EXHIBIT 99.01
SECOND AMENDMENT TO FOUR MEDIA COMPANY 1997 STOCK PLAN
THIS SECOND AMENDMENT TO FOUR MEDIA COMPANY 1997 STOCK PLAN, dated as of April
10, 2000 (the "Second Amendment"), is made and adopted by FOUR MEDIA COMPANY, a
Delaware corporation (the "Company"). Capitalized terms used but not otherwise
defined herein shall have the respective meanings ascribed to such terms in the
1997 Stock Plan (as defined below).
RECITALS
WHEREAS, the Company was party to an Agreement and Plan of Merger, dated
as of December 6, 1999 (the "Merger Agreement"), among AT&T Corp. ("AT&T"),
D-Group Merger Corp., a wholly owned subsidiary of AT&T ("Merger Sub"), and
Liberty Media Corporation;
WHEREAS, the Merger Agreement provided for the merger (the "Merger") of
Merger Sub with and into the Company, with the Company remaining as the
surviving corporation in the Merger;
WHEREAS, the Merger became effective on April 10, 2000 (the "Effective
Date");
WHEREAS, pursuant to the Merger Agreement, all Company Stock Options (as
defined in the Merger Agreement) are to be converted into Rollover Options (as
defined in the Merger Agreement) on the Effective Date;
WHEREAS, the Merger Agreement, and its provision for the Rollover Options,
were approved by the Board of Directors of the Company on December 3, 1999;
WHEREAS, this Second Amendment does not impair the rights of any Optionee
and therefore does not require the written consent of any Optionees pursuant to
Section 14 of the Four Media Company 1997 Stock Plan, as amended by the First
Amendment to Four Media Company 1997 Stock Plan (the "Former Plan", and, as
amended by this Second Amendment, the "1997 Stock Plan");
WHEREAS, the Company desires to amend the Former Plan to, among other
things, make the adjustments to the Former Plan, as contemplated by the Merger
Agreement, so that (i) all Company Stock Options issued under the 1997 Stock
Plan are converted into options for that number of shares of AT&T's Class A
Liberty Media Group Common Stock, par value $1.00 per share ("Tracking Stock"),
equal to the number of shares of the Company's common stock subject to such
Company Stock Option immediately prior to the Effective Date multiplied by
0.32258 and (ii) all Optionees may elect to receive a cash payment from Liberty
in lieu of receiving shares of Tracking Stock;
WHEREAS, a notice to Optionees describing the adjustments to the Company
Stock Options was distributed to all Optionees on March 23, 2000;
<PAGE>
NOW, THEREFORE, in consideration of the foregoing, the Company hereby
amends the Former Plan as follows:
1. The following definition of the following item in Section 2 of the
Former Plan is hereby amended in its entirety to read as follows:
"Common Stock" means AT&T's Class A Liberty Media Group Common Stock, par
value $1.00 per share.
2. The following terms are hereby added to Section 2 of the Former Plan in
their respective appropriate alphabetical places:
"AT&T" means AT&T Corp., a New York corporation.
"Liberty" means Liberty Media Corporation, a Delaware corporation.
3. The first paragraph of Section 3 of the Former Plan is hereby amended
and restated to read in its entirety:
"3. Stock Subject to the Plan. Subject to Section 12, the maximum
aggregate number of Shares which may be subject to option and sold under the
Plan is 2,023,049 Shares (the "Available Shares"). In no event, except as
subject to Section 12, shall more than 532,257 Shares be available for issuance
pursuant to Incentive Stock Option grants under the Plan. Of the Available
Shares, the maximum aggregate number of Shares which may be subject to Special
Options (as defined below) granted pursuant to the Employment Agreements (as
defined below) is 1,032,256 Shares. For purposes of this Plan, "Special Options"
shall mean those Options granted to the Chief Executive Officer of the Company,
the President and Chief Administrative Officer of the Company, and the President
- Broadcast, Syndication and Manufacturing of the Company (collectively, the
"Executives"), pursuant to those certain Employment Agreements (the "Employment
Agreements"), each dated as of January 1, 1999, as amended to date, between the
Company and each of the Executives."
4. Section 5(d)(i) of the 1997 Stock Plan is hereby deleted in its
entirety and replaced with the following paragraph:
"(i) Except with respect to the Special Options, no Employee shall be
granted, in any fiscal year of the Company, Options and Stock Purchase Rights to
purchase more than 56,452 Shares."
5. Section 12 of the Former Plan is hereby amended to read in its
entirety:
"12. Adjustments Upon Changes in Capitalization or Merger.
(a) Changes in Capitalization. Subject to any required action by
AT&T's stockholders or holders of Common Stock, the number of Shares of Common
Stock covered by each outstanding Option or Stock Purchase Right, and the number
of shares of Common Stock which have been authorized for issuance under the Plan
but as to which no Options or Stock Purchase Rights have yet been granted or
which have been returned to the Plan upon cancellation
2
<PAGE>
or expiration of an Option or Stock Purchase Right, as well as the price per
Share of Common Stock covered by each such outstanding Option or Stock Purchase
Right, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued Shares of
Common Stock effected without receipt of consideration by AT&T. The conversion
of any securities convertible into shares of Common Stock shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by Liberty (with the prior written consent of AT&T), whose determination in
that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by AT&T of Shares of stock of any class, or
securities convertible into Shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares of Common Stock subject to an Option or Stock Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of (i) the Company or (ii) the Liberty Media Group
(as defined in the Merger Agreement), the Administrator shall notify the
Optionee at least fifteen (15) days prior to such proposed action. To the extent
it has not been previously exercised, the Option or Stock Purchase Right shall
terminate immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger or other
businesscombination affecting AT&T or any subsidiary thereof, and, as a result
of such merger or other business combination, the Common Stock is converted into
or mandatorily exchanged for securities of another entity, each outstanding
Option and Stock Purchase Right shall be assumed or an equivalent option or
right substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option or Stock Purchase Right, the Optionee shall
have the right to exercise the Option or Stock Purchase Right as to all of the
Optioned Stock, including Shares as to which it would not otherwise be
exercisable. If an Option or Stock Purchase Right is exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee that the Option or Stock Purchase Right
shall be fully exercisable for a period of fifteen (15) days from the date of
such notice, and the Option or Stock Purchase Right shall terminate upon the
expiration of such period. For the purposes of this paragraph, the Option or
Stock Purchase Right shall be considered assumed if, following the merger or
sale of assets, the option or right confers the right to purchase or receive,
for each Share of Optioned Stock subject to the Option or Stock Purchase Right
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets was not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets."
3
<PAGE>
6. Section 16 of the Former Plan is hereby amended to read in its
entirety:
"Reservation of Shares. AT&T, pursuant to the Merger Agreement, has
agreed that Shares of Common Stock to be issued pursuant to the terms of this
Plan will be duly authorized, validly issued, fully paid and non-assessable."
7. The first paragraph of Section 2(b) of the Four Media Company 1997
Stock Option Agreement, which is attached to the 1997 Stock Plan, is hereby
amended to read in its entirety:
"(b) Method of Exercise. This Option shall be exercisable by
written notice (in the form attached as Exhibit A) which shall state the
election to exercise the Option, the number of Shares in respect of which the
Option is being exercised, and such other representations and agreements as to
the holder's investment intent with respect to such shares of Common Stock as
may be required by the Company pursuant to the provisions of the Plan. Such
written notice shall be signed by the Optionee and shall be delivered in person
or by certified mail to the Secretary of the Company. The written notice shall
be accompanied by payment of the Exercise Price, if applicable. This Option
shall be deemed to be exercised upon receipt by the Company of such written
notice accompanied by the Exercise Price, if applicable."
8. The following sentence of Section 11(e) of the Four Media Company 1997
Stock Option Agreement, which is attached to the 1997 Stock Plan, is hereby
deleted in its entirety, because it is no longer applicable:
"However, if such Shares are held for more than one year but less than 18
months, any gain will be treated as a mid-term gain."
9. Exhibit A to the Four Media Company 1997 Stock Option Agreement, which
is attached to the 1997 Stock Plan, is hereby deleted in its entirety and is
replaced with Exhibit A attached to this Second Amendment. As stated in Exhibit
A, Optionees may make a Cash Election (as defined in Exhibit A) in lieu of
receiving Shares upon exercising their Options.
10. This Second Amendment shall be and is hereby incorporated in and forms
a part of the 1997 Stock Plan.
11. All other terms and provisions of the 1997 Stock Plan shall remain
unchanged except as specifically modified herein.
12. The 1997 Stock Plan, as amended by this Second Amendment, is hereby
ratified and confirmed.
13. This Second Amendment shall be interpreted and enforced under the
internal laws of the State of California without regard to conflicts of laws
thereof.
4
<PAGE>
I hereby certify that the foregoing Second Amendment was duly adopted by the
Board of Directors of Four Media Company on December 3, 1999.
By: /s/ Robert T. Walston
---------------------
Robert T. Walston
Chief Executive Officer
