Document:

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                                                                   EXHIBIT 10.21

                              EMPLOYMENT AGREEMENT

        This agreement (the "Agreement") shall be deemed dated as of January 1,
1999, and is entered into by and between Four Media Company, a Delaware
corporation (the "Company"), and John H. Donlon ("Executive").

                                  INTRODUCTION

        A. The Company and its operating subsidiaries ("Affiliates") are engaged
in the business of providing technical and creative services to the
entertainment industry.

        B. The Company has executed a stock purchase agreement dated January 18,
1999 pursuant to which the Company has agreed to issue and an investor has
agreed to purchase 6,582,607 shares of the Company's common stock (the "Stock
Purchase Agreement").

        C. The Company and Executive are both parties to that certain employment
contract dated October 1, 1996 (the "Original Agreement" a copy of which is
attached hereto as Exhibit A).

        D. The Executive and Employee desire to (i) enter into a new employment
agreement upon the terms set forth in this Agreement and to (ii) terminate the
Original Agreement provided that the "Closing Date" (as such term is defined in
the Stock Purchase Agreement) has occurred on or before September 30, 1999.

        NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

                                    ARTICLE I

                            EMPLOYMENT; TERM; DUTIES

        1.1 Employment. Upon the terms and conditions hereinafter set forth, the
Company hereby employs Executive, and Executive hereby accepts employment, as
President - Broadcast, Syndication and Manufacturing of the Company and as
President of the Company's Foreign Operations Division.

        1.2 Term. Subject to Article IV below, Executive's employment hereunder
shall be for a term of five (5) years commencing on the date hereof and expiring
at the close of business on the day prior to the fifth anniversary of the date
hereof (the "Term").

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        1.3 Duties. During the Term, Executive shall perform such executive
duties for the Company and/or its Affiliates, consistent with his position
hereunder, as may be assigned to him from time to time by the Board of Directors
of the Company (the "Board"). Executive shall devote his entire productive
business time, attention and energies to the performance of his duties
hereunder. Executive shall use his best efforts to advance the interests and
business of the Company and its Affiliates. Executive shall abide by all rules,
regulations and policies of the Company, as may be in effect from time to time.
Notwithstanding the foregoing, Executive may act for his own account in
passive-type investments as provided in Section 5.3, or, with the consent of the
Board, as a member of other boards of directors, where the time allocated for
those activities does not materially interfere with or create a conflict of
interest with the discharge of his duties for the Company.

        1.4 Reporting. Executive shall report directly to the Chief Executive
Officer of the Company.

        1.5 Exclusive Agreement. Executive represents and warrants to the
Company that there are no agreements or arrangements, whether written or oral,
in effect which would prevent Executive from rendering his exclusive services to
the Company during the Term.

                                   ARTICLE II

                                  COMPENSATION

        2.1 Compensation. For all services rendered by Executive hereunder and
all covenants and conditions undertaken by him pursuant to this Agreement, the
Company shall pay, and Executive shall accept, as full compensation, the amounts
set forth in this Article II.

        2.2 Base Salary. The base salary shall be an annual salary of $325,000
("Base Salary"), payable by the Company in accordance with the Company's normal
payroll practices applicable to senior executives but no less frequently than
monthly.

        2.3 Annual Incentive Bonus. In addition to the Base Salary, Executive
shall participate in an incentive bonus plan to be established and administered
by the Compensation Committee of the Board. The criteria on which awards under
such plan are based shall be set by the Board or the Compensation Committee of
the Board.

        2.4 Deductions. The Company shall deduct from the compensation described
in Sections 2.2 and 2.3 any federal, state or local withholding taxes, social
security contributions and any other amounts which may be required to be
deducted or withheld by the Company pursuant to any federal, state or local
laws, rules or regulations.

        2.5 Disability Adjustment. Any compensation otherwise payable to
Executive pursuant to Sections 2.2 and 2.3 in respect of any period during which
Executive is disabled (as

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contemplated in Section 4.4) shall be reduced by any amounts payable to
Executive for loss of earnings or the like under any insurance plan or policy
sponsored by the Company.

                                   ARTICLE III

                               BENEFITS; EXPENSES

        3.1 Benefits. During the Term, Executive shall be entitled to
participate in such group life, health, accident, disability or hospitalization
insurance plans, pension plans and retirement plans as the Company may make
available to its other senior executive employees as a group, subject to the
terms and conditions of any such plans. Executive's participation in all such
plans shall be at a level, and on terms and conditions, that are commensurate
with his positions and responsibilities at the Company. During the Term, no
perquisite or special benefit made available to Executive as a senior executive
of the Company shall be materially reduced without his prior written consent.

        3.2 Expenses. The Company agrees that Executive is authorized to incur
reasonable expenses in the performance of his duties hereunder and in promoting
the business of the Company. The Company shall from time to time pay or
reimburse Executive for the reasonable and necessary expenses incurred by
Executive in connection with the performance of his duties hereunder if such
expenses have been previously approved by the Company or if reimbursement is
otherwise appropriate in accordance with the Company's established policies and
if the Company receives such verification thereof as the Company may require in
order to qualify such expenses as deductible business expenses.

        3.3 Vacation. Executive shall accrue, on a daily basis, a total of four
(4) work weeks of vacation per year following the date of this Agreement. If
Executive's earned but unused vacation time reaches six (6) work weeks,
Executive will not continue to accrue additional vacation time until he uses
enough vacation to fall below this maximum amount. Thereafter, Executive will
start earning vacation benefits again until the six (6) work week maximum is
again reached. Any accrued but unused vacation time will be paid to Executive on
a pro rata basis at termination of employment.

        3.4 Key Man Insurance. The Company may secure in its own name or
otherwise, and at its own expense, life, health, accident and other insurance
covering Executive alone or with others, and Executive shall not have any right,
title or interest in or to such insurance other than as expressly provided
herein. Executive agrees to assist the Company in procuring such insurance by
submitting to the usual and customary medical and other examinations to be
conducted by such physicians as the Company or such insurance company may
designate and by signing such applications and other written instruments as may
be required by the insurance companies to which application is made for such
insurance. Executive's failure to submit to such usual and customary medical and
other examinations shall be deemed a material breach of this Agreement.

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        3.5 Initial Stock Option Grant. Effective as of the date hereof, but
subject to the approval by the Company's shareholders of an amendment to the
Company's 1997 Stock Plan to increase the number of shares available for
issuance thereunder, the Company shall grant Executive an option (the "Option")
to purchase 200,000 shares of the Company's common stock, par value $.01 per
share (the "Common Stock"), at an exercise price of $8.00 per share. To the
extent not inconsistent with the terms of this Agreement, the Option shall be
subject to the terms of a stock option agreement in substantially the form
attached hereto as Exhibit B (the "Option Agreement").

        The Option shall become exercisable on a cumulative basis as follows,
provided that Executive continues in the employment of the Company through the
applicable vesting date(s):

               (a) twenty percent (20%) of the shares covered by the Option
        shall become exercisable on the first anniversary of the date of grant;

               (b) twenty percent (20%) of the shares covered by the Option
        shall become exercisable on the second anniversary of the date of grant;

               (c) twenty percent (20%) of the shares covered by the Option
        shall become exercisable on the third anniversary of the date of grant;

               (d) twenty percent (20%) of the shares covered by the Option
        shall become exercisable on the fourth anniversary of the date of grant;
        and

               (e) twenty percent (20%) of the shares covered by the Option
        shall become exercisable on the fifth anniversary of the date of grant.

        Notwithstanding the foregoing, all shares covered by the Option shall
vest and become exercisable upon the occurrence of any of the following events:
(i) a Termination Without Cause (as defined below), or (ii) a Termination With
Good Reason (as defined below).

        In the event that Executive incurs a termination of employment for any
reason other than a Termination With Cause or a resignation without Good Reason
prior to the expiration of the Term, any portion of the Option that has become
vested on or before the date of such termination (including without limitation,
any portion that becomes exercisable due to such termination) shall remain
exercisable for 180 days following the date of such termination. In the event
that Executive incurs a Termination With Cause or in the event Executive resigns
without Good Reason prior to the expiration of the Term, any portion of the
Option that has become vested on or before the date of such termination
(including without limitation, any portion that becomes exercisable due to such
termination) shall remain exercisable for ninety (90) days following the date of
such termination. Following the natural expiration of the Term of this
Agreement, Executive shall have 180 days following the last day of employment
with the Company to exercise the Options; provided, however, that
notwithstanding the foregoing, the Options shall terminate on December 31, 2008,
if not already expired.

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        3.6 Other Long-Term Incentives. Executive shall be eligible for other or
additional long-term incentives in the discretion of the Board, including
without limitation additional stock option grants. Such incentive awards shall
be at a level, and on terms and conditions, that are commensurate with his
positions and responsibilities at the Company and appropriate in light of
corresponding awards to other senior executives of the Company.

        3.7 Perquisites. During the Term, Executive shall participate in all
fringe benefits and perquisites available to senior executives of the Company at
levels, and on terms and conditions, that are commensurate with his positions
and responsibilities at the Company, and shall receive such additional fringe
benefits and perquisites as the Company may, in its discretion, from
time-to-time provide.

                                   ARTICLE IV

                         TERMINATION; DEATH; DISABILITY

        4.1 Termination of Employment With Cause. In addition to any other
remedies available to the Company at law, in equity or as set forth in this
Agreement, the Company shall have the right, upon written notice to Executive,
to terminate his employment hereunder without any further liability or
obligation to him in respect of his employment (other than its obligation to pay
Base Salary accrued but unpaid as of the date of termination) if Executive: (a)
breaches any material provision of this Agreement; or (b) has committed an act
of gross misconduct in connection with the performance of his duties hereunder,
as determined in good faith by the Board; or (c) demonstrates habitual
negligence in the performance of his duties, as determined by the Board; or (d)
is convicted of or pleads nolo contendere to any misdemeanor involving moral
turpitude or to any felony; or (e) has committed any act of fraud,
misappropriation of funds or embezzlement in connection with his employment
hereunder (a "Termination With Cause").

        Notwithstanding the foregoing, no purported Termination With Cause
pursuant to (a), (b) or (c) of this Section 4.1 shall be effective unless all of
the following provisions shall have been complied with: (i) Executive shall be
given written notice by the Board of the intention to effect a Termination With
Cause, such notice (A) to state in detail the particular circumstances that
constitute the grounds on which the proposed Termination With Cause is based and
(B) to be given no later than 180 days after the Board first learns of such
circumstances; (ii) Executive shall have 15 days after receiving such notice in
which to cure such grounds, to the extent such cure is possible; and (iii) if
Executive fails to cure such grounds, he shall, upon written notice by the
Board, incur a Termination With Cause.

        4.2 Termination of Employment Without Cause. During the Term, the
Company may at any time, in its sole discretion, terminate the employment of
Executive hereunder for reasons other than those set forth in Section 4.1 (a
"Termination Without Cause") by written notice to him. In such event, the
Company shall pay Executive an amount equal to the sum of the following:

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               (a) any Base Salary accrued but unpaid as of the date of
        termination;

               (b) an amount equal to Executive's monthly Base Salary in effect
        on the date of termination for twenty-four (24) months payable as and
        when such amounts would have been due and payable hereunder had such
        termination not occurred (the "Severance Period"); and

               (c) any reimbursement for expenses incurred in accordance with
        Section 3.2.

        In addition, the Company shall use its best efforts to arrange for the
continuation, through the Severance Period, of such health and/or medical
benefits or plans as are in effect with respect to Executive as of the date of
termination, if and only if permissible under such plans, such benefits and
plans to be continued on the same terms and conditions as were in effect with
respect to Executive as of the date of termination. If not so permissible, the
Company shall pay to Executive an amount sufficient to enable Executive to
arrange for substantially equivalent health and/or medical coverage during the
Severance Period.

        Executive acknowledges that the payments and benefits referred to in
this Section 4.2, together with any rights or benefits under any written plan or
agreement which have vested on or prior to the termination date of Executive's
employment under this Section 4.2, constitute the only payments to which
Executive shall be entitled to receive from the Company hereunder in the event
of any termination of his employment pursuant to this Section 4.2, and that
except for such payments or benefits the Company shall have no further liability
or obligation to him hereunder or otherwise in respect of his employment.

        4.3 Termination of Employment With Good Reason. In addition to any other
remedies available to Executive at law, in equity or as set forth in this
Agreement, Executive shall have the right, upon written notice to the Company,
to terminate his employment hereunder upon the occurrence of any of the
following events without the prior written consent of Executive, unless the
Company shall have fully cured all grounds for such termination within 15 days
after Executive gives notice thereof: (a) a material diminution in Executive's
duties or the assignment to Executive of duties that are materially inconsistent
with or materially impair his ability to perform the duties set forth herein; or
(b) a material reduction in Executive's then current Base Salary; or (c) the
relocation by the Company of Executive's principal place of employment to a
location more than 50 miles from such principal place of employment; or (d) a
breach by the Company of any material provision of this Agreement (a
"Termination With Good Reason").

        In the event that a Termination With Good Reason occurs, Executive shall
have the same entitlements to the amounts and benefits as provided under Section
4.2 for a Termination Without Cause.

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        Executive acknowledges that the payments and benefits referred to in
this Section 4.3, together with any rights or benefits under any written plan or
agreement which have vested on or prior to the termination date of Executive's
employment under this Section 4.3, constitute the only payments to which
Executive shall be entitled to receive from the Company hereunder in the event
of any termination of his employment pursuant to this Section 4.3, and that
except for such payments or benefits the Company shall have no further liability
or obligation to him hereunder or otherwise in respect of his employment.

        4.4 Death; Disability. In the event that Executive dies or becomes
Disabled (as defined herein), Executive's employment shall terminate when such
death or Disability occurs and the Company shall pay Executive (or his legal
representative, as the case may be) as follows:

               (a) any Base Salary accrued but unpaid as of the date of death or
        termination for Disability;

               (b) any reimbursement for expenses incurred in accordance with
        Section 3.2.; and

               (c) an amount equal to Executive's monthly Base Salary in effect
        on such termination date for the lesser of (i) six (6) months or (ii)
        the remainder of the Term, payable as and when such amounts would have
        been due and payable hereunder had such termination not occurred. The
        monthly Base Salary with respect to any period during which Executive is
        Disabled shall be reduced by amounts payable to him under any insurance
        plan sponsored by the Company, provided that Executive's aggregate
        compensation during the period of Disability shall be equal to 100% of
        his monthly Base Salary then in effect.

        For the purposes of this Agreement, Executive shall be deemed to be
"Disabled" or have a "Disability" if, because of Executive's physical or mental
disability, (a) he has been substantially unable to perform his duties hereunder
for 180 consecutive days, and (b) he has utilized any and all benefits available
to him under state and federal laws and is either (i) unable to reasonably and
effectively carry out his duties with reasonable accommodations by the Company
or (ii) unable to reasonably and effectively carry out his duties because any
reasonable accommodation which may be required would cause the Company undue
hardship. In the event of a disagreement concerning Executive's perceived
Disability, Executive shall submit to such examinations as are deemed
appropriate by three practicing physicians specializing in the area of
Executive's Disability, one selected by Executive, one selected by the Company,
and one selected by both such physicians. The majority decision of such three
physicians shall be final and binding on the parties. Nothing in this paragraph
is intended to limit the Company's right to invoke the provisions of this
paragraph with respect to any perceived Disability of Executive.

        Executive acknowledges that the payments referred to in this Section
4.4, together with any rights or benefits under any written plan or agreement
which have vested on or prior to the termination date of Executive's employment
under this Section 4.4, constitute the only payments

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to which Executive (or his legal representative, as the case may be) shall be
entitled to receive from the Company hereunder in the event of a termination of
his employment for death or Disability, and that except for such payments the
Company shall have no further liability or obligation to him (or his legal
representatives, as the case may be) hereunder or otherwise in respect of his
employment.

        4.5 No Mitigation by Executive; No Offset by Company. Except as
otherwise expressly provided herein, Executive shall not be required to mitigate
the amount of any payment provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for herein
be reduced by any compensation earned by Executive as the result of employment
by another employer; provided, however, that if Executive becomes employed with
another employer and is eligible to receive health and/or medical benefits under
such other employer's plans, Executive's continued benefits and/or plan coverage
as set forth in Section 4.2 or 4.3, as the case may be, shall be reduced to the
extent that comparable benefits and/or coverage is provided under such other
employer's plans.

        The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against Executive or others, provided that
nothing herein shall preclude the Company from separately pursuing recovery from
Executive based on any such claim.

        4.6 Continued Compliance. Executive and the Company hereby acknowledge
that the amounts or benefits payable by the Company under Sections 4.2(b), 4.3,
and 4.4(c) [and 4.__(b)] are part of the consideration for Executive's
undertakings under Article V below. Such amounts and benefits are subject to
Executive's continued compliance with the provisions of Article V. If Executive
violates the provisions of Article V, then the Company will have no obligation
to make any of the payments that remain payable by the Company under Sections
4.2(b), 4.3, and 4.4(c) on or after the date of such violation.

                                    ARTICLE V

                      OWNERSHIP OF PROCEEDS OF EMPLOYMENT;
                         NON-DISCLOSURE; NON-COMPETITION

        5.1 Ownership of Proceeds of Employment. The Company shall be the sole
and exclusive owner throughout the universe in perpetuity of all of the results
and proceeds of Executive's services, work and labor during the Term in
connection with Executive's employment by the Company, free and clear of any and
all claims, liens or encumbrances. All results and proceeds of Executive's
services, work and labor during the Term shall be deemed to be
works-made-for-hire for the Company within the meaning of the copyright laws of
the United States and the Company shall be deemed to be the sole author thereof
in all territories and for all purposes.

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        5.2 Non-Disclosure of Confidential Information. As used herein,
"Confidential Information" means any and all information affecting or relating
to the business of the Company and its Affiliates, including without limitation,
financial data, customer lists and data, licensing arrangements, business
strategies, pricing information, product development, intellectual, artistic,
literary, dramatic or musical rights, works, or other materials of any kind or
nature (whether or not entitled to protection under applicable copyright laws,
or reduced to or embodied in any medium or tangible form), including without
limitation, all copyrights, patents, trademarks, service marks, trade secrets,
contract rights, titles, themes, stories, treatments, ideas, concepts,
technologies, art work, logos, hardware, software, and may be embodied in any
and all computer programs, tapes, diskettes, disks, mailing lists, lists of
actual or prospective customers and/or suppliers, notebooks, documents,
memoranda, reports, files, correspondence, charts, lists and all other written,
printed or otherwise recorded material of any kind whatsoever and any other
information, whether or not reduced to writing, including "know-how", ideas,
concepts, research, processes, and plans. "Confidential Information" does not
include information that is in the public domain, information that is generally
known in the trade, or information that Executive can prove he acquired wholly
independently of his employment with the Company. Executive shall not, at any
time during the Term or thereafter, directly or indirectly, disclose or furnish
to any other person, firm or corporation any Confidential Information, except in
the course of the proper performance of his duties hereunder or as required by
law (in which event Executive shall give prior written notice to Company and
shall cooperate with Company and Company's counsel in complying with such legal
requirements). Promptly upon the expiration or termination of Executive's
employment hereunder for any reason or whenever the Company so requests,
Executive shall surrender to the Company all documents, drawings, work papers,
lists, memoranda, records and other data (including all copies) constituting or
pertaining in any way to any of the Confidential Information.

        5.3 Non-Competition. For so long as he is entitled to compensation under
or pursuant to this Agreement (whether or not he is actively employed by the
Company hereunder), Executive shall not, except with the prior written consent
of the Company, directly or indirectly: (a) compete with the Company; or (b) be
interested in, employed by, engaged in or participate in the ownership,
management, operation or control of, or act in any advisory or other capacity
for, any Competing Entity which conducts its business within the Territory (as
such terms are hereinafter defined); provided, however, that notwithstanding the
foregoing, Executive may make solely passive investments in any Competing Entity
the common stock of which is "publicly held," and of which Executive shall not
own or control, directly or indirectly, in the aggregate securities which
constitute more than one (1%) percent of the voting rights or equity ownership
of such Competing Entity; or (c) solicit or divert any business or any customer
from the Company or assist any person, firm or corporation in doing so or
attempting to do so; or (d) cause or seek to cause any person, firm or
corporation to refrain from dealing or doing business with the Company or assist
any person, firm or corporation in doing so or attempting to do so.

        For purposes of this Section 5.3, (i) the term "Competing Entity" shall
mean any entity which presently or during the period referred to above engages
in any business activity the

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Company is then engaged in or proposes to be engaged in; and (ii) the term
"Territory" shall mean any geographic area in which the Company conducts
business during such period.

        5.4 Non-Solicitation. Executive shall not, for a period of two (2) years
from the date of any termination or expiration of his employment hereunder,
directly or indirectly: (a) solicit or hire, or attempt to solicit or hire, any
employee of the Company, or assist any person, firm or corporation in doing so
or attempting to do so; or (b) plan for, acquire any financial interest in or
perform any services for himself or any other entity in connection with a
business in which Executive's interest, duties or activities would inherently
require Executive to reveal any Confidential Information; or (c) solicit or
cause to be solicited the disclosure of or disclose any Confidential Information
for any purpose whatsoever or for any other party.

        5.5 Breach of Provisions. In the event that Executive shall breach any
of the provisions of this Article V, or in the event that any such breach is
threatened by Executive, in addition to and without limiting or waiving any
other remedies available to the Company at law or in equity, the Company shall
be entitled to immediate injunctive relief in any court, domestic or foreign,
having the capacity to grant such relief, without the necessity of posting a
bond, to restrain any such breach or threatened breach and to enforce the
provisions of this Article V. Executive acknowledges and agrees that there is no
adequate remedy at law for any such breach or threatened breach and, in the
event that any action or proceeding is brought seeking injunctive relief,
Executive shall not use as a defense thereto that there is an adequate remedy at
law.

        5.6 Reasonable Restrictions. The parties acknowledge that the foregoing
restrictions, the duration and the territorial scope thereof as set forth in
this Article V, are under all of the circumstances reasonable and necessary for
the protection of the Company and its business.

        5.7 Definition. For purposes of this Article V, the term "Company" shall
be deemed to include any subsidiary of, affiliate of, predecessor to, or
successor of the Company.

                                   ARTICLE VI

                                  MISCELLANEOUS

        6.1 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives,
heirs, distributees, successors and assigns; provided that the rights and
obligations of Executive hereunder shall not be assignable by him.

        6.2 Notices. Any notice provided for herein shall be in writing and
shall be deemed to have been given or made when personally delivered or three
(3) days following deposit for mailing by first class registered or certified
mail, return receipt requested, or if delivered by facsimile transmission, upon
confirmation of receipt of the transmission, to the address of the other party
set forth below or to such other address as may be specified by notice given in
accordance with this Section 6.2:

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               (a)    If to the Company:

                      Four Media Company

                      -------------------------------

                      -------------------------------

                      -------------------------------
                      Fax No.:  (818) 846-5197

                      With a copy to:

                      Latham & Watkins
                      633 West Fifth Street, Suite 4000
                      Los Angeles, CA  90071
                      Attention:  Michael W. Sturrock
                      Fax No.:  (213) 891-8763

               (b)    If to Executive:

                      Mr. John H. Donlon

                      -------------------------------

                      -------------------------------

                      With a copy to:

                      -------------------------------

                      -------------------------------

                      -------------------------------

                      -------------------------------
                      Fax No.:

        6.3 Severability. If any provision of this Agreement, or portion
thereof, shall be held invalid or unenforceable by a court of competent
jurisdiction, such invalidity or unenforceability shall attach only to such
provision or portion thereof, and shall not in any manner affect or render
invalid or unenforceable any other provision of this Agreement or portion
thereof, and this Agreement shall be carried out as if any such invalid or
unenforceable provision or portion thereof were not contained herein. In
addition, any such invalid or unenforceable provision or portion thereof shall
be deemed, without further action on the part of the parties hereto, modified,
amended or limited to the extent necessary to render the same valid and
enforceable.

        6.4 Confidentiality. The parties hereto agree that they will not, during
the Term or thereafter, disclose to any other person or entity the terms or
conditions of this Agreement (excluding the financial terms hereof) without the
prior written consent of the other party or as required by law, regulatory
authority or as necessary for either party to obtain personal loans or

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financing. Approval of the Company and of Executive shall be required with
respect to any press releases regarding this Agreement and the activities of
Executive contemplated hereunder.

        6.5 Arbitration. Any controversy, claim or dispute arising out of or in
any way relating to this Agreement, the alleged breach thereof, and/or
Executive's employment with the Company or termination therefrom, including
without limitation, any and all claims for employment discrimination or
harassment, shall be determined by binding arbitration administered by the
American Arbitration Association under its National Rules for Resolution of
Employment Disputes ("Rules") which are in effect at the time of the arbitration
or the demand therefor. The Rules are hereby incorporated by reference.
California Code of Civil Procedure (S)1283.05, which provides for certain
discovery rights, shall apply to any such arbitration, and said code section is
also hereby incorporated by reference. In reaching a decision, the arbitrator
shall have no authority to change, extend, modify or suspend any of the terms of
this Agreement. The arbitration shall be commenced and heard in Los Angeles
County, California. The arbitrator(s) shall apply the substantive law (and the
law of remedies, if applicable) of California or federal law, or both, as
applicable to the claim(s) asserted. Judgment on the award may be entered in any
court of competent jurisdiction, even if a party who received notice under the
Rules fails to appear at the arbitration hearing(s). The parties may seek, from
a court of competent jurisdiction, provisional remedies or injunctive relief in
support of their respective rights and remedies hereunder without waiving any
right to arbitration. However, the merits of any action that involves such
provisional remedies or injunctive relief, including, without limitation, the
terms of any permanent injunction, shall be determined by arbitration under this
paragraph.

        6.6 Waiver. No waiver by a party hereto of a breach or default hereunder
by the other party shall be considered valid unless in writing signed by such
first party, and no such waiver shall be deemed a waiver of any subsequent
breach or default of the same or any other nature.

        6.7 Controlling Nature of Agreement. To the extent any terms of this
Agreement are inconsistent with the terms or provisions of the Company's
Employee Manual or any other personnel policy statements or documents, the terms
of this Agreement shall control. To the extent that any terms and conditions of
Executive's employment are not covered in this Agreement, the terms and
conditions set forth in the Employee Manual or any similar document shall
control such terms.

        6.8 Entire Agreement. This Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof, and supersedes
any and all prior agreements or understanding between the Company and Executive,
whether written or oral, fully or partially performed relating to any or all
matters covered by and contained or otherwise dealt with in this Agreement. This
Agreement does not constitute a commitment of the Company with regard to
Executive's employment, express or implied, other than to the extent expressly
provided for herein.

                                       12
<PAGE>

        6.9 Amendment. No modification, change or amendment of this Agreement or
any of its provisions shall be valid unless in writing and signed by the party
against whom such claimed modification, change or amendment is sought to be
enforced.

        6.10 Authority. The parties each represent and warrant that they have
the power, authority and right to enter into this Agreement and to carry out and
perform the terms, covenants and conditions hereof.

        6.11 Applicable Law. This Agreement, and all of the rights and
obligations of the parties in connection with the employment relationship
established hereby, shall be governed by and construed in accordance with the
substantive laws of the State of California without giving effect to principles
relating to conflicts of law.

        6.12 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall constitute
one and the same instrument.

        6.13 Effective Date. Until the Closing Date (as such term is defined
under the Stock Purchase Agreement) has occurred, Executive and the Company's
obligations (including by way of illustration and not as a limitation the
payment of compensation) shall, except as modified by Section 6.14 below, be
governed by the terms of the Original Agreement. Upon the Closing Date the
Original Agreement shall be deemed terminated and of no further force or effect
(except for obligations which are intended to survive termination) and this
Agreement shall be deemed effective as of the date of this Agreement.
Notwithstanding the foregoing, upon the Closing Date Executive shall be paid an
amount equal to the difference between base compensation due to Executive under
the Original Agreement and the base compensation due to Executive under this
Agreement for the period between the date of this Agreement and the actual
Closing Date. If the Closing Date does not occur on or before September 30, 1999
then this Agreement shall automatically, and without notice, terminate without
any obligation due to the other party (i.e., there shall be no compensation or
options due Executive as provided for in this Agreement). In such event, the
parties respective obligations shall be governed by the terms of the Original
Agreement.

        6.14 Amendment. Section 1.2 of the Original Agreement is hereby amended
and restated in its entirety to provide that

            "SUBJECT TO SECTION 4.1, EXECUTIVES EMPLOYMENT HEREUNDER
                     SHALL TERMINATE ON SEPTEMBER 30, 1999."

                           [Signature Page to Follow]

                                       13
<PAGE>

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

                                        "COMPANY"

                                        FOUR MEDIA COMPANY

                                        By:    /s/ Robert T. Walston
                                             -----------------------------------
                                        Name:  Robert T. Walston
                                        Title:  CEO

                                        "EXECUTIVE"

                                               /s/ J. H. Donlon
                                        ----------------------------------------
                                        John H. Donlon

                                      S-1<PAGE>
                                                                   EXHIBIT 10.22

                     FORM OF REGISTRATION RIGHTS AGREEMENT

               REGISTRATION RIGHTS AGREEMENT ("Agreement"), dated as of June 1,
2001, between LIBERTY LIVEWIRE CORPORATION, a Delaware corporation ("Company"),
and Salah M. Hassanein ("Seller").

                                    Recitals

               Seller owns the shares of Class A Common Stock of Company set
forth on Schedule A1 attached hereto ("Issued Shares") and the stock options set
forth on Schedule A2 attached hereto ("Options"). The Issued Shares are
"restricted securities" (as defined in Rule 144 under the Securities Act of
1933, as amended) and, under certain circumstances, any shares of Class A Common
Stock issued by Company to Seller pursuant to the Options may constitute
restricted securities (as so defined) in the hands of Seller. Company is willing
to provide Seller with the registration rights set forth herein.

               NOW THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, and intending to be bound
hereby, the parties to this Agreement hereby agree as follows:

        1.     Certain Definitions.

               Business Day: Any day other than a Saturday, Sunday or holiday on
which banking institutions in Los Angeles, California or New York, New York are
closed.

               Class A Common Stock: Class A Common Stock, par value $.01 per
share, of Company.

               Commission: The Securities and Exchange Commission, or any other
Federal agency at the time administering the Securities Act or the Exchange Act.

               Company Indemnified Parties: As defined in Section 5(b).

               Exchange Act: The Securities and Exchange Act of 1934, as
amended, or any successor Federal statute, and the rules and regulations of the
Commission promulgated thereunder, as they each may, from time to time, be in
effect.

               Indemnified Party: As defined in Section 5(c).

               Indemnifying Party: As defined in Section 5(c).

               Losses: As defined in Section 5(a).

               Prospectus: The prospectus included in the Registration Statement
as of the date it becomes effective under the Securities Act and, in the case of
references to the Prospectus as of a date subsequent to the effective date of
the Registration Statement, as amended or

<PAGE>

supplemented as of such date, including all documents incorporated by reference
therein, as amended, and each prospectus supplement relating to the offering and
sale of any of the Registrable Shares.

               Registrable Shares: Issued Shares and any other shares of Class A
Common Stock acquired by Seller upon the exercise of the Options (and which are
not otherwise the subject of an effective Registration Statement under the
Securities Act) and any other shares of capital stock of Company issued in
respect or in replacement of such shares as a result of any stock splits, stock
dividends, reclassifications, recapitalizations, mergers, consolidations or
similar events. References in this Agreement to amounts or percentages of
Registrable Shares as of or on any particular date shall be deemed to refer to
amounts or percentages after giving effect to any applicable events contemplated
by the preceding sentence. Any Registrable Share will cease to be a Registrable
Share when (i) a registration statement covering such Registrable Share has been
declared effective by the Commission and such Registrable Share has been
disposed of pursuant to such effective registration statement, (ii) such
Registrable Share is no longer held by Seller or (iii) such Registrable Share
may be publicly resold without registration under the Securities Act pursuant to
Rule 144(k) promulgated thereunder.

               Registration Statement: A registration statement of Company under
the Securities Act on any form (to be selected by Company, and including without
limitation Form S-8) for which Company then qualifies and which permits the
secondary resale thereunder by Seller of the number of Registrable Shares
required pursuant to this Agreement to be included therein. The terms
"Registration Statement" and "Shelf Registration Statement" shall also include
all exhibits and financial statements and schedules and documents incorporated
by reference in such Registration Statement when it becomes effective under the
Securities Act, and in the case of the references to a Registration Statement as
of a date subsequent to its effective date, as amended or supplemented as of
such date.

               Regulation S-K: As defined in Section 2(b).

               Securities Act: The Securities Act of 1933, as amended, or any
successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, as they each may, from time to time, be in effect.

               Shelf Registration Statement: As defined in Section 2(a).

        2.     Registration.

               (a) As soon as practicable after the annual meeting of
stockholders of Company held in the calendar year 2001, and in any event within
15 days after the date of such meeting, Company shall file with the Commission,
and use commercially reasonable efforts to cause to become effective, a
Registration Statement covering the Registrable Shares for offering and sale on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act (the
"Shelf Registration Statement").

                                       2
<PAGE>

               (b) The section of the Shelf Registration Statement entitled
"Plan of Distribution" shall be prepared in accordance with the requirements of
Item 508 of Regulation S-K promulgated by the Commission under the Securities
Act ("Regulation S-K") and, notwithstanding anything to the contrary contained
herein, shall provide that Seller may distribute the Registrable Shares pursuant
to such Registration Statement solely in the manner set forth on Exhibit A
hereto.

               (c) Company shall be entitled to postpone, for a reasonable
period of time not in excess of 90 days after the date of its 2001 annual
stockholders meeting, the filing of a Registration Statement, if (i) at any time
prior to the filing of such Registration Statement Company determines, in its
reasonable business judgment, that such registration and offering could
materially interfere with or otherwise materially adversely affect any
financing, acquisition, corporate reorganization, or other material transaction
or development involving Company or any of its affiliates or require Company to
disclose any material matter that otherwise would not be required to be
disclosed at such time and (ii) Company gives Seller written notice of such
postponement. Any such notice need not specify the reasons for such postponement
if Company determines, in its reasonable business judgment, that doing so would
materially interfere with or materially adversely affect such transaction or
development or would result in the disclosure of material non-public
information. In the event of such postponement, Company shall file such
Registration Statement as soon as practicable after it shall determine, in its
reasonable business judgment, that such registration and offering will not
interfere with the matters described in the first sentence of this Section 2(c)
but in any event within 90 days after the date of the Company's 2001 annual
stockholders meeting.

               (d) Company shall also be entitled to postpone the filing of a
Registration Statement if, for such Registration Statement to be filed or go
effective, Company would be required to undergo a special interim audit, or
prepare and file with the Commission sooner than would otherwise be required pro
forma or other financial statements relating to any proposed, probable or
recently completed transaction. In the event of such postponement, Company shall
file such Registration Statement as soon as practicable after the relevant
financial statements have actually been filed.

               (e) Notwithstanding anything to the contrary contained herein or
in any other agreement or understanding between Seller and Company, including
without limitation any agreement with respect to any Option, Company shall not
be required to effect or maintain any registration if Company does not have
securities registered under Section 12(b) or 12(g) of the Exchange Act.

        3.     Obligations with Respect to Registration.

               (a) In connection with Company's obligation under this Agreement
to effect the registration of Registrable Shares pursuant to the Shelf
Registration Statement, Company shall:

                                       3
<PAGE>

                      (i) subject to Section 3(b), use commercially reasonable
               efforts to cause the Shelf Registration Statement to remain
               effective, and prepare and file with the Commission any
               amendments and supplements to such Registration Statement and to
               the Prospectus used in connection therewith as may be necessary
               to keep the Prospectus current and in compliance in all material
               respects with the provisions of the Securities Act, until the
               sooner to occur of the expiration of a two-year period following
               the initial filing of the Shelf Registration Statement and the
               sale of all Registrable Shares covered by such Shelf Registration
               Statement; provided, however, that notwithstanding the expiration
               of such two-year period, the Company shall nevertheless use
               commercially reasonable efforts to cause to remain effective a
               registration statement under the Securities Act, on Form S-8 or a
               similar form, registering the issuance by the Company to Seller
               of shares of Class A Common Stock issuable upon the exercise of
               the Options, so long as any Options remain outstanding and have
               not been exercised or terminated;

                      (ii) notify Seller: (A) when the Shelf Registration
               Statement becomes effective, (B) when the filing of a
               post-effective amendment to the Shelf Registration Statement or
               supplement to the Prospectus is required, when such amendment or
               supplement is filed, and in the case of a post-effective
               amendment, when it becomes effective, (C) of any request by the
               Commission for any amendment of or supplement to the Shelf
               Registration Statement or any Prospectus relating thereto or for
               any additional information in relation to the Shelf Registration
               Statement or Prospectus or any matter described therein and (D)
               of the entry of any stop order suspending the effectiveness of
               such Registration Statement or of the initiation of any
               proceedings for that purpose;

                      (iii) furnish to Seller a conformed copy of the Shelf
               Registration Statement as declared effective by the Commission
               and of each post-effective amendment thereto, and such number of
               copies of the final Prospectus and of each supplement thereto as
               may reasonably be required to facilitate the distribution of the
               Registrable Shares included in such Registration Statement;

                      (iv) register or qualify the Registrable Shares covered by
               the Shelf Registration Statement under the securities or blue sky
               laws of such jurisdictions in the United States as Seller shall
               reasonably request, and do any and all other acts and things
               which may be necessary to enable Seller to consummate the
               disposition in such jurisdictions of such Registrable Shares in
               accordance with a method of distribution described in such
               Registration Statement; provided, however, that Company shall in
               no event be required to qualify to do business as a foreign
               corporation or as a dealer in any jurisdiction where it is not so
               qualified, to conform its capitalization or the composition of
               its assets at the time to the securities or blue sky laws of such
               jurisdiction, to execute or file any general consent to service
               of process under the laws of any jurisdiction, to take any action
               that would subject it to service of process in suits other than
               those arising out of the offer and sale of the Registrable Shares
               covered by such Registration

                                       4
<PAGE>

               Statement, or to subject itself to taxation in any jurisdiction
               where it has not theretofore done so;

                      (v) use its diligent efforts to obtain, from its
               independent certified public accountants, a "cold comfort" letter
               in customary form and covering such matters of the type
               customarily covered by cold comfort letters, and use its best
               efforts to obtain from its counsel an opinion or opinions in
               customary form; and

                      (vi) cause such Registrable Shares to be listed on the
               principal exchange or exchanges or qualified for trading on the
               principal over-the-counter market on which the Class A Common
               Stock is then listed or traded, if not already so listed or
               qualified.

               (b) Notwithstanding anything to the contrary contained herein, if
at any time after the filing of the Shelf Registration Statement or after it is
declared effective by the Commission, Company determines, in its reasonable
business judgment, that such registration and offering could materially
interfere with or otherwise materially adversely affect any financing,
acquisition, corporate reorganization, or other material transaction or
development involving Company or any of its affiliates or require Company to
disclose material matters that otherwise would not be required to be disclosed
at such time, then Company may require the suspension by Seller of the
distribution of any of the Registrable Shares by giving notice to Seller. Any
such notice need not specify the reasons for such suspension if Company
determines, in its reasonable business judgment, that doing so would interfere
with or adversely affect such transaction or development or would result in the
disclosure of material non-public information. Company shall not be entitled to
postpone the filing of a Registration Statement pursuant to Section 2(c) or
require Seller to suspend the distribution of Registrable Shares under this
Section 3(b) for more than 90 days in any 12-month period. In the event that
such notice is given, then until Company has determined, in its reasonable
business judgment, that such registration and offering would no longer interfere
with the matters described in the preceding sentence (subject to the time
limitations contained therein) and has given notice thereof to Seller, Company's
obligations under Section 2(a), if the Registration Statement has not become
effective, or under Section 3(a)(i), if the Registration Statement has become
effective, will be suspended. In the event of a suspension pursuant to this
Section 3(b) after a Registration Statement has been declared effective, the
two-year period of effectiveness of such Registration Statement referred to in
Section 3(a)(i) will be extended by a number of days equal to the total number
of days for which the distribution of Registrable Shares included in such
Registration Statement has been suspended under this Section 3(b).

               (c) Company's obligations to Seller under this Agreement shall be
conditioned upon Seller's compliance with the following:

                      (i) Seller shall cooperate with Company at Company's
               expense in connection with the preparation of the Registration
               Statement, and for so long as Company is obligated to keep the
               Registration Statement effective, Seller shall provide to
               Company, in writing, for use in the Registration Statement, all

                                       5
<PAGE>

               information regarding Seller and such other information as may be
               necessary to enable Company to prepare the Registration Statement
               and Prospectus covering the Registrable Shares and to maintain
               the currency and effectiveness thereof;

                      (ii) Seller shall enter into such agreements with Company
               and any underwriter, broker-dealer or similar securities industry
               professional containing representations, warranties, indemnities
               and agreements as are in each case customarily entered into and
               made by selling stockholders;

                      (iii) during such time as Seller may be engaged in a
               distribution of the Registrable Shares, Seller shall comply with
               all applicable laws and regulations, including but not limited to
               Regulation M promulgated under the Exchange Act, and pursuant
               thereto shall, among other things: (A) not engage in any
               stabilization activity in connection with the securities of
               Company in contravention of any such laws or regulations ; (B)
               distribute Registrable Shares solely in the manner described in
               the Shelf Registration Statement, or in transactions for which
               registration under the Securities Act is not required; (C) cause
               to be furnished to each underwriter, agent or broker-dealer to or
               through whom the Registrable Shares, or to the offeree if an
               offer is made directly by Seller, such copies of the Prospectus
               (as amended and supplemented to such date) and documents
               incorporated by reference therein as may be required by such
               underwriter, agent, broker-dealer or offeree; and (D) not bid for
               or purchase any securities of Company or attempt to induce any
               person to purchase any securities of Company other than as
               permitted under the Exchange Act and the rules and regulations of
               the Commission promulgated thereunder; and

                      (iv) on notice from Company of the happening of any of the
               events specified in clauses (B), (C) or (D) of Section 3(a)(ii),
               or that, as set forth in Section 3(b), it requires the suspension
               by Seller of the distribution of any Registrable Shares, Seller
               shall cease offering or distributing Registrable Shares until
               such time as Company notifies Seller that offering and
               distribution of the Registrable Shares may recommence.

        4.     Expenses of Registration.

               All expenses in connection with the filing of the Shelf
Registration Statement, any qualification or compliance with federal or state
laws required in connection therewith, and the distribution of the Registrable
Shares shall, as between Seller and Company, be borne as follows:

               (a) Company shall pay and be responsible for the registration fee
payable under the Securities Act, blue sky fees and expenses, if applicable
(subject to the limitations set forth in Section 3(a)(iv)), printing fees and
all fees and disbursements of Company's counsel and accountants. Solely at its
discretion, Company may, in lieu of engaging the services of a financial
printing company with respect to the Registration Statement or the Prospectus,
arrange

                                       6
<PAGE>

for the photocopying thereof, in which event Company will bear the applicable
photocopying costs.

               (b) Seller shall pay all fees and disbursements of its own
counsel and other advisers, all stock transfer fees (including the cost of all
transfer tax stamps) or expenses, if any, and all other expenses (including
underwriting or brokerage discounts, commissions and fees) related to the
distribution of the Registrable Shares that have not expressly been assumed by
Company as set forth above.

        5.     Indemnification.

               (a) Company agrees to indemnify and hold harmless Seller from and
against any losses, claims, damages or liabilities (collectively "Losses"),
joint or several, to which Seller may become subject, to the extent that such
Losses (or actions in respect thereof) are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or any violation by Company of the Securities Act or state
securities or blue sky laws that relates to any action or inaction required of
Company in connection with the registration or qualification of securities under
such laws; and, subject to Section 5(c), Company will reimburse Seller for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such Losses; provided, however, that Company will
not indemnify or hold harmless Seller from or against any such Losses (i) that
arise out of or are based upon any violation by Seller (or any agent,
broker-dealer or underwriter it engaged) of any federal or state securities
laws, rules or regulations or any failure by Seller to give any purchaser of
Registrable Shares at or prior to the written confirmation of such sale, a copy
of the most recent Prospectus or (ii) if the untrue statement, omission or
allegation thereof upon which such Losses or expenses are based (x) was made in
reliance upon and in conformity with the information provided by or on behalf of
Seller in writing specifically for use or inclusion in the Registration
Statement or any Prospectus, or (y) was made in any Prospectus used after such
time as Company advised Seller that the filing of a post-effective amendment or
supplement thereto was required, except the Prospectus as so amended or
supplemented, or (z) was made in any Prospectus used after such time as the
obligation of Company hereunder to keep the Registration Statement effective and
current has expired or been suspended.

               (b) Seller agrees to indemnify and hold harmless Company, its
directors and officers and each person, if any, who controls Company within the
meaning of either the Securities Act or the Exchange Act (the "Company
Indemnified Parties"), from and against any Losses, joint or several, to which
Company Indemnified Parties may become subject, to the extent that such Losses
(or actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, made in conformity with

                                       7
<PAGE>

information provided by or on behalf of Seller in writing specifically for use
or inclusion in the Registration Statement or any Prospectus, or (ii) the use of
any Prospectus by or on behalf of Seller after Company has advised Seller that
the filing of a post-effective amendment or supplement thereto is required,
except the Prospectus as so amended or supplemented, or (iii) the use of any
Prospectus after the obligation of Company hereunder to keep the Registration
Statement effective and current has expired or been suspended, or (iv) any
violation by Seller (or any agent, broker-dealer or underwriter engaged by
Seller) of any federal or state securities law or rule or regulation thereunder
or any failure by Seller or its agents to give any purchaser of Registrable
Shares at or prior to the written confirmation of such sale, a copy of the most
recent Prospectus; and, subject to Section 5(c), Seller shall reimburse such
Company Indemnified Parties for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such Losses. Seller's
obligation to indemnify Company Indemnified Parties for Losses hereunder shall
be limited to the aggregate net proceeds received by Seller from the sale of
Registrable Shares pursuant to this Agreement.

               (c) Each party entitled to indemnification under this Section 5
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and the
Indemnifying Party may participate at its own expense in the defense, or if it
so elects, to assume the defense of any such claim and any action or proceeding
resulting therefrom, including the employment of counsel and the payment of all
expenses. The failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party from its obligations to indemnify such
Indemnified Party, except to the extent the Indemnified Party's failure so to
notify actually prejudices the Indemnifying Party's ability to defend against
such claim, action or proceeding. In the event that the Indemnifying Party
elects to assume the defense in any action or proceeding, the Indemnified Party
shall have the right to employ separate counsel in any such action or proceeding
and to participate in the defense thereof, but the fees and expenses of such
separate counsel shall be such Indemnified Party's expense unless (i) the
Indemnifying Party has agreed to pay such fees and expenses or (ii) the named
parties to any such action or proceeding (including any impleaded parties)
include an Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by counsel that there may be a conflict of
interest between such Indemnified Party and the Indemnifying Party in the
conduct of the defense of such action (in which case, if such Indemnified Party
notifies the Indemnifying Party in writing that it elects to employ separate
counsel at the expense of the Indemnifying Party, the Indemnifying Party shall
not assume the defense of such action or proceeding on such Indemnified Party's
behalf, it being understood, however, that the Indemnifying Party shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all Indemnified
Parties, which firm shall be designated in writing by Seller or Company as the
case may be). No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of the Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. The

                                       8
<PAGE>

Indemnifying Party shall not be liable for any settlement of any such action or
proceeding effected without its written consent, but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action or
proceeding, the Indemnifying Party shall indemnify and hold harmless the
Indemnified Party from and against any loss or liability by reason of such
settlement or judgment

               (d) If the indemnification provided for under this Section 5 is
unavailable to or insufficient to hold the Indemnified Party harmless under
subparagraphs (a) or (b) above in respect of any Losses referred to therein for
any reason other than as specified therein, then the Indemnifying Party shall
contribute to the amount paid or required by law to be paid by such Indemnified
Party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and such Indemnified Party on the other in connection with
the statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by (or omitted to be supplied by) Company or
Seller the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, the relative
benefits received by each party from the sale of the Registrable Shares and any
other equitable considerations appropriate under the circumstances. The amount
paid or payable by an Indemnified Party as a result of the Losses referred to
above in this Section 5(d) shall be deemed to include any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Seller's obligation to
contribute pursuant to this Section 5(d) shall be limited to the aggregate net
proceeds received by Seller from the sale of Registrable Shares pursuant to this
Agreement. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.

        6. Exchange Act Compliance. From and after such date as a registration
statement filed by Company pursuant to the Exchange Act shall have become
effective, Company shall use commercially reasonable efforts to comply in all
material respects with all of the reporting requirements of the Exchange Act and
shall use commercially reasonable efforts to comply in all material respects
with all other public information reporting requirements of the Securities and
Exchange Commission that are conditions to the availability of Rule 144 from the
sale of Class A Common Stock. Company shall cooperate with Seller in supplying
such information as may be necessary for Seller to complete and file any
information reporting forms presently or hereafter required by the Securities
and Exchange Commission as a condition to the availability of Rule 144.

        7. Notices. All notices, requests, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally or mailed, certified or registered mail with
postage prepaid, or sent by telex, telegram or telecopier, as follows:

                                       9
<PAGE>

                      (a)    if to Company:

                             Liberty Livewire Corporation
                             520 Broadway, 5th Floor
                             Santa Monica, CA  90401
                             Attention:  General Counsel
                             Facsimile:  (310) 434-7005

                      (b)    if to Seller :

                             Salah M. Hassanein
                             2318 Front Street
                             Del Mar, CA  92014
                             Facsimile:  (858) 509-0708

or to such other person or address as any party shall specify by notice in
writing to the other party. All notices and other communications given to a
party in accordance with the provisions of this Agreement shall be deemed to
have been given (i) three Business Days after the same are sent by certified or
registered mail, postage prepaid, return receipt requested, (ii) when delivered
by hand or transmitted by telecopy (answer back received) or (iii) one Business
Day after the same are sent by a reliable overnight courier service, with
acknowledgment of receipt requested. Notwithstanding the preceding sentence,
notice of change of address shall be effective only upon actual receipt thereof.

        8. Amendment. Any provision of this Agreement may be amended or modified
in whole or in part at any time by an agreement in writing among Company and
Seller, executed in the same manner as this Agreement. No consent, waiver or
similar act shall be effective unless in writing.

        9. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto and supersedes all prior agreements and understandings,
oral and written, among the parties hereto with respect to the subject matter
hereof.

        10. Counterparts. This Agreement may be executed in two or more
counterparts, and on separate counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument, and a signature page from one counterpart may be removed and
attached to another identical counterpart, with the same effect as if the
persons signing such separate signature pages had signed the same counterpart.

        11. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of New York, without giving
effect to principles of conflicts of laws.

        12. Assignment. The Seller may not assign his rights under this
Agreement without the prior written consent of Company, except for any transfer
upon Seller's death to any of his heirs, devisees or personal representatives,
in accordance with the laws of distribution and

                                       10
<PAGE>

descent. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. In the event of any transfer by Seller pursuant to the first
sentence of this Section 12, such transferee shall be deemed to be Seller for
purposes of this agreement (including the definition of Registrable Shares),
unless the context otherwise requires.

        13. Blackout Periods. Seller covenants and agrees that he shall not sell
any Registrable Shares pursuant to a Registration Statement during (i) the
34-day period commencing on any April 16, July 16, or October 16, or (ii) the
60-day period commencing on any February 14 (collectively, the "Blackout
Periods"). For the avoidance of doubt, the preceding sentence shall not be
construed to prohibit Seller from selling shares during any Blackout Period
through any transaction that does not require the delivery of a prospectus under
the Securities Act. Seller acknowledges that the designation of such blackout
periods does not supersede or otherwise diminish any obligation that Seller may
have to comply with any "insider trading" guidelines established from time by
the Company, to the extent such guidelines may be applicable to Seller, or the
requirements of applicable state and Federal securities laws and regulations,
including without limitation Rule 10b-5 under the Securities Exchange Act of
1934, as amended, which among other things prohibits the offer or sale of any
security by any person in possession of material non-public information relating
thereto.

                                       11
<PAGE>

               IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.

                                        LIBERTY LIVEWIRE CORPORATION

                                        By      /s/ Marcus O. Evans
                                           -------------------------------------
                                              Name:
                                              Title:

                                                /s/ Salah M. Hassanein
                                        ----------------------------------------
                                                  Salah M. Hassanein

<PAGE>

                                                                       EXHIBIT A

The Registrable Shares may be sold by Seller directly or through agents
designated from time to time or to or through broker-dealers designated from
time to time. To the extent required, any such agent or broker-dealer involved
in the offer and sale of the Registrable Shares and any applicable commissions,
discounts or other items constituting compensation to such agents or
broker-dealers will be set forth in a Prospectus Supplement.

The distribution of the Registrable Shares may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at prices determined on a negotiated or competitive
bid basis. Registrable Shares may be sold through a broker-dealer acting as
agent or broker for Seller, or to a broker-dealer acting as principal, including
without limitation in any such transaction pursuant to a forward sale, put
option purchased by Seller, call option written by Seller, or similar
transaction, or a delivery of Shares to cover a short sale by Seller (in any
such case subject to all applicable laws and regulations and to the requirements
of any stock exchange or automated quotation system on which or through which
any such transaction shall be consummated. In the case of any sale by Seller to
a broker-dealer acting as principal, the broker-dealer may then resell such
Registrable Shares to the public at varying prices to be determined by such
broker-dealer at the time of resale.

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