<PAGE>
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)
<PAGE>
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).
<PAGE>
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.
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2. Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) [X]
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(b) [_]
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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)
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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
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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
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<PAGE>
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)
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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
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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
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<PAGE>
CUSIP No. 350872 10 7
----------------
1. Names of Reporting Persons. I.R.S. Identification Nos. of above
persons (entities only).
Robert T. Walston
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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
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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
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<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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
- --------------------------------
<PAGE>
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
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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ARTICLE I.
<S> <C>
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
</TABLE>
(i)
<PAGE>
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)
<PAGE>
TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
Page
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<S> <C>
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
</TABLE>
(ii)
<PAGE>
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:
<PAGE>
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-
<PAGE>
(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-
<PAGE>
(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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
(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-
<PAGE>
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
<PAGE>
TECHNICAL SERVICES PARTNERS, L.P.
By: Technical Service Holding, its general
partner
By: /s/ Edward Kirtman
------------------------------------------
Name: EDWARD KIRTMAN
Title VICE PRESIDENT
S-2
<PAGE>
SCHEDULE 1.1(b)
ADDITIONAL SECURITIES BENEFICIALLY OWNED BY STOCKHOLDER
-------------------------------------------------------
See Schedule 1.1 (c)
1 of 1
<PAGE>
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
<PAGE>
SCHEDULE 2.1
UNENCUMBERED SHARES OF STOCKHOLDER
----------------------------------
See Schedule 1.1 (c)
1 of 1
<PAGE>
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
===============================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I.
<S> <C>
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
</TABLE>
(i)
<PAGE>
TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
Page
----
<S> <C>
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
</TABLE>
(ii)
<PAGE>
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:
<PAGE>
(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-
<PAGE>
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-
<PAGE>
(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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
(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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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-
<PAGE>
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
<PAGE>
TECHNICAL SERVICES PARTNERS, L.P.
By: Technical Service Holding, its
general partner
By: /s/ Edward Kirtman
------------------------------
Name: Edward Kirtman
Title: Vice President
S-2
<PAGE>
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
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
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
</TABLE>
(i)
<PAGE>
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)
<PAGE>
TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Agreement.................................................................. 1
Common Stock............................................................... 1
Exchange Act............................................................... 1
Lien....................................................................... 1
Merger Agreement........................................................... 1
Shares..................................................................... 1
Stockholder................................................................ 1
</TABLE>
(iii)
<PAGE>
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
<PAGE>
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,
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<PAGE>
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-
<PAGE>
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.
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
(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]
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<PAGE>
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
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<PAGE>
SCHEDULE 1.1(b)
ADDITIONAL SECURITIES BENEFICIALLY OWNED BY STOCKHOLDER
See Schedule 1.1(c)
<PAGE>
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.
<PAGE>
SCHEDULE 1.1(f)
STOCKHOLDER DEFAULTS, CONFLICTS, ETC.
None.
<PAGE>
SCHEDULE 1.2(d)
LIBERTY DEFAULTS, CONFLICTS, ETC.
None.
<PAGE>
SCHEDULE 1.3(d)
COMPANY DEFAULTS, CONFLICTS, ETC.
None.
