company or its subsidiaries; (iii) (A) any change in a majority of the persons who constitute the Board of Directors of the Company as of the date hereof; (B) any change in the present capitalization of the Company or any amendment of the Certificate of Incorporation and Bylaws of the Company, as amended through the date hereof; (C) any other material change in the Company's corporate structure or business; or (D) any other action that, in the case of each of the matters referred to in clauses (iii)(A), (B) and (C) is intended, or could reasonably be expected, to impede, interfere with, delay, postpone, or adversely affect the transactions contemplated by this Agreement, the Stockholder Purchase Agreement and the Company Purchase Agreement. This proxy and power of attorney is a proxy and power coupled with an interest, and the Stockholder declares that it is irrevocable during and for the term of this Agreement. The Stockholder hereby revokes all and any other proxies with respect to the Shares that it may have heretofore made or granted and agrees that no other writing or instrument shall be required in order to grant the proxy and rights to Purchasers granted hereby. Section 3.2. No Solicitation. The Stockholder will not, directly or --------------- indirectly, through any agent, financial advisor, attorney, accountant or other representative or otherwise, (i) solicit, initiate or encourage submission of proposals or offers from any Person relating to, or that could reasonably be expected to lead to, a sale or transfer of any of -5- the Shares or a Takeover Proposal or (ii) participate in any negotiations or discussions regarding, or furnish to any other Person any information with respect to, or otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other Person to do or seek a sale or transfer of any of the Shares or a Takeover Proposal. The Stockholder shall immediately advise Purchasers in writing of the receipt of a request for information or any inquiries or proposals relating to a sale or transfer of any of the Shares or a Takeover Proposal. Notwithstanding the foregoing, this Section 3.2 shall not restrict any designee of the Stockholder to the Company's Board of Directors from fulfilling its fiduciary duties as such a director pursuant to Section 5 of the Company Purchase Agreement. ARTICLE IV. Section 4.1. Grant of Option. The Stockholder hereby grants --------------- Purchasers an irrevocable option (the "Purchaser Option") to purchase for cash, ---------------- in the manner set forth below, all but not less than all of the Subject Shares beneficially owned by the Stockholder at a price (the "Exercise Price") per -------------- Share equal to $7.50 per Share (the "Per Share Amount"). In the event of any ---------------- stock dividends, stock splits, recapitalizations, combinations, exchanges of shares or the like, the Per Share Amount and the Exercise Price will be appropriately adjusted for the purpose of this Section 4.1. Section 4.2. Exercise of Option. ------------------ (a) Subject to the conditions set forth in Section 4.4 hereof, the Purchaser Option may be exercised by Purchasers, in whole but not in part, at any time after the occurrence of any Trigger Event (as defined below) until the termination of the Purchaser Option set forth in Section 4.3. The Company shall notify Purchasers and the Stockholder promptly in writing of the occurrence of any Trigger Event, it being understood that the giving of such notice by the Company is not a condition to the right of Purchasers to exercise the Purchaser Option. In the event Purchasers wish to exercise the Purchaser Option, Purchasers shall deliver to the Stockholder a written notice of such exercise (the "Exercise Notice"). The closing of a purchase of Subject Shares (a --------------- "Closing") will occur at a place, on a date and at a time designated by ------- Purchasers in the Exercise Notice delivered at least two and not more than five Business Days (as defined in the Company Purchase Agreement) prior to the date of the Closing. (b) A "Trigger Event" means (provided Purchasers are not in material ------------- breach of their representations, warranties or covenants set forth in Section 1.3 hereof or in any Transaction Document) any one of the following: (a) the Company Purchase Agreement is terminated under circumstances that could entitle Purchasers to the Termination Fee/Expense Reimbursement (as -6- defined in Section 10.2(b) of the Company Purchase Agreement), (b) a tender or exchange offer for some or all of the shares of Common Stock shall have been publicly proposed to be made or shall have been made by another person, or (c) it shall have been publicly disclosed or Purchasers shall have otherwise learned that (i) any person or "group" (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), other than Purchasers, shall have acquired or proposed to acquire beneficial ownership of more than 20% of any class or series of capital stock of the Company (including the Common Stock), through the acquisition of stock, the formation of a group or otherwise, or shall have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial ownership of more than 20% of any class or series of capital stock of the Company other than as disclosed in a Schedule 13D or 13G on file with the Securities and Exchange Commission on December 31, 1998, (ii) any such person or group which, prior to December 31, 1998, had filed a Schedule 13D or 13G with the Securities and Exchange Commission shall have acquired or proposed to acquire beneficial ownership of additional shares of any class or series of capital stock of the Company, through the acquisition of stock, the formation of a group or otherwise, constituting 5% or more of any such class or series, or shall have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial ownership of additional shares of any class or series of capital stock of the Company (including the Common Stock) constituting 5% or more of any such class or series; (iii) any person (other than Purchasers) shall have filed a Notification and Report Form under the HSR Act, or made a public announcement reflecting an intent to acquire the Company or any assets or securities of the Company; or (iv) any person or group (other than Purchasers) shall have entered into or offered to enter into a definitive agreement or an agreement in principle with respect to a merger, consolidation or other business combination with the Company. Section 4.3. Termination of Option. The Purchaser Option will --------------------- terminate upon the earliest to occur of: (i) the consummation of the transactions contemplated by the Company Purchase Agreement, (ii) the termination of the Company Purchase Agreement other than upon or during the continuance of a Trigger Event; or (iii) September 30, 1999 (or if, at the expiration of such period the Purchaser Option cannot be exercised by reason of any applicable judgment, decree, order, law or regulation, ten Business Days after such impediment to exercise has been removed or has become final and not subject to appeal but in no event later than December 31, 1999). Upon the giving by Purchasers to the Stockholder of the Exercise Notice and the tender of the aggregate Exercise Price, Purchasers will be deemed to be the holders of record of the Subject Shares transferable upon such exercise, notwithstanding that the stock transfer books of the Company are then closed or that certificates representing such Subject Shares have not been actually delivered to Purchasers. -7- Section 4.4. Conditions to Closing. The obligation of the --------------------- Stockholder to sell the Subject Shares to Purchasers hereunder is subject to the conditions that (i) all waiting periods, if any, under the HSR Act, applicable to the sale of the Subject Shares or the acquisition of the Subject Shares by Purchasers hereunder, have expired or have been terminated; (ii) all consents, approvals, orders or authorizations of, or registrations, declarations or filings with, any court, administrative agency or other governmental body or authority, if any, required in connection with sale of the Subject Shares or the acquisition of the Subject Shares by Purchasers hereunder have been obtained or made; and (iii) no preliminary or permanent injunction or other order by any court of competent jurisdiction prohibiting or otherwise restraining such sale or acquisition is in effect. Section 4.5. Closing. At any Closing, (a) the Stockholder will ------- deliver to Purchasers or their designee a certificate or certificates in definitive form representing the number of Subject Shares designated by Purchasers in their Exercise Notice, such certificate or certificates with stock powers endorsed in blank or to be registered in the name of Purchasers or their designee and (b) Purchasers will deliver to the Stockholder by wire transfer of immediately available funds the aggregate Exercise Price for the Subject Shares being purchased. The Company will pay all expenses, and any and all United States federal, state and local taxes and other charges that may be payable in connection with the preparation, issue and delivery of stock certificates under this Section 4.5 in the name of Purchasers or their designee. Section 4.6. Registration Rights. ------------------- (a) (i) Following termination of the Company Purchase Agreement, Purchasers may by written notice (the "Registration Notice") to the Company, ------------------- which Registration Notice the Purchasers shall concurrently send to the Stockholder, request the Company to register under the Securities Act all or any part of the shares of Common Stock acquired under the Purchaser Option (the "Purchaser Owned Shares" and such Purchaser Owned Shares requested to be - ----------------------- registered for sale, the "Registrable Securities") pursuant to a bona fide firm ---------------------- commitment underwritten public offering in which Purchasers and the underwriters shall effect as wide a distribution of such Registrable Securities as is reasonably practicable (a "Permitted Offering"). The Registration Notice will ------------------ include a certificate executed by Purchasers and their proposed managing underwriter, which underwriter will be an investment banking firm of nationally recognized standing (the "Manager"), stating that (A) they have a good faith ------- intention to commence promptly a Permitted Offering and (B) the Manager in good faith believes that, based on the then prevailing market conditions, it will be able to sell the Registrable Securities at a per share price equal to at least 85% of the then Fair Market Value of such shares. -8- (b) The Company shall use reasonable best efforts to effect, as promptly as practicable, the registration under the Securities Act of the Registrable Securities pursuant to the terms of the Registration Rights Agreement, dated the date hereof, between Purchasers and the Company. ARTICLE V. Section 5.1. Termination. This Agreement will terminate, except for ----------- Article IV hereof which will only terminate as and when provided therein, on the earliest to occur of (A) the termination of the Company Purchase Agreement, (B) the consummation of the transactions contemplated by the Company Purchase Agreement, (C) the mutual agreement of the Stockholder, the Company and Purchasers to so terminate and (D) the Expiration Date (or, if applicable, the Extended Expiration Date) (each as defined in the Company Purchase Agreement). Section 5.2. Expenses. Except as otherwise expressly provided in -------- the Company Purchase Agreement or in the Stockholder Purchase Agreement, all costs and expenses incurred by any of the parties hereto will be borne by the party incurring such costs and expenses. Purchasers, on the one hand, and the Stockholder, on the other hand, will indemnify and hold harmless the other from and against any and all claims or liabilities for finder's fees or brokerage commissions or other like payments incurred by reason of action taken by it. Section 5.3. Further Assurances. Each party hereto will execute and ------------------ deliver all such further documents and instruments and take all such further action as may be necessary in order to consummate the transactions contemplated hereby. Section 5.4. Publicity. Purchasers and the Stockholder shall --------- consult with each other and the Company before issuing any press release or otherwise making any public statements with respect to this Agreement or the Company Purchase Agreement or the other transactions contemplated hereby or thereby and shall not issue any such press release or make any such public statement before such consultation, except as may be required by law or applicable stock exchange rules. The Company shall be an express third party beneficiary of this Section 5.4. Section 5.5. Enforcement of the Agreement. The Stockholder and ---------------------------- Purchasers each acknowledge that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that each party hereto will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any state or federal court sitting in New York County, New York, this being in addition to any other remedy to which they are entitled at law or in equity. -9- Section 5.6. Miscellaneous. ------------- (a) All representations and warranties contained herein will survive for eighteen (18) months after the termination hereof. The covenants and agreements made herein will survive the Closing Date in accordance with their respective terms. (b) Any provision of this Agreement may be waived at any time by the party that is entitled to the benefits thereof. No such waiver, amendment or supplement will be effective unless in writing and signed by the party or parties sought to be bound thereby. Any waiver by any party of a breach of any provision of this Agreement will not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement or one or more sections hereof will not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. (c) This Agreement, the other Transaction Documents and the other agreements attached as Exhibits to the Company Purchase Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof, and supersede all prior agreements among such parties with respect to such matters. This Agreement may not be amended, changed, supplemented, waived or otherwise modified, except upon the delivery of a written agreement executed by the parties hereto. (d) This Agreement will be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of laws principles thereof. (e) With respect to any suit, action or proceeding initiated by a party to this Agreement arising out of, under or in connection with this Agreement or the Stockholder Purchase Agreement, the Stockholder and Purchasers each hereby submit to the exclusive jurisdiction of any state or federal court sitting in New York County, New York and irrevocably waive, to the fullest extent permitted by law, any objection that they may now have or hereafter obtain to the laying of venue in any such court in any such suit, action or proceeding. (f) The descriptive headings contained herein are for convenience and reference only and will not affect in any way the meaning or interpretation of this Agreement. (g) All notices and other communications hereunder will be in writing and will be given (and will be deemed to have been duly given upon receipt) by delivery in person, by telecopy, or by registered or certified mail, postage prepaid, return receipt requested, addressed as follows: -10- If to any of Purchasers to: Warburg, Pincus Equity Partners, L.P. 466 Lexington Avenue New York, NY 10017 Attention: David E. Libowitz Telecopier: (212) 878-9351 With a copy to: Willkie Farr & Gallagher 787 Seventh Avenue New York, New York 10019 Attention: Neil Novikoff, Esq. Telecopier: (212) 728-8111 If to the Stockholder to: Technical Services Partners, L.P. c/o Steinhardt Partners 605 Third Avenue New York, New York 10158 Attention: Shimon Topor Telecopier: With a copy to: Schulte Roth & Zabel LLP 900 Third Avenue New York, NY 10022 Attention: Stuart D. Freedman, Esq. Telecopier: 212-593-5955 or to such other address as any party may have furnished to the other parties in writing in accordance herewith. (h) This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original, but all of which together will constitute one agreement. (i) This Agreement and each of the other Transaction Documents (as such term is defined in the Company Purchase Agreement) shall (i) be executed on the Closing Date and at such time shall be valid and binding obligations of each of the parties and signatories thereto and (ii) simultaneously be consummated at the Closing. (j) Neither this Agreement nor any of the rights or obligations of any party hereto may be assigned without the prior written consent of the other parties hereto, except that Purchasers may, without such consent, assign this Agreement and any of such rights and obligations to one or more of their affiliates unless such assignment causes any representation or warranty to be untrue or incorrect in any material respect or -11- unless such assignment shall materially delay the Closing. Any such assignment shall not, however, act as a release of the assigning Person. Subject to the foregoing, this Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, and no other Person shall have any right, benefit or obligation hereunder. (k) If any term or provision of this Agreement is determined to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms and provisions of this Agreement will nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party hereto. Upon any such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto will negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated by this Agreement are consummated to the extent possible. (l) All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity will be cumulative and not alternative, and the exercise of any thereof by either party will not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. [The remainder of this page is intentionally left blank.] -12- IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the date first above written. WARBURG, PINCUS EQUITY PARTNERS, L.P. By: Warburg, Pincus & Co., its general partner By: /s/ David E. Libowitz ---------------------- Name: David E. Libowitz Title: Managing Director WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS I, C.V. By: Warburg, Pincus & Co., its general partner By: /s/ David E. Libowitz ----------------------- Name: David E. Libowitz Title: Managing Director WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS II, C.V. By: Warburg, Pincus & Co., its general partner By: /s/ David E. Libowitz ---------------------- Name: David E. Libowitz Title: Managing Director WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS III, C.V. By: Warburg, Pincus & Co., its general partner By: /s/ David E. Libowitz ---------------------- Name: David E. Libowitz Title: Managing Director S-1 TECHNICAL SERVICES PARTNERS, L.P. By: Technical Service Holding, its general partner By: /s/ Edward Kirtman ------------------------------ Name: Edward Kirtman Title: Vice President S-2 EX-1.3 4 VOTING AGMT DATED 12/06/1999 EXHIBIT 1.3 ================================================================================ VOTING AGREEMENT by and among FOUR MEDIA COMPANY, TECHNICAL SERVICES PARTNERS, L.P. and LIBERTY MEDIA CORPORATION dated as of December 6, 1999 ================================================================================ TABLE OF CONTENTS
Page ---- ARTICLE I. Section 1.1. Representations and Warranties of the Stockholder............ 1 Section 1.2. Representations and Warranties of Liberty.................... 3 Section 1.3. Representations and Warranties of the Company................ 4 ARTICLE II. Section 2.1. Transfer of the Shares....................................... 5 Section 2.2. Adjustments.................................................. 5 Section 2.3. Stop Transfer................................................ 5 ARTICLE III. Section 3.1. Voting Agreement............................................. 5 Section 3.2. No Solicitation.............................................. 6 ARTICLE IV. Section 4.1. Termination.................................................. 7 Section 4.2. Expenses..................................................... 7 Section 4.3. Further Assurances........................................... 7 Section 4.4. Publicity.................................................... 7 Section 4.5. Enforcement of the Agreement................................. 7 Section 4.6. Miscellaneous................................................ 7
(i) SCHEDULE 1.1(b) Additional Securities Beneficially Owned by Stockholder SCHEDULE 1.1(c) Convertible Securities Beneficially Owned by Stockholder SCHEDULE 1.1(f) Stockholder Defaults, Conflicts, etc. SCHEDULE 1.2(d) Liberty Defaults, Conflicts, etc. SCHEDULE 1.3(d) Company Defaults, Conflicts, etc. (ii) TABLE OF DEFINED TERMS
Page ---- Agreement.................................................................. 1 Common Stock............................................................... 1 Exchange Act............................................................... 1 Lien....................................................................... 1 Merger Agreement........................................................... 1 Shares..................................................................... 1 Stockholder................................................................ 1
(iii) VOTING AGREEMENT, dated as of December 6, 1999 (this "Agreement"), by --------- and among Liberty Media Corporation, a Delaware corporation ("Liberty" and, ------- collectively with AT&T Corp., a New York corporation ("Parent") and D-Group ------ Merger Corp., a Delaware corporation ("Merger Sub"), the "Acquirors"), Four ---------- --------- Media Company, a Delaware corporation (the "Company"), and Technical Services ------- Partners L.P., a Delaware limited partnership (the "Stockholder"). ----------- WHEREAS, as of the date hereof, Stockholder is the record and beneficial owner of [1,432,875] shares (the "Shares") of common stock, $.01 par ------ value per share (the "Common Stock") of the Company; and ------------ WHEREAS, concurrently with the execution of this Agreement, Parent, Merger Sub, Liberty Media and the Company have entered into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger Agreement"), pursuant ---------------- to which, and upon the terms and subject to the conditions thereof, the Company will be acquired by Parent by means of a merger (the "Merger") of Merger Sub ------ with and into the Company, with the Company continuing as the surviving entity; and WHEREAS, as a condition to the willingness of Liberty and the Company to enter into the Merger Agreement, Liberty has requested the Company and the Stockholder to agree, and in order to induce Liberty to enter into the Merger Agreement, Stockholder has agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and subject to the terms and conditions set forth herein, the parties hereto hereby agree as follows: ARTICLE I. Section 1.1. Representations and Warranties of the Stockholder. As of the date hereof and as of the date of the closing under the Merger Agreement, Stockholder hereby represents and warrants to Liberty as follows: (a) Stockholder is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), ------------ which meaning will apply for all purposes of this Agreement) of, and has good title to, all of the Shares, free and clear of any mortgage, pledge, hypothecation, rights of others, claim, security interest, charge, encumbrance, title defect, title retention agreement, voting trust agreement, interest, option, lien, charge or similar restriction or limitation (each, a "Lien") ---- (including any restriction on the right to vote, sell or otherwise dispose of the Shares) except for immaterial Liens which shall not materially affect Stockholder's ability to perform its obligations under this Agreement. (b) Except as set forth on Schedule 1.1(b), the Shares constitute all of the securities (as defined in Section 3(10) of the Exchange Act, which definition will apply for all purposes of this Agreement) of the Company beneficially owned, directly or indirectly, by Stockholder (excluding any securities beneficially owned by any of its affiliates or associates (as such terms are defined in Rule 12b-2 under the Exchange Act, which definitions will apply for all purposes of this Agreement) as to which it does not have voting or investment power. (c) Except as set forth on Schedule 1.1(c), and except for the Shares, Stockholder does not, directly or indirectly, beneficially own or have any option, warrant or other right to acquire any securities of the Company that are or may by their terms become entitled to vote or any securities that are convertible or exchangeable into or exercisable for any securities of the Company that are or may by their terms become entitled to vote, nor is Stockholder subject to any contract, commitment, arrangement, understanding or relationship (whether or not legally enforceable), other than this Agreement, that allows or obligates it to vote or acquire any securities of the Company. Stockholder has the sole power to vote the Shares and has not granted a proxy to any other Person (as defined in the Merger Agreement, which definition will apply for all purposes of this Agreement) to vote such Shares, subject to the limitations set forth in this Agreement. (d) Stockholder is a partnership duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has the power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and has taken all necessary action to authorize the execution, delivery and performance of this Agreement. (e) This Agreement has been duly executed and delivered by Stockholder and, assuming due authorization, execution and delivery of this Agreement by Liberty and the Company, is a valid and binding obligation of Stockholder enforceable against Stockholder in accordance with its terms, except that (i) the enforceability hereof may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereinafter in effect, affecting creditors' rights generally and (ii) the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any proceeding therefor may be brought. (f) Neither the execution and delivery of this Agreement nor the performance by Stockholder of its obligations hereunder will conflict with, result in a violation or breach of, or constitute a default (or an event that, with notice or lapse of time or both, would result in a default) or give rise to any right of termination, amendment, cancellation, or acceleration or result in the creation of any Lien on any Shares under (collectively, a "Conflict"), (i) -------- its organizational documents, (ii) any contract, commitment, agreement, understanding, arrangement or restriction of any kind to which Stockholder is a party or by which Stockholder is bound, to the extent such Conflict would materially affect Stockholder's ability to consummate the transactions contemplated hereby or (iii) any injunction, judgment, writ, decree, order or ruling applicable to Stockholder, to the extent such Conflict would materially affect Stockholder's ability to consummate the transactions contemplated under this Agreement. (g) Except as set forth on Schedule 1.1(f), neither the execution and delivery of this Agreement nor the performance by Stockholder of its obligations hereunder will violate any law, decree, statute, rule or regulation applicable to Stockholder or require any order, -2- consent, authorization or approval of, filing or registration with, or declaration or notice to, any corporation, Person, firm, Governmental Entity (as such term is defined in the Merger Agreement) or public or judicial authority, other than any required notices or filings with the Federal Communications Commission ("FCC") or pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("Hart Scott Act"), as amended, and the rules and regulations promulgated thereunder or the federal securities laws. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which the Stockholder is a trustee whose consent is required for the execution and delivery of this Agreement or the compliance by the Stockholder with the terms hereof. Section 1.2. Representations and Warranties of Liberty. As of the date hereof and the closing of the Merger Agreement, Liberty represents and warrants to Stockholder and the Company as follows: (a) Liberty is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and has the requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and has taken all necessary action to authorize the execution, delivery and performance of this Agreement. (b) This Agreement has been duly executed and delivered by Liberty and, assuming the due execution and delivery of this Agreement by Stockholder and the Company, is the valid and binding obligation of Liberty, enforceable against Liberty in accordance with its terms, except that (i) the enforceability hereof may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereinafter in effect, affecting creditors' rights generally, and (ii) the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any proceeding therefor may be brought. (c) Neither the execution and delivery of this Agreement nor the performance by Liberty of its obligations hereunder will Conflict with (i) its certificate of incorporation, (ii) any contract, commitment, agreement, understanding, arrangement or restriction of any kind to which Liberty is a party or by which Liberty is bound to the extent such Conflict would materially affect Liberty's ability to consummate the transactions contemplated hereby or (iii) any injunction, judgment, writ, decree, order or ruling applicable to Liberty to the extent such Conflict would materially affect Liberty's ability to consummate the transactions contemplated hereby. (d) Except as set forth on Schedule 1.2(d), neither the execution and delivery of this Agreement nor the performance by Liberty of its obligations hereunder will violate any law, decree, statute, rule or regulation applicable to Liberty or require any order, consent, authorization or approval of, filing or registration with, or declaration or notice to, any corporation, Person, firm, Governmental Entity or public or judicial authority, other than any required notices or filings with the FCC or pursuant to the Hart Scott Act, and the rules and regulations promulgated thereunder or the federal securities laws. -3- Section 1.3. Representations and Warranties of the Company. As of the date hereof and the closing of the Merger Agreement, the Company represents and warrants to Stockholder and Liberty as follows: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and has the requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and has taken all necessary action to authorize the execution, delivery and performance of this Agreement. (b) This Agreement has been duly executed and delivered by the Company and, assuming due execution and delivery of this Agreement by Liberty and Stockholder, is the valid and binding obligation of the Company, enforceable against it in accordance with its terms, except that (i) the enforceability hereof may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereinafter in effect, affecting creditors' rights generally, and (ii) the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any proceeding therefor may be brought. (c) Neither the execution and delivery of this Agreement nor the performance by the Company of its obligations hereunder will Conflict with (i) its certificate of incorporation, (ii) any contract, commitment, agreement, understanding, arrangement or restriction of any kind to which the Company is a party or by which the Company is bound to the extent such Conflict would materially affect its ability to consummate the transactions contemplated hereby or (iii) any injunction, judgment, writ, decree, order or ruling applicable to the Company to the extent such Conflict would materially affect the Company's ability to consummate the transactions contemplated hereby. (d) Except as set forth on Schedule 1.3(d), neither the execution and delivery of this Agreement nor the performance by the Company of its obligations hereunder will violate any law, decree, statute, rule or regulation applicable to the Company or require any order, consent, authorization or approval of, filing or registration with, or declaration or notice to, any corporation, Person, firm, Governmental Entity or public or judicial authority, other than any required notices or filings with the FCC or pursuant to the Hart Scott Act, and the rules and regulations promulgated thereunder or the federal securities laws. (e) The Company's Board of Directors has duly and validly authorized the execution and delivery by the Company of this Agreement and the performance by the Company of its obligations hereunder in accordance with Section 203 of the DGCL (as defined in the Merger Agreement) and other applicable provisions of the DGCL. The Company will (i) take all reasonable steps to exempt this Agreement and the Merger Agreement from the requirements of any applicable state takeover law and (ii) assist in any challenge by any of the Acquirors or any of their respective Affiliates to the validity or applicability to this Agreement or the Merger or any state takeover law. -4- ARTICLE II. Section 2.1. Transfer of the Shares. During the term of this Agreement, Stockholder will not (a) tender into any tender or exchange offer or otherwise sell, transfer, pledge, assign, hypothecate or otherwise dispose of, or encumber with any Lien, any of the Shares, (b) acquire any shares of Common Stock or other securities of the Company (otherwise than in connection with a transaction of the type described in Section 2.2 of this Agreement or pursuant to an exercise of outstanding warrants), (c) deposit the Shares into a voting trust (other than in connection with this Agreement), enter into any other voting agreement or similar arrangement with respect to the Shares or grant any proxy or power of attorney with respect to the Shares, (d) enter into any contract, option or other arrangement or undertaking with respect to the direct or indirect acquisition or sale, transfer, pledge, assignment, hypothecation or other disposition of any interest in or the voting of any shares of Common Stock or any other securities of the Company, or (e) take any action that would have the effect of preventing or disabling Stockholder from performing its obligations under this Agreement. Section 2.2. Adjustments. (a) In the event (i) of any stock dividend, stock split, recapitalization, reclassification, combination or exchange of shares of capital stock or other securities of the Company on, of or affecting the Shares or the like or any other action that would have the effect of changing Stockholder's ownership of the Company's capital stock or other securities or (ii) Stockholder becomes the beneficial owner of any additional shares of Common Stock or other securities of the Company subject to Section 2.1, then the terms of this Agreement will apply to the shares of capital stock held by Stockholder immediately following the effectiveness of the events described in clause (i) or Stockholder becoming the beneficial owner thereof, as described in clause (ii), as though they were Shares hereunder. (b) Stockholder hereby agrees, while this Agreement is in effect, promptly to notify Liberty of the number of any new shares of the Common Stock acquired by Stockholder, if any, after the date hereof. Section 2.3. Stop Transfer. Stockholder hereby agrees with, and covenants to, each other party hereto, that Stockholder shall not request that the Company register the transfer (book entry or otherwise) of any certificate or uncertificated interest representing any of its Shares, unless such transfer is made in compliance with this Agreement (including the provisions of Section 2.1 hereof). The Company agrees with, and covenants to, each other party hereto that the Company shall not register the transfer (book entry or otherwise) of any certificate or uncertificated interest representing any of the Shares, unless such transfer is made in compliance with this Agreement (including the provisions of Section 2.1 hereof). ARTICLE III. Section 3.1. Voting Agreement. Stockholder, by this Agreement, does hereby constitute and appoint Liberty, or any nominee thereof, with full power of substitution, during and for the term -5- of this Agreement, as its true and lawful attorney and proxy for and in its name, place and stead, to vote all the Shares Stockholder beneficially owns at the time of such vote, at any annual, special or adjourned meeting of the stockholders of the Company (and this appointment will include the right to sign on its behalf (as a stockholder) to any consent, certificate or other document relating to the Company that laws of the State of Delaware may require or permit) (x) in favor of approval and adoption of the Merger Agreement and the other transactions contemplated thereby and (y) against (a) any Extraordinary Transaction (as defined in the Merger Agreement), (b) any action or agreement that would result in a breach in any respect of any covenant, agreement, representation or warranty of the Company under the Merger Agreement and (c) the following actions (other than the other transactions contemplated by the Merger Agreement): (i) any extraordinary corporate transaction, such as a merger, consolidation or other business combination involving the Company or its subsidiaries; (ii) a sale, lease or transfer of a substantial amount of assets of the Company or one of its subsidiaries, or a reorganization, recapitalization, dissolution or liquidation of the Company or its subsidiaries or (iii) (A) any change in a majority of the persons who constitute the Board of Directors of the Company as of the date hereof; (B) any change in the present capitalization of the Company or any amendment of the Certificate of Incorporation or Bylaws of the Company, as amended through the date hereof; (C) any other material change in the Company's corporate structure or business; or (D) any other action that, in the case of each of the matters referred to in clauses (iii)(A), (B) and (C) is intended, or could reasonably be expected, to impede, interfere with, delay, postpone, or adversely affect the transactions contemplated by this Agreement and the Merger Agreement. This proxy and power of attorney is a proxy and power coupled with an interest, and Stockholder declares that it is irrevocable during and for the term of this Agreement. Stockholder hereby revokes all and any other proxies with respect to the Shares that it may have heretofore made or granted and agrees that no other writing or instrument shall be required in order to grant the proxy and rights to Liberty granted hereby. For Shares as to which Stockholder is the beneficial but not the record owner, Stockholder shall use its reasonable best efforts to cause any record owner of such Shares to grant to Liberty a proxy to the same effect as that contained herein. Section 3.2. No Solicitation. Stockholder will not, directly or indirectly, through any agent, financial advisor, attorney, accountant or other representative or otherwise, (i) engage in any Extraordinary Transaction, (ii) enter into any agreement or understanding with any person other than Liberty or Parent with respect to any Extraordinary Transaction, (iii) participate or engage in any discussions or negotiations with any person other than Liberty or Parent relating to any of the foregoing, (iv) provide any material non-public information regarding the Company or any of its Subsidiaries or any of the Company's securities to any person other than Liberty, Parent or Stockholder's affiliates and advisors in connection with any of the foregoing. Stockholder agrees to immediately advise Liberty in writing of the receipt of any request for information or any inquiries or proposals relating to a sale or transfer of any of the Shares or any Extraordinary Transaction. Notwithstanding the foregoing, this Section 3.2 shall not restrict Stockholder from fulfilling its fiduciary duties as a director of the Company pursuant to Section 7.5(c) of the Merger Agreement. -6- ARTICLE IV. Section 4.1. Termination. This Agreement shall become effective on the date hereof and shall continue in effect until the earlier of (i) the termination of the Merger Agreement in accordance with its terms (other than any such termination following a material breach of the Merger Agreement by the Company or Stockholder and (ii) the consummation of the Merger. Section 4.2. Expenses. Except as otherwise expressly provided in the Merger Agreement, all costs and expenses incurred by any of the parties hereto will be borne by the party incurring such costs and expenses. Liberty, the Company and Stockholder will indemnify and hold harmless each other from and against any and all claims or liabilities for finder's fees or brokerage commissions or other like payments incurred by reason of action taken by it or any of them, as the case may be. Section 4.3. Further Assurances. Each party hereto will execute and deliver all such further documents and instruments and take all such further action as may be necessary in order to consummate the transactions contemplated hereby. Section 4.4. Publicity. Liberty, the Company and Stockholder shall consult with each other and the Company before issuing any press release or otherwise making any public statements with respect to this Agreement or the Merger Agreement or the other transactions contemplated hereby or thereby and shall not issue any such press release or make any such public statement before such consultation, except as may be required by law or applicable stock exchange rules. Section 4.5. Enforcement of the Agreement. Stockholder, the Company and Liberty each acknowledge that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that each party hereto will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. Section 4.6. Miscellaneous. (a) All representations and warranties contained herein will terminate upon the termination of this Agreement. The covenants and agreements made herein will survive the Closing Date in accordance with their respective terms. (b) Any provision of this Agreement may be waived at any time by the party that is entitled to the benefits thereof. No such waiver, amendment or supplement will be effective unless in writing and signed by the party or parties sought to be bound thereby. Any waiver by any party of a breach of any provision of this Agreement will not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement or one or more sections hereof will not be considered a waiver or deprive that -7- party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. (c) This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements among such parties with respect to such matters. This Agreement may not be amended, changed, supplemented, waived or otherwise modified, except upon the delivery of a written agreement executed by the parties hereto. (d) This Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of laws principles thereof. (e) With respect to any suit, action or proceeding initiated by a party to this Agreement arising out of, under or in connection with this Agreement, Stockholder, the Company and Liberty hereby submit to the exclusive jurisdiction of any state or federal court sitting in the State of California and irrevocably waive, to the fullest extent permitted by law, any objection that they may now have or hereafter obtain to the laying of venue in any such court in any such suit, action or proceeding. (f) The descriptive headings contained herein are for convenience and reference only and will not affect in any way the meaning or interpretation of this Agreement. (g) All notices and other communications hereunder will be in writing and will be given (and will be deemed to have been duly given upon receipt) by delivery in person, by facsimile, or by registered or certified mail, postage prepaid, return receipt requested, addressed as follows: If to Liberty: Liberty Media Corporation 9197 South Peoria Englewood, CO 80112 Attention: Charles Y. Tanabe, Esq. Facsimile: (720) 875-5382 With a copy to: Baker & Botts, L.L.P. 599 Lexington Avenue New York, NY 10022 Attention: Marc A. Leaf, Esq. Facsimile: (212) 705-5125 If to the Company: Four Media Company 625 Arizona Avenue -8- Santa Monica, CA 90401 Attention: William E. Niles, Esq. Facsimile: (310) 587-1277 With a copy to: Latham & Watkins 633 W. Fifth St., Suite 4000 Los Angeles, CA 90071 Attention: James P. Beaubien, Esq. Facsimile: (213) 891-8763 If to Stockholder: Technical Services Partners, L.P. c/o Triple Bogey, Inc. 9010 Briarcrest Lane Beverly Hills, CA 90210 Attention: Robert T. Walston Facsimile: (310) 275-3582 With a copy to: Alschuler, Grossman, Stein & Kahan LLP 2049 Century Park East, 39th Floor Los Angeles, CA 90067 Attention: Robert Kahan, Esq. Facsimile: (310) 552-6077 or to such other address as any party may have furnished to the other parties in writing in accordance herewith. (h) This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original, but all of which together will constitute one agreement. (i) This Agreement shall be executed at the same time as the Merger Agreement and at such time shall be valid and binding obligations of each of the parties and signatories thereto. (j) Neither this Agreement nor any of the rights or obligations of any party hereto may be assigned without the prior written consent of the other parties hereto, except that Liberty may, without such consent, assign this Agreement and any of such rights and obligations to one or more of its affiliates. Any such assignment shall not, however, act as a release of the assigning Person. Subject to the foregoing, this Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, and no other Person shall have any right, benefit or obligation hereunder. -9- (k) If any term or provision of this Agreement is determined to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms and provisions of this Agreement will nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party hereto. Upon any such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto will negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated by this Agreement are consummated to the extent possible. (l) All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity will be cumulative and not alternative, and the exercise of any thereof by either party will not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. [Signature pages follow] -10- IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the date first above written. LIBERTY MEDIA CORPORATION By: /s/ Charles Y. Tanabe ---------------------------------------- Name: Charles Y. Tanabe Title: Senior Vice President FOUR MEDIA COMPANY By: /s/ Robert T. Walston ---------------------------------------- Name: Title: TECHNICAL SERVICES PARTNERS, L.P. By: Triple Bogey, Inc., its general partner By: /s/ Robert T. Walston ------------------------------------- Name: Robert T. Walston Title: President S-1 SCHEDULE 1.1(b) ADDITIONAL SECURITIES BENEFICIALLY OWNED BY STOCKHOLDER See Schedule 1.1(c) SCHEDULE 1.1(c) CONVERTIBLE SECURITIES BENEFICIALLY OWNED BY STOCKHOLDER Robert T. Walston, the Chief Executive Officer of the Company, holds an option to purchase 2,500,000 shares of common stock of the Company at an exercise price of $8.00 per share. Mr. Walston is a limited partner of Stockholder, as well as the sole shareholder of Triple Bogey, Inc., the general partner of Stockholder. SCHEDULE 1.1(f) STOCKHOLDER DEFAULTS, CONFLICTS, ETC. None. SCHEDULE 1.2(d) LIBERTY DEFAULTS, CONFLICTS, ETC. None. SCHEDULE 1.3(d) COMPANY DEFAULTS, CONFLICTS, ETC. 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