SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant x
-----
Filed by a party other than the registrant
/ / Preliminary proxy statement
/x/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c)
or Rule 14A-12
TELEMUNDO GROUP, INC.
(Name of Registrant as Specified in Its Charter)
Jose M. Sariego
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transactions
applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11: <F1>
(4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
__________________________
<F1> Set forth the amount on which the filing fee is calculated
and state how it was determined.
TELEMUNDO GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 27, 1995
The Annual Meeting of Stockholders of Telemundo Group, Inc.,
a Delaware corporation (the "Company"), will be held at the
offices of Bankers Trust Company, 280 Park Avenue, 1st floor, New
York, New York on Tuesday, June 27, 1995, beginning at 10:00
a.m.
At the meeting, stockholders will be asked to:
1. Elect nine directors to serve for the ensuing year or
until their successors are duly elected and qualified.
2. Approve the 1994 Stock Plan.
3. Approve the compensation payable to certain executive
officers of the Company.
4. Transact any other business that may properly come before
the meeting or any adjournment thereof.
Only stockholders of record at the close of business on May
19, 1995 will be entitled to notice of, and to vote at, the
meeting. A list of such stockholders will be available for
inspection at the offices of the Company, 1740 Broadway, New
York, New York, during normal business hours during the ten-day
period prior to the meeting.
Your attention is directed to the accompanying Proxy
Statement. Please mark, sign and date the enclosed proxy card
and mail it promptly in the accompanying envelope. This will
enable your shares to be voted in accordance with your
instructions.
By Order of the Board of Directors
Jose M. Sariego
Secretary
Miami, Florida
May 22, 1995
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK,
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED STAMPED ENVELOPE. IF YOU ARE ABLE TO
ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR
SHARES IN PERSON.
PROXY STATEMENT
TELEMUNDO GROUP, INC.
2290 West 8th Avenue
Hialeah, Florida 33010
_________________________________________
ANNUAL MEETING OF STOCKHOLDERS
June 27, 1995
_________________________________________
GENERAL
The enclosed proxy is solicited by and on behalf of the
Board of Directors of Telemundo Group, Inc., a Delaware
corporation (the "Company"), for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at the offices of
Bankers Trust Company, 280 Park Avenue, 1st floor, New York, New
York on Tuesday, June 27, 1995 beginning at 10:00 a.m. local time
and at any adjournment thereof. At the Annual Meeting,
stockholders will be requested to act upon the matters set forth
in this Proxy Statement. If you are not present in person at the
meeting, your shares can be voted only when represented by proxy.
The shares represented by your proxy will be voted in accordance
with your instructions if the proxy is properly completed, signed
and returned to the Company prior to the Annual Meeting. If no
choice is specified, the shares represented by the proxy will be
voted for the election of all nominees for director and for
approval of all the proposals described in this Proxy Statement.
A proxy given pursuant to this solicitation may be revoked at any
time prior to its exercise by written notice delivered to the
Secretary of the Company, by executing and delivering to the
Secretary a proxy with a later date, or by attending the Annual
Meeting and voting in person.
Solicitation of proxies will be made initially by mail. The
Company's directors, officers and employees may also solicit
proxies in person or by telephone without additional
compensation. In addition, proxies may be solicited by certain
banking institutions, brokerage firms, custodians, trustees,
nominees and fiduciaries who will mail material to or otherwise
communicate with the beneficial owners of shares of the Company's
Common Stock, $.01 par value ("Common Stock"). The cost of this
solicitation will be borne by the Company. The Company's Annual
Report to Stockholders for the year ended December 31, 1994 and
Form 10-Q Quarterly Report for the quarter ended March 31, 1995
accompany this Proxy Statement, and it is anticipated that this
Proxy Statement and accompanying proxy and other materials will
be mailed on or about May 22, 1995 to stockholders of record on
May 19, 1995.
The Company's only class of voting securities is its Common
Stock, which is divided into Series A (the "Series A Common
Stock") and Series B (the "Series B Common Stock"). Only
stockholders of record at the close of business on May 19, 1995
are entitled to notice of and to vote at the Annual Meeting.
Each share of Common Stock entitles the holder thereof to one
vote on all matters properly brought before the Annual Meeting,
except that, under the Company's Restated Certificate of
Incorporation, five of the nine members of the Board of Directors
will be elected by the holders of the Series B Common Stock,
voting separately as a series, and the remaining four directors
will be elected by the holders of the Series A Common Stock,
voting separately as a series. The presence, in person or by
proxy, of a majority of the shares entitled to vote is necessary
to constitute a quorum at the Annual Meeting. With respect to
the election of directors, a majority of the outstanding shares
of Series A Common Stock, present or represented by proxy, is
necessary to constitute a quorum for purposes of electing the
Series A directors, and a majority of the outstanding shares of
Series B Common Stock, present or represented by proxy, is
necessary to constitute a quorum for purposes of electing the
Series B directors. Directors are elected by a plurality of the
votes of the shares eligible to vote present in person or
represented by proxy at the Annual Meeting, with the nine
directors receiving the highest number of votes being elected to
the Board of Directors. In the case of the approval of the 1994
Stock Plan and the approval of the compensation payable to
certain executives of the Company, described below, the
affirmative vote of the holders of a majority of the shares of
Common Stock present in person or represented by proxy at the
Annual Meeting and entitled to vote is required for approval of
each proposal.
Shares that are entitled to vote but that are not voted at
the direction of the beneficial owner ("abstentions"), shares
represented by proxies or ballots that are marked "withhold
authority" with respect to the election of any one or more
nominees for election as directors, and votes withheld by brokers
in the absence of instruction from beneficial holders ("broker
nonvotes") will be counted for the purpose of determining whether
there is a quorum for the transaction of business at the Annual
Meeting. In determining whether a matter requiring approval of a
majority of the shares present and entitled to vote has been
approved or whether a plurality of the shares present and
entitled to vote has been voted, abstentions and withheld votes
will have the same effect as a vote against and broker nonvotes
will be disregarded and will have no effect on the outcome of the
vote.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At April 27, 1995, there were approximately 120 holders of
record of the Company's Common Stock, which is the only class of
capital stock of the Company outstanding. As discussed under the
caption "General" above, the Company's Common Stock is divided
into Series A Common Stock and Series B Common Stock. At April
27, 1995, there were 5,178,797 shares of Series A Common Stock
and 4,821,203 shares of Series B Common Stock outstanding.
Until December 30, 1994, the date on which the Company
consummated its Chapter 11 plan of reorganization (the "Plan of
Reorganization"), Reliance Group Holdings, Inc. ("RGH") or its
subsidiaries owned or controlled more than 58% of the Company's
then-outstanding common stock (the "Old Common Stock"). Pursuant
to the Plan of Reorganization, upon consummation, all of the Old
Common Stock was canceled and the Common Stock was issued to
certain creditors and others. The following table sets forth
information regarding the ownership of the Company's Common Stock
at April 27, 1995 by (a) all persons known to the Company to be
the beneficial owners of more than 5% of the Company's Series A
Common Stock or Series B Common Stock outstanding at April 27,
1995, (b) each director and nominee for director, (c) each
executive officer of the Company named in the Summary Compensa
tion Table set forth under the caption "Executive Compensation"
below, and (d) all directors and executive officers of the
Company as a group. Except as noted below, to the Company's
knowledge, each such owner has sole voting and investment power
for the shares indicated as beneficially owned by them.
<TABLE>
<CAPTION>
Amount and Percentage Percentage Percentage
Nature of of Series of Series of Total
Beneficial A Common B Common Common
Name of Beneficial Owner Ownership Stock Stock Stock
________________________ __________ __________ _________ ___________
5% or Greater Stockholders
<S> <C> <C> <C> <C>
TLMD Partners II, L.L.C. 1,550,464<F1><F2> --% 32.2% 15.5%
c/o Apollo Advisors, L.P.
Two Manhattanville Road
Purchase, NY 10577
Bastion Capital Fund, L.P. 1,257,685<F1><F3> 7.2 18.3 12.6
Suite 2960
1999 Avenue of the Stars
Los Angeles, CA 90067
Reliance Group Holdings, Inc. 1,099,269<F4> 21.2 -- 11.0
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
Nugget Partners, L.P. 540,030<F5> 10.4 -- 5.4
c/o DiGiorgio Corporation
2 Executive Drive, Suite 400
Somerset, NJ 08873
Hernandez Partners 499,999<F1><F6> 1.0 9.3 5.0
900 S. Garfield Avenue
Alhambra, CA 91801
Directors and Nominees
for Director
Leon D. Black 202,933<F1><F2> * 4.1 2.0
Guillermo Bron 1,257,685<F1><F3> 7.2 18.3 12.6
Arthur M. Goldberg 540,030<F5> 10.4 -- 5.4
John J. Hannan -- -- -- --
Roland A. Hernandez 499,999<F1><F6> 1.0 9.3 5.0
Alan Kolod 500 * -- *
Barry W. Ridings -- -- -- --
Bruce H. Spector -- -- -- --
Edward M. Yorke -- -- -- --
David E. Yurkerwich -- -- -- --
Named Executive Officers
Joaquin F. Blaya<F7> -- -- -- --
Jose C. Cancela<F7> -- -- -- __
Peter J. Housman II<F7> -- -- -- --
Filiberto Fernandez<F7> -- -- -- --
Gustavo Pupo-Mayo<F7> -- -- -- --
All directors and executive
officers as a group 2,500,647 18.7 31.8 25.0
______________________
*Less than 1%
<F1> TLMD Partners II, L.L.C., a Delaware limited liability company ("TLMD
Partners"); Bastion Capital Fund, L.P., a Delaware limited partnership
("Bastion"); Hernandez Partners, a California partnership ("Hernandez
Partners"); The Value Realization Fund, L.P., a Delaware limited partnership
("Value"); GRS Partners, an Illinois partnership ("GRS"); and Leon D. Black, the
Company's Chairman of the Board of Directors and a nominee for director
("Black") (collectively, the "Stockholders"), collectively own 527,927 shares of
Series A Common Stock, constituting 10.2% of the Series A Common Stock
outstanding, and 3,083,153 shares of Series B Common Stock, constituting 63.9%
of the Series B Common Stock outstanding. In total, the Stockholders own
3,611,080 shares of Common Stock, constituting 36.1% of the Common Stock
outstanding. The Stockholders directly own the following shares of Series A
Common Stock and Series B Common Stock: (a) TLMD Partners-- 0 shares of Series A
Common Stock and 1,550,464 shares of Series B Common Stock; (b) Bastion --
374,997 shares of Series A Common Stock and 882,688 shares of Series B Common
Stock; (c) Hernandez Partners -- 49,998 shares of Series A Common Stock and
450,001 shares of Series B Common Stock; (d) Black -- 2,933 shares of Series A
Common Stock and 200,000 shares of Series B Common Stock; (e) GRS -- 33,333
shares of Series A Common Stock and 0 shares of Series B Common Stock; and (f)
Value -- 66,666 shares of Series A Common Stock and 0 shares of Series B Common
Stock.
The Stockholders have entered into a Shareholders Agreement dated as
of December 20, 1994 (the "Shareholders Agreement") pursuant to which each of
them has agreed, during the term of the Shareholders Agreement and subject to
the provisions thereof (including the continued ownership of a specified minimum
number of shares of Series B Common Stock, as set forth in the Shareholders
Agreement), among other things, to use its reasonable best efforts to cause
Black (or his nominee), two nominees of TLMD Partners, a nominee of Bastion and
a nominee of Hernandez Partners to be elected to the Board of Directors of the
Company. Pursuant to the Shareholders Agreement, the Stockholders have agreed
that all of the shares of Common Stock owned by each of them will be voted by a
voting committee comprised of three members, one of which is appointed by TLMD
Partners, one of which is appointed by Bastion and one of which is an
independent stockholder (as defined in the Shareholders Agreement). Currently,
the members of the voting committee are John J. Hannan, Guillermo Bron and Alan
Abramson. The parties to the Shareholders Agreement have appointed the voting
committee as their attorney-in-fact and proxy to vote all shares of Common Stock
owned by such parties as to which a vote of stockholders is required.
Each Stockholder disclaims beneficial ownership of any shares of
Common Stock which it does not directly own as described in the first paragraph
of this footnote (1).
<F2> Does not include warrants expiring December 30, 1999 representing the
immediate right to purchase 41,774 shares of Series A Common Stock at an
exercise price of $7.00 per share. Of these warrants, warrants to purchase
29,242 shares of Series A Common Stock are owned by AIF II, L.P., a Delaware
limited partnership ("AIF II"). AIF II is the manager of TLMD Partners and has
sole dispositive power with respect to the securities held by TLMD Partners.
The managing general partner of AIF II is Apollo Advisors, L.P., a Delaware
limited partnership ("Apollo"). Apollo Capital Management, Inc., a Delaware
corporation ("Apollo Capital"), is the sole general partner of Apollo. Of the
remaining warrants, warrants to purchase 12,532 shares of Series A Common Stock
are owned by Lion Advisors, L.P., a Delaware limited partnership ("Lion
Advisors"). The sole general partner of Lion Advisors is Lion Capital
Management, Inc., a Delaware corporation ("Lion Capital"). Leon D. Black and
John J. Hannan, who are directors and officers of Apollo Capital and Lion
Capital, and Edward M. Yorke are associated with Apollo, Apollo Capital, Lion
Advisors and Lion Capital. See "Election of Directors" below. TLMD Partners,
Mr. Black, Mr. Hannan and Mr. Yorke disclaim beneficial ownership of the
warrants held by AIF II and Lion Advisors.
<F3> The sole general partner of Bastion is Bastion Partners, L.P., a
Delaware limited partnership ("BP"). The only general partners of BP are Bron
Corp., a Delaware corporation ("BC"), and Villanueva Investments, Inc., a
Delaware corporation ("VII"). The sole holder of voting stock and the sole
director and officer of BC is Guillermo Bron, a director and nominee for
director of the Company. The sole holder of voting stock of VII is the Daniel
Villanueva Living Trust, a trust created under the laws of California, the co-
trustees of which are Daniel D. Villanueva and Myrna E. Villanueva. Mr.
Villanueva is the sole director and principal officer of VII. Messrs. Bron and
Villanueva are the managing directors of Bastion Capital Corp., which manages
the affairs of Bastion pursuant to a management agreement.
<F4> Of the amount shown, 76 shares are held beneficially by Reliance Group
Holdings, Inc. ("RGH"), 405,427 shares are held beneficially by Reliance
Insurance Company ("RIC"), an indirect wholly owned subsidiary of RGH, and
693,728 shares are held beneficially by United Pacific Insurance Company, a
wholly owned subsidiary of RIC. Also includes warrants to purchase 32 shares of
Series A Common Stock beneficially owned by RIC and warrants to purchase six
shares of Series A Common Stock beneficially owned by RGH, both at an exercise
price of $7.00 per share, which warrants are immediately exercisable until
December 30, 1999. Does not include warrants beneficially owned by RIC to
purchase 416,667 shares of Series A Common Stock at an exercise price of $7.19
per share, one-third of which warrants become exercisable on each of December
30, 1995, 1996 and 1997 for five-year periods from the date they become
exercisable. Saul P. Steinberg, the Chairman of the Board of the Company until
December 30, 1994, and affiliated trusts own or control approximately 47% of the
outstanding common stock of RGH. Mr. Steinberg disclaims beneficial ownership
of all of these shares of Common Stock and warrants.
<F5> Arthur M. Goldberg, a director and nominee for director of the
Company, is the sole general partner of Nugget Partners, L.P., a New Jersey
limited partnership. All of the shares shown are beneficially owned directly by
Nugget Partners, L.P.
<F6> The general partners of Hernandez Partners are Roland A. Hernandez,
the President and Chief Executive Officer of the Company and a director and
nominee for director of the Company, and Enrique Hernandez, Jr., his brother.
Each of the general partners of Hernandez Partners has dispositive and voting
power with respect to the shares of Common Stock held by Hernandez Partners,
except as described in footnote (1) above.
<F7> Messrs. Blaya, Cancela, Housman, Fernandez and Pupo-Mayo are named in
the "Summary Compensation Table" under the section captioned "Executive
Compensation" below. Messrs. Cancela and Housman are executive officers of the
Company at present. Mr. Blaya was President and Chief Executive Officer and a
director of the Company until March 1995. Messrs. Fernandez and Pupo-Mayo
ceased being executive officers of the Company for purposes of this table in
April 1995.
</TABLE>
ELECTION OF DIRECTORS
The Board of Directors has nominated the persons described
below for election as directors at the Annual Meeting. Of the
nominees for director, five will be voted upon by the holders of
the Series B Common Stock voting separately as a series. Those
nominees are Leon D. Black; Guillermo Bron; Roland A. Hernandez;
Bruce H. Spector; and Edward M. Yorke (the "Series B Nominees").
The remaining four nominees will be voted upon by the holders of
the Series A Common Stock voting separately as a series. Those
nominees are Arthur M. Goldberg; Alan Kolod; Barry W. Ridings and
David E. Yurkerwich (the "Series A Nominees").
The Stockholders collectively own 63.9% of the outstanding
shares of Series B Common Stock as of April 27, 1995. See
"Security Ownership of Certain Beneficial Owners and Management."
If the Stockholders vote their shares of Series B Common Stock in
favor of the Series B Nominees, such nominees will be assured of
election to the Board of Directors.
THE BOARD OF DIRECTORS HAS NOMINATED EACH OF THESE PERSONS
AND RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THEM TO
SERVE UNTIL THE NEXT ANNUAL MEETING OF STOCKHOLDERS OR UNTIL
THEIR RESPECTIVE SUCCESSORS ARE DULY ELECTED AND QUALIFIED.
UNLESS OTHERWISE SPECIFIED THEREIN, PROXIES SOLICITED BY THE
BOARD WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES.
The following is a brief description of each nominee:
Series B Nominees
Leon D. Black, 43, became Chairman of the Board of Directors
of the Company as of December 30, 1994 upon consummation of the
Company's Plan of Reorganization. Mr. Black is one of the
founding principals of Apollo Advisors, L.P. ("Apollo"), which
acts as managing general partner of Apollo Investment Fund, L.P.
("AIF") and AIF II, L.P. ("AIF II"), both securities investment
funds, and Apollo Advisors II, L.P. ("Apollo II"), which acts as
the managing general partner of Apollo Investment Fund III, L.P.
("AIF III"), a securities investment fund. Mr. Black also is a
founding principal of Lion Advisors, L.P. ("Lion Advisors"),
which acts as financial advisor to and representative for certain
institutional investors with respect to securities investments.
Prior to 1990, Mr. Black was a Managing Director of Drexel
Burnham Lambert Incorporated, an investment banking firm ("Drexel
Burnham"). Mr. Black is a director of Astrum International,
Inc., Big Flower Press, Inc., Converse, Inc., Interco,
Incorporated, Gillett Holdings, Inc. and New York Law Publishing
Company.
Guillermo Bron, 43, became a director of the Company as of
December 30, 1994 upon consummation of the Plan of
Reorganization. From July 1994 to the present, Mr. Bron has been
an officer, director and principal stockholder of the corporate
general partner of Bastion Partners, L.P., which is the general
partner of Bastion Capital Fund, L.P., an investment fund and a
principal stockholder of the Company. Since 1990, Mr. Bron also
has been President of Bastion Capital Corp., a financial advisory
firm. From 1983 to 1990, Mr. Bron held various positions with
Drexel Burnham, including Managing Director. Mr. Bron currently
is a director of Pan American Bank.
Roland A. Hernandez, 37, has been a Director of the Company
since August 1989 and was reappointed to office as of December
30, 1994 upon consummation of the Plan of Reorganization. In
March 1995, the Board of Directors elected Mr. Hernandez
President and Chief Executive Officer of the Company. From 1987
to April 1985, Mr. Hernandez was the President of the corporate
general partner of Interspan Communications ("Interspan"), a
California limited partnership that owns Spanish-language
television station KFWD, Channel 52, a Company affiliate serving
the Dallas/Fort Worth market. Mr. Hernandez currently is a Vice
President and a director of the corporate general partner of
Interspan. Since 1991, Mr. Hernandez also has been a general
partner of Hernandez Partners, an investment partnership and a
principal stockholder of the Company. Mr. Hernandez also has
been an officer and director of Inter-Con Security Systems, Inc.,
a security services company, since 1984. Mr. Hernandez is a
member of the Young Presidents Organization and serves on the
Board of Directors of Beneficial Corporation, a financial
services holding company, and Weingart Center, a not-for-profit
organization dedicated to providing transitional services for the
homeless. From 1986 to 1992, Mr. Hernandez was President of
Plaza de la Raza, a not-for-profit organization dedicated to the
cultural and artistic advancement of inner city Hispanic children
in Los Angeles.
Bruce H. Spector, 52, became a director of the Company as of
December 30, 1994 upon consummation of the Plan of
Reorganization. Since October 1992, Mr. Spector has been a
consultant to Apollo. In March 1995, Mr. Spector became a
principal of Apollo II. For 25 years prior to 1992, Mr. Spector
was a member of the Los Angeles law firm of Stutman Triester &
Glatt. Mr. Spector is a director of Gillett Holdings, Inc. and
United International Holdings, Inc.
Edward M. Yorke, 36, has not previously served on the Board
of Directors of the Company. Since 1992, Mr. Yorke has been a
principal of Apollo and Lion Advisors and since March 1995 of
Apollo II. From 1990 to 1992, Mr. Yorke was a Vice President in
the high yield capital markets group of BT Securities Corp., an
investment banking firm. Mr. Yorke is a director of Aris
Industries, Inc., Big Flower Press, Inc., Salant Corporation and
Webcraft Technologies, Inc.
Series A Nominees
Arthur M. Goldberg, 53, became a director of the Company in
March 1995. Since November 1990, Mr. Goldberg has been Chairman
of the Board, President and Chief Executive Officer of Bally
Entertainment Corporation, formerly known as Bally Manufacturing
Corporation, a company involved, through its subsidiaries, in the
operation of casino resorts and health and fitness centers. Mr.
Goldberg also has been Chairman of the Board, President and Chief
Executive Officer of DiGiorgio Corporation, a food distributor,
since February 1990. Since September 1990, he also has been the
general partner of Nugget Partners, L.P., an investment
partnership and a principal stockholder of the Company, and
managing general partner of Arveron Investments, L.P., another
investment partnership, since 1984.
Alan Kolod, 46, became a director of the Company as of
December 30, 1994 upon consummation of the Plan of
Reorganization. Mr. Kolod has been a member of the New York law
firm Moses & Singer since December 1989.
Barry W. Ridings, 43, became a director of the Company in
March 1995. Mr. Ridings has been a Managing Director of the
investment banking firm Alex. Brown & Sons Incorporated since
March 1990. Mr. Ridings is a director of Greenman Brothers,
Inc., Leaseway Transportation Corporation, New Valley
Corporation, Norex America, Inc., Sub Micron Systems Corporation,
Tiger Direct, Inc., TansCor Waste Services Corporation and
Trinity Six, Inc.
David E. Yurkerwich, 42, became a director of the Company in
March 1995. Since 1980, Mr. Yurkerwich has been a member of
Peterson Consulting L.P., a litigation, dispute and economic
consulting firm, and has served as president of the firm since
1994.
GENERAL INFORMATION
RELATING TO THE BOARD OF DIRECTORS
From January 1 to December 30, 1994, the Company's Board of
Directors consisted of 11 members (the "Old Board"). The term of
office of all of the members of the Old Board expired on December
30, 1994 pursuant to the Plan of Reorganization and a new nine-
member board took office on that date (the "New Board"). The Old
Board held four meetings during 1994, all of which occurred prior
to December 30, 1994. All the members of the Old Board attended
more than 75% of the aggregate number of meetings held by the Old
Board and by the committees of which they were members, except
for George E. Bello, Henry R. Silverman and Christopher J.
Kennan. The Old Board and committees also acted from time to time
by unanimous written consent in lieu of meetings. The New Board
or its committees did not meet in person after December 30, 1994
and before year-end 1994.
During 1994, the Old Board had an Executive Committee, an
Audit Committee, a Compensation Committee, a Stock Option
Committee, a Nominating Committee and a Special Transactions
Committee. Currently, the New Board has an Audit Committee and a
Compensation and Stock Option Committee, all other committees of
the Old Board having been dissolved.
The Executive Committee of the Old Board was authorized to
take any action permitted to be taken by the Board of Directors,
except as otherwise restricted by the General Corporation Law of
the State of Delaware. During 1994, the Executive Committee was
comprised of Saul P. Steinberg, George E. Bello, Howard E.
Steinberg and Lowell C. Freiberg. The Executive Committee met
once during 1994 and also acted by written consent on one
occasion.
The Audit Committee recommends the engagement of independent
auditors, approves the scope of the annual audit and related fee
proposals, holds periodic meetings with both the independent
auditors and Company employees performing internal audit
functions to discuss the results of audit examinations, and
reviews the adequacy of internal accounting and financial
reporting controls and current developments in financial
reporting and accounting. During 1994, the Audit Committee of
the Old Board was comprised of George E. Bello, Daniel Hirsch and
Christopher J. Kennan. The Audit Committee met once during 1994.
Currently, the members of the Audit Committee of the New Board
are Guillermo Bron, Alan Kolod and Bruce H. Spector.
The Old Board had a separate Compensation Committee and
Stock Option Committee; these committees have been combined into
one Compensation and Stock Option Committee by the New Board.
The Compensation and Stock Option Committee reviews and approves
the Company's executive compensation policies. In addition, the
Compensation and Stock Option Committee selects the officers and
key employees of the Company who are to receive grants of
options, stock appreciation rights or restricted stock under the
1994 Stock Plan and the number of shares that would be subject
thereto, the exercise price, if any, and the other terms and
conditions of the grant. See "Approval of the Company's 1994
Stock Plan -- Administration" below.
During 1994, the Compensation Committee of the Old Board was
comprised of George E. Bello and Robert M. Steinberg from January
1, 1994 to May 15, 1994, and Daniel Hirsch and Christopher J.
Kennan from May 16, 1994 to December 30, 1994. The Compensation
Committee of the Old Board met once during 1994. During 1994,
the Stock Option Committee of the Old Board consisted of Daniel
Hirsch and Christopher J. Kennan. The Stock Option Committee of
the Old Board met once during 1994. Currently, the members of
the Compensation and Stock Option Committee of the New Board are
Leon D. Black and Bruce H. Spector.
The Nominating Committee of the Old Board advised and made
recommendations to the Board of Directors concerning the
selection of nominees for election as directors of the Company.
The Nominating Committee also considered stockholder proposals
for nominees. During 1994, the Nominating Committee of the Old
Board consisted of Saul P. Steinberg, George E. Bello, Lowell C.
Freiberg and Howard E. Steinberg. The Nominating Committee did
not meet in 1994. Currently, nominees for election as Series A
directors are selected by the Series A directors and nominees
for election as Series B directors are selected by the Series B
directors. Stockholder proposals for nominees should be sub
mitted in writing to the Secretary of the Company and should
include biographical information regarding the proposed nominee
with a statement from the stockholder as to the qualifications
and willingness of the candidate to serve on the Company's Board
of Directors.
The Special Transactions Committee of the Old Board reviewed
transactions between the Company and its officers, directors and
affiliates. During 1994, the Special Transactions Committee
consisted of Daniel Hirsch and Christopher J. Kennan. The
Special Transactions Committee did not meet in 1994.
The Company is required to identify any director or officer
who did not file timely with the Securities and Exchange
Commission a required report relating to ownership and changes in
ownership of the Company's equity securities. Based on material
provided to the Company, the Company believes that during 1994
all such filing requirements were complied with by its directors
and officers.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is the name, age and position of each of the
executive officers of the Company:
Name Age Position
____ ___ _________
Roland A. Hernandez 37 President and Chief Executive
Officer
Jose C. Cancela 37 Executive Vice President
Stephen J. Levin 46 Executive Vice President
Peter J. Housman II 43 Chief Financial Officer and
Treasurer
Maria I. Chaves 38 Senior Vice President, Sales
Stuart Livingston 37 Senior Vice President,
Operations and Administration
Horace G. Dawson, III 40 Assistant General Counsel and
Assistant Secretary
Raymond R. Gutierrez 40 Vice President, Human Resources
Jose M. Sariego 40 Senior Corporate Counsel and
Secretary
Mr. Hernandez's background is described under the caption
"Election of Directors" above.
Jose C. Cancela became Executive Vice President of the
Company in April 1995. From June 1992 until April 1995, he
served as President, Station Group of the Company. He served as
Senior Vice President of Univision Station Group, Inc. from
September 1991 until June 1992. From November 1988 until June
1992, he served as General Manager of WLTV, a Spanish-language
television station in Miami, and from August 1987 until November
1988, as General Manager of KWEX, a Spanish-language television
station in San Antonio, Texas. Mr. Cancela serves as Chairman of
the Board of Trustees of the Public Health Trust of Dade County,
as a Director of the National Hispanic Scholarship Fund, and on
the Board of Governors of the Greater Miami Chamber of Commerce.
Stephen J. Levin became Executive Vice President of the
Company in April 1995. From November 1993 to March 1995, Mr.
Levin was Sales Manager for National Cable Advertising, Inc., a
broadcast time sales company. From February 1993 to October
1993, he was a marketing consultant to various radio and
television broadcasting companies. From June 1991 to November
1992 Mr. Levin was the general manager of WNJU, the Company's
television station serving the New York market, and from February
1989 to June 1991, Mr. Levin was the general manager of KVEA, the
Company's television station serving the Los Angeles market.
Peter J. Housman II became Chief Financial Officer and
Treasurer of the Company in February 1987. From February 1991
until April 1995, he also served as President, Business and
Corporate Affairs of the Company. Mr. Housman served as Senior
Vice President of the Company from February 1987 until February
1991 and served as Senior Vice President, Treasurer and Chief
Financial Officer of the Company's predecessor from November 1986
to February 1987. From January 1984 to October 1986, Mr. Housman
served as a Vice President and Controller of Reliance Capital
Group, Inc., a subsidiary of RGH, and from October 1983 to
October 1986, he served as a Vice President of RGH having been
employed by RGH or one of its predecessors since 1976.
Maria I. Chaves became Senior Vice President, Sales and
Marketing of the Company in February 1995. From June 1993 to
February 1995, she served as Senior Vice President, Sales of the
Company. Prior thereto, she served as Vice President and
Director of Sales of the Company from September 1992. She served
as Sales Manager of WSCV, the Company's television station
serving the Miami-Ft. Lauderdale market, from June 1992 until
September 1992. From August 1989 until January 1992, Ms. Chaves
served as General Sales Manager of WLTV, a Spanish-language
television station in Miami.
Stuart Livingston became Senior Vice President,
Administration of the Company in April 1995. From January 1994
to March 1995, Mr. Livingston was Vice President of Affiliate
Relations for the Univision Network. From September 1989 to
December 1993, Mr. Livingston was Vice President of Broadcast
Operations of Univisa, Inc., a U.S. subsidiary of Grupo Televisa,
S.A., a Mexican media company.
Horace G. Dawson, III became Assistant General Counsel and
Assistant Secretary of the Company in September 1992. From
September 1992 to April 1995, he also served as a Vice President
of the Company. He served as Corporate Counsel of the Company
from June 1987 until September 1992. Prior thereto, he served as
Staff Counsel of RGH since August 1986.
Raymond R. Gutierrez became Vice President, Human Resources
of the Company in September 1993. He served as Director, Human
Resources from 1990 until September 1993. Prior thereto, Mr.
Gutierrez served as Senior Executive, Human Resources of R.H.
Macy & Co. from July 1982 until April 1990.
Jose M. Sariego became Secretary of the Company in March
1995. Since August 1994, he also has served as Senior Corporate
Counsel of the Company. From January 1990 to August 1994, Mr.
Sariego was a partner in the Miami, Florida office of Kelley Drye
& Warren, an international law firm.
Officers are not elected for a fixed term of office but
serve at the discretion of the Board of Directors.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the
compensation for services in all capacities to the Company for
the years ended December 31, 1994, 1993, and 1992 paid to (a) the
Chief Executive Officer and (b) the other four most highly compen
sated executive officers of the Company during 1994
(collectively, the "Named Executives"). Joaquin F. Blaya became
the Chief Executive Officer of the Company and Jose C. Cancela,
Gustavo Pupo-Mayo and Filiberto Fernandez became executive
officers of the Company during 1992. The amounts shown in the
table for 1992 with respect to Messrs. Blaya, Cancela, Pupo-Mayo
and Fernandez are payments from the dates they became executive
officers. Mr. Blaya resigned as President and Chief Executive
Officer of the Company in March 1995. Messrs. Pupo-Mayo and
Fernandez ceased being executive officers of the Company for
purposes of this table in April 1995.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
________________________________
Long Term
Compensa-
tion Awards
___________
Annual Securities All Other
Salary Bonus Underlying Compensation
Name and Principal Position During 1994 Year ($) ($) Options (#) ($)<F1>
- --------------------------------------- ---- ------ ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Joaquin F. Blaya 1994 840,577 0 500,000<F2> 16,285
President and Chief 1993 722,558 682,966 0 14,559
Executive Officer 1992 397,500 295,621 0 3,712
Jose C. Cancela 1994 380,773 0 50,000<F3> 811
President, Station Group 1993 330,192 317,283 0 7,996
1992 182,308 134,082 0 706
Peter J. Housman II 1994 306,730 0 50,000<F3> 10,297
President, Business and Corporate 1993 271,231 260,580 0 17,533
Affairs, Chief Financial Officer 1992 249,231 226,758 0 14,820
and Treasurer
Gustavo Pupo-Mayo 1994 239,792 83,900 0 178
Senior Vice President, 1993 200,000 91,000 0 2,196
News and Public Affairs 1992 65,385 60,000 0 166
Filiberto Fernandez 1994 300,000 0 0 4,750
Senior Vice President, Marketing 1993 279,615 198,503 0 5,842
1992 149,038 73,580 0 208
____________________
<F1> The following amounts are included in the above table. Company
retirement contributions and matching 401(k) contributions: Mr. Blaya $0 for
1992, $13,931 for 1993 and $4,620 for 1994; Mr. Cancela $0 for 1992, $7,704 for
1993 and $0 for 1994; Mr. Housman $13,517 for 1992, $13,931 for 1993 and $4,620
for 1994; Mr. Pupo-Mayo $0 for 1992, $2,030 for 1993 and $0 for 1994; Mr.
Fernandez $0 for 1992, $5,592 for 1993 and $4,500 for 1994. Life, disability and
supplemental medical insurance policy premiums paid by the Company: Mr. Blaya
$3,712 in 1992, $628 in 1993 and $11,665 in 1994; Mr. Cancela $706 in 1992, $292
in 1993 and $811 in 1994; Mr. Housman $1,303 in 1992, $3,602 in 1993 and $5,677
in 1994; Mr. Pupo-Mayo $166 in 1992 and 1993 and $178 in 1994; Mr. Fernandez
$208 in 1992, $250 in 1993 and 1994.
<F2> These options were canceled in March 1995. See "--Employment and
Severance Agreements" below.
<F3> These options are subject to the Company achieving certain performance
levels during the first six months of 1995. Management believes that these
levels are not likely to be achieved. See "--Employment and Severance
Agreements" below.
</TABLE>
Employment and Severance Agreements
In 1992, the Company entered into a three-year employment
agreement with Jose C. Cancela commencing May 25, 1992 and ending
on May 26, 1995. The agreement with Mr. Cancela provides for an
annual base salary of $300,000, $350,000 and $400,000 during the
first, second and third years, respectively, of his term of
employment. Upon the Company achieving certain performance goals
based on the operating income of the Company (subject to certain
adjustments), Mr. Cancela is eligible for an annual bonus of up
to 100% of his annual base salary. Under the agreement, Mr.
Cancela receives benefits customarily afforded to senior
executive officers of the Company, including term life insurance,
but is not entitled to participate in any bonus plan maintained
by the Company. If Mr. Cancela's employment is terminated for
"cause" (as defined) or because of death, disability or other
event rendering Mr. Cancela unable to perform his duties and
obligations under the Agreement, the Company is only obligated to
pay Mr. Cancela's salary through the date of termination. If the
Company terminates the agreement for any other reason, its sole
obligation is to continue payment of his salary through May 26,
1995, subject to the terms of the second employment agreement
between the Company and Mr. Cancela described below.
In 1994, the Company entered into a second employment
agreement with Mr. Cancela commencing May 27, 1995 and ending May
25, 1997. The second agreement with Mr. Cancela provides for an
annual base salary of $400,000 during his term of employment.
Upon the Company achieving certain performance goals based on the
operating income of the Company (subject to certain adjustments),
Mr. Cancela is eligible for an annual bonus of up to 100% of his
annual base salary. Under Mr. Cancela's second agreement, the
Company agreed to enter into two stock option agreements pursuant
to which the Company would issue to him options to purchase an
aggregate of 100,000 shares of Series A Common Stock under the
1994 Stock Plan. The first stock option agreement was entered
into on December 31, 1994 and granted Mr. Cancela options to
purchase 50,000 shares at an exercise price of $7.00 per share,
exercisable for a period of 10 years, upon the Company achieving
certain performance goals based on the operating income of the
Company (subject to certain adjustments). Management believes
that these performance goals are not likely to be achieved. The
second option agreement, which must be executed on June 30, 1995,
will provide for the grant of additional 10-year options to
purchase 50,000 shares at an exercise price equal to the then-
market value of the Series A Common Stock, one-third of which
options become exercisable on each of June 30, 1998, 1999 and
2000. Mr. Cancela's second employment agreement further provides
that Mr. Cancela is entitled to participate in benefit plans
customarily afforded to senior executive officers of the Company,
including term life insurance, but may not participate in any
bonus plan maintained by the Company. If Mr. Cancela's
employment is terminated for "cause" (as defined) or because of
death, disability or other event rendering Mr. Cancela unable to
perform his duties and obligations under the Agreement, the
Company is only obligated to pay Mr. Cancela's salary through the
date of termination. If the Company terminates the Agreement for
any other reason, its sole obligation is to continue payment of
his salary through the remaining term of his agreement and to
provide certain medical benefits.
In 1994, the Company entered into a three-year employment
agreement with Peter J. Housman II for a term commencing May 15,
1994 and ending May 25, 1997. The agreement with Mr. Housman
provides for an annual base salary of $325,000 during his term of
employment. Upon the Company achieving certain performance goals
based on the operating income of the Company (subject to certain
adjustments), Mr. Housman is eligible for an annual bonus of up
to 100% of his annual base salary. Under Mr. Housman's
agreement, the Company agreed to enter into two stock option
agreements pursuant to which the Company would issue to him
options to purchase an aggregate of 100,000 shares of Series A
Common Stock under the 1994 Stock Plan. The first stock option
agreement was entered into on December 31, 1994 and granted Mr.
Housman options to purchase 50,000 shares at an exercise price of
$7.00 per share, exercisable for a period of 10 years, upon the
Company achieving certain performance goals based on the
operating income of the Company (subject to certain adjustments).
Management believes that these performance goals are not likely
to be achieved. The second option agreement, which must be
executed on June 30, 1995, will provide for the grant of
additional 10-year options to purchase 50,000 shares at an
exercise price equal to the then-market value of the Series A
Common Stock, one-third of which options become exercisable on
each of June 30, 1998, 1999 and 2000. Mr. Housman's employment
agreement further provides that Mr. Housman is entitled to
participate in benefit plans customarily afforded to senior
executive officers of the Company, including term life insurance,
but may not participate in any bonus plan maintained by the
Company. If Mr. Housman's employment is terminated for "cause"
(as defined) or because of death, disability or other event
rendering Mr. Housman unable to perform his duties and
obligations under the agreement, the Company is only obligated to
pay Mr. Housman's salary through the date of termination. If the
Company terminates Mr. Housman's employment for any other reason,
its sole obligation is to continue payment of his salary through
the remaining term of his agreement and to provide certain
medical benefits.
The bonus and option provisions of these agreements are
subject to stockholder approval. See "Approval of Compensation
of Certain Executives" below.
In 1994, the Company entered into a three-year employment
agreement with Gustavo Pupo-Mayo commencing September 16, 1994
and ending September 15, 1997. The agreement with Mr. Pupo-Mayo
provides for an annual base salary of $300,000 during his term of
employment. Mr. Pupo-Mayo also is entitled to a bonus of up to
50% of his annual base salary based upon the achievement by
TeleNoticias del Mundo, L.P., a 24-hour-a-day news service
partnership in which the Company is a lead partner
("TeleNoticias"), of certain performance goals based on the
operating income of TeleNoticias (subject to certain adjustments)
and upon the achievement of certain ratings levels during the
broadcast on the Company's network of the prime-time network news
programs produced by TeleNoticias. The agreement further
provides that Mr. Pupo-Mayo is entitled to participate in benefit
plans customarily afforded to senior executives of the Company,
but may not participate in any bonus plan maintained by the
Company. If Mr. Pupo-Mayo's employment is terminated for "cause"
(as defined) or because of death, disability or other event
rendering Mr. Pupo-Mayo unable to perform his duties and
obligations under the agreement, the Company is only obligated to
pay Mr. Pupo-Mayo's salary through the date of termination. If
the Company terminates Mr. Pupo-Mayo's employment for any other
reason, its sole obligation is to continue payment of his salary
through the remaining term of his agreement and to provide
certain medical benefits.
In 1992, the Company entered into a three-year employment
agreement with Filiberto Fernandez commencing June 1, 1992 and
ending May 31, 1995. The agreement with Mr. Fernandez provides
for an annual base salary of $250,000 during the first year of
the term and $300,000 during the second and third years. Upon
the Company achieving certain performance goals based on the
operating income of the Company (subject to certain adjustments),
Mr. Fernandez is eligible for an annual bonus of up to 75% of
his annual base salary. The agreement further provides that Mr.
Fernandez is entitled to participate in benefit plans customarily
afforded to senior executives of the Company, but may not
participate in any bonus plan maintained by the Company. If Mr.
Fernandez's employment is terminated for "cause" (as defined) or
because of death, disability or other event rendering Mr.
Fernandez unable to perform his duties and obligations under the
agreement, the Company is only obligated to pay Mr. Fernandez's
salary through the date of termination. If the Company
terminates Mr. Fernandez's employment for any other reason, its
sole obligation is to continue payment of his salary through the
remaining term of his agreement.
In March 1995, the Company entered into an agreement with
Joaquin F. Blaya, formerly the Company's President and Chief
Executive Officer, providing for certain consideration for the
termination of Mr. Blaya's employment agreements and stock option
agreement with the Company. Pursuant to the agreement, the terms
of which are generally consistent with a termination without
cause under Mr. Blaya's then-existing employment agreement with
the Company, Mr. Blaya will be paid at an annual rate of $900,000
from March 8, 1995 to May 25, 1997. The Company also is
obligated to provide medical benefits substantially similar to
those provided to Mr. Blaya immediately prior to his resignation
in March 1995. In addition, Mr. Blaya agreed to a cancellation
of his then-existing options to purchase 500,000 shares of the
Company's Series A Common Stock and the Company granted Mr. Blaya
new options to purchase 150,000 shares of Series A Common Stock
at an exercise price of $7.00 per share, exercisable from January
1, 1996 through December 31, 1998. Mr. Blaya's two employment
agreements with the Company as well as his existing stock option
agreement were terminated pursuant to the agreement.
Option Grants in 1994
The following table sets forth certain information with
respect to the grant of options to purchase Series A Common Stock
made during 1994 to each of the Named Executives.
<TABLE>
<CAPTION> Potential Realiz-
Number of able Value at
Securities % of Total Assumed Annual
Underlying Options Rates of Stock
Options Granted to Exercise Price Appreciation
Name Granted (#) Employees Price Expiration Date for Option Term
____ ___________ __________ ________ _______________ __________________
<S> <C> <C> <C> <C> <C> <C> <C>
0% 5% 10%
--- --- ---
Joaquin F. Blaya 500,000<F1> 84% $7.00 December 30, 2004 <F1> <F1> <F1>
Jose C. Cancela 50,000<F2> 8% $7.00 December 30, 2004 <F2> <F2> <F2>
Peter J. Housman II 50,000<F2> 8% $7.00 December 30, 2004 <F3> <F3> <F3>
______________
<F1>These options were canceled in March 1995. See "--Employment and Severance
Agreements" above.
<F2>These options are subject to the Company achieving certain performance
levels during the first six months of 1995. See "--Employment and Severance
Agreements" above. Management believes that these levels are not likely to
be achieved.
</TABLE>
Aggregated Option Exercises in 1994 and Year-End Option Value
The following table sets forth the number of shares of
Series A Common Stock covered by stock options held by the Named
Executives at December 31, 1994 and also shows the value of "in-
the-money" options at that date. No Named Executive exercised
stock options during 1994.
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Year -End (#) Year-End ($)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable <F1>
- ---- ------------- ------------------
Joaquin F. Blaya 0/500,000<F2> 0/1,375,000
Jose C. Cancela 0/50,000<F3> 0/137,500
Peter J. Housman II 0/50,000<F3> 0/137,500
_______________
<F1> Based on the closing sale price of the Company's Series A
Common Stock of $9.75 per share on January 4, 1995, the
first day the Series A Common Stock traded on the Nasdaq
National Market.
<F2> These options were canceled in March 1995. See "--
Employment and Severance Agreements" above.
<F3> These options are subject to the Company achieving certain
performance levels during the first six months of 1995. See
"--Employment and Severance Agreements" above. Management
believes that these levels are not likely to be achieved.
Performance Graph
On December 30, 1994 in connection with the consummation of
the Company's Plan of Reorganization, the Company's Old Common
Stock was canceled and the now-outstanding Common Stock was
issued. A performance graph as required by the proxy rules of
the Securities and Exchange Commission therefore is not relevant
and is not included. The Company's Series A Common Stock
currently is quoted on the Nasdaq National Market under the
symbol "TLMD."
Compensation Committee Report
The Compensation Committee of the Old Board was formed in
November 1992 to review and approve the Company's executive
compensation policies. The Compensation Committee of the Old
Board was comprised of nonemployee directors.
The following report addresses the Company's compensation
policies for 1994 with respect to the Company's executive
officers, including the Named Executives. Compensation paid in
1994 to Joaquin F. Blaya, Jose C. Cancela and Filiberto Fernandez
was pursuant to employment agreements entered into between each
of them and the Company in 1992. Compensation paid in the second
half of 1994 to Peter J. Housman II was pursuant to an employment
agreement entered into with him on May 15, 1994. Compensation
paid to Gustavo Pupo-Mayo in 1994 was pursuant to employment
agreements entered into with him in 1992 and 1994. The current
employment agreements of Messrs. Cancela, Housman, Fernandez and
Pupo-Mayo are described under "-- Employment and Severance
Agreements" above and "Approval of Compensation of Certain
Executives" below. Mr. Blaya resigned all his positions with the
Company effective March 1995 and his two employment agreements
and one stock option agreement with the Company were terminated.
Mr. Fernandez and Mr. Pupo-Mayo ceased being executive officers
of the Company for purposes of this report in April 1995,
although they remain under contract with the Company pursuant to
their current employment agreements.
Executive Compensation Policies. In the highly competitive
environment of television broadcasting and the entertainment
industry as a whole, decisions made by key executives can have a
substantial impact on a company's financial performance. The
Company faces competition not only from other Spanish-language
and English-language television networks, but also from other
Spanish-language and English-language media, including cable
channels, radio stations, movies and other forms of
entertainment.
The Company's executive compensation policies are structured
to meet this competitive challenge and to help the Company
achieve its business objectives by providing levels of annual
base compensation designed to attract and retain talented
executives and by providing annual incentive compensation that
varies directly with Company financial performance and may also
take into account individual executive performance and
contribution.
Relationship of Performance Under Compensation Policies.
The components of 1994 executive compensation included base
salary and annual bonus amounts and, in the case of Messrs.
Blaya, Cancela and Housman, stock options. Executive compensation
for 1994 reflected the Company's emphasis on tying pay to
performance criteria in addition to providing salary levels
consistent with competitive practices and level of responsi
bility.
Base Salaries. An executive's base salary for 1994 was
determined based on the executive's individual level of
responsibility and competitive practices in the industry. For
the Named Executives, base salaries were set in employment
agreements between the Company and each of those executives.
Annual Bonuses. The Company generally pays cash bonuses, if
any, to its executives during the first quarter of the year for
services rendered during the preceding year. The Company
believes that its ability to pay bonuses is important to attract
and retain superior executives. For those executives employed
pursuant to employment agreements, bonus amounts are based solely
on meeting objective performance criteria. For other executives,
bonuses are based on a combination of objective Company financial
performance criteria together with objective and subjective
individual criteria. Individual subjective performance criteria
can include, to a greater or lesser degree, depending on the
executive, evaluation of initiative and contribution to overall
corporate performance, managerial ability, and adherence to
Company policies and procedures. The bonus amount generally is
calculated as a percentage of base salary earned in the year.
Stock Options. The Company's 1994 Stock Plan, which was
adopted by the Stock Option Committee of the Old Board in 1994
subject to approval by the Company's stockholders, provides for
the granting of stock options, either alone or together with
stock appreciation rights, and restricted stock. Pursuant to the
employment agreements with Messrs. Blaya, Cancela and Housman,
the Company issued stock options to purchase an aggregate of
600,000 shares of Series A Common Stock to these executives,
subject to certain conditions, including the Company achieving
certain performance levels and stockholder approval. See "--
Employment and Severance Agreements" above and "Approval of
Compensation of Certain Executives" below. No other options
under the 1994 Stock Plan were granted in 1994, and all
previously outstanding stock options under prior stock option
plans were canceled as of December 30, 1994 pursuant to the Plan
of Reorganization.
Other Compensation Plans. The Company has adopted a broad-
based employee benefit plan in which executives are permitted to
participate on the same terms as nonexecutive employees who meet
applicable eligibility criteria, subject to any legal limitations
on the amounts that may be contributed or the benefits that may
be payable under the plan. The Company also provides term life
insurance coverage for all employees, including executives. An
executive's coverage is determined based on salary up to a
maximum coverage amount of $300,000, except where an employment
agreement provides for different coverage.
CEO 1994 Compensation. As noted above, Mr. Blaya's 1994
compensation as President and Chief Executive Officer reflects a
contractual obligation entered into in May 1992 when Mr. Blaya
joined the Company. Prior to Mr. Blaya's employment agreement
being terminated in March 1995, his agreement provided for a base
salary plus the opportunity to earn a bonus based solely on the
Company achieving certain performance goals based on the
operating income of the Company (subject to certain adjustments).
In addition, Mr. Blaya was granted options to purchase 500,000
shares of the Company's Series A Common Stock, which become
exercisable only upon the Company achieving certain performance
goals based on the operating income of the Company (subject to
certain adjustments). Mr. Blaya's total compensation package,
therefore, was consistent with the policies discussed above.
Compliance with Internal Revenue Code Section 162(m).
Section 162(m) of the Internal Revenue Code of 1986, as amended,
which took effect January 1, 1994, limits the federal income tax
deduction that the Company may take for compensation paid to the
corporation's Chief Executive Officer and other four most highly
compensated executive officers to $1 million unless such
compensation is based solely on the attainment of "objective"
performance goals established in advance by a committee of two or
more outside directors. The Compensation Committee in 1994
attempted to structure the performance-based compensation in a
manner that complies with the new rules.
SUBMITTED BY:
THE COMPENSATION COMMITTEE
OF THE OLD BOARD OF DIRECTORS
Daniel Hirsch (May 16 to December 30,
1994)
Christopher J. Kennan (May 16 to
December 30, 1994)
Compensation of Directors
Each of the eight nonmanagement directors of the New Board
currently receives for his services as director a retainer of
$1,000 per calendar quarter, plus $2,500 for each meeting of the
Board of Directors and $1,000 for each committee meeting attended
in person, and $500 for each meeting of the Board of Directors or
a committee attended by telephone.
Compensation Committee Interlocks
Until May 15, 1994, Robert M. Steinberg and George E. Bello,
who are also directors of RGH, served as the two members of the
Old Board's Compensation Committee. Mr. Steinberg serves as the
President and Chief Operating Officer of RGH and Mr. Bello serves
as Executive Vice President and Controller of RGH . During 1994,
Reliance Insurance Company, an indirect wholly-owned subsidiary
of RGH ("RIC") provided the Company and its subsidiaries with
certain insurance coverage at a cost of approximately $200,000.
Saul P. Steinberg, Chairman of the Company's Board of Directors
until December 30, 1994, serves as Chairman of the Board and
Chief Executive Officer of RGH.
RELATED PARTY TRANSACTIONS
The Stockholders have entered into a Shareholders Agreement
relating to the transfer and voting of shares of Common Stock
owned by each of the Stockholders. See "Security Ownership of
Certain Beneficial Owners and Management" above.
On December 30, 1994, in connection with the consummation of
the Company's Plan of Reorganization, the Company, Apollo and RIC
entered into a registration rights agreement pursuant to which
the Company agreed to register Common Stock held by Apollo and
RIC and certain of their respective affiliates and transferees
("Holders") under the Securities Act of 1933, as amended (the
"Securities Act"). Under the registration rights agreement, the
Company is obligated, subject to certain terms and conditions and
upon demand by the Holders, to use reasonable diligence to effect
and to maintain for not more than 90 days the registration under
the Securities Act of certain registrable securities as defined
in the agreement. The Company is not required to effect more
than two such registrations during the term of the agreement. A
demand for registration under the agreement must be made by a
Holder within five years of the date of the agreement in the case
of (a) Common Stock acquired other than through the exercise of
warrants and (b) the Company's 10.25% Senior Notes due December
30, 2001, and within the later of five years from the date of the
agreement and two years after the exercise of warrants in the
case of Common Stock acquired through the exercise of warrants.
In addition, so long as any of the registrable securities are
outstanding, if the Company proposes to register any of its
securities under the Securities Act, whether or not for its own
account, the Holders have the right to request the Company to
include the Holders' registrable securities in such registration,
subject to certain terms and conditions.
During 1994, RIC provided the Company and its subsidiaries
with certain insurance coverage at a cost of approximately
$200,000.
Interspan owns and operates television station KFWD, Channel
52, the Company's Dallas/Fort Worth network affiliate. Roland A.
Hernandez, the Company's President and Chief Executive Officer
and a director, is a director and vice president of the corporate
general partner of Interspan, which is owned by Mr. Hernandez and
his family. Pursuant to Interspan's affiliation agreement with
the Company, Interspan received approximately $1,125,000 in
network compensation during 1994 and paid the Company
approximately $189,000 for the Company's services as the
exclusive national sales representative for KFWD.
Moses & Singer, a law firm of which Alan Kolod, a director
of the Company, is a partner, provided legal services to the
creditors' committee under the Company's Plan of Reorganization,
which legal services ultimately were paid for by the Company.
The amount paid by the Company for such services rendered in 1994
was approximately $204,000. Such services were rendered pursuant
to the Plan of Reorganization and prior to the time Mr. Kolod
became a director.
Management believes that the transactions described above
were on terms no less favorable to the Company than could be
obtained from unaffiliated parties.
APPROVAL OF THE COMPANY'S 1994 STOCK PLAN
In 1994, the Stock Option Committee of the Old Board
approved the adoption of the Company's 1994 Stock Plan (the
"Stock Plan") pursuant to which up to 1,000,000 shares of Series
A Common Stock may be issued upon the grant of restricted stock
or upon the exercise of options granted under the Stock Plan.
The stockholders are being requested at the Annual Meeting to
consider and approve the adoption of the Stock Plan by the
Company. The full text of the Stock Plan is attached as Appendix
A. The description set forth below is a summary of the Stock
Plan, does not purport to be complete, and is subject to and
qualified in its entirety by reference to the text of the Stock
Plan itself. Approval of the Stock Plan requires the affirmative
vote of the holders of a majority of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting
and entitled to vote thereon.
Stockholders are requested to approve the Stock Plan to
comply with the requirements of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), as well as the
requirements of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Section
162(m) limits the federal income tax deduction that the Company
may take for compensation paid to any Named Executive (current or
future) to $1 million unless such compensation is based solely on
the attainment of "objective" performance goals established in
advance by a committee of two or more outside directors, and the
material terms under which the compensation is to be paid,
including the performance goals, are disclosed to and approved by
the stockholders. The Stock Plan is designed to help preserve
the deductibility of incentive compensation paid to the Named
Executives now and in the future.
In addition, pursuant to Section 16(b) of the Exchange Act,
directors, certain officers and 10% or greater stockholders of
the Company generally are liable to the Company for repayment of
any "short-swing" profits realized from any nonexempt purchase
and sale of Common Stock occurring within a six-month period.
Rule 16b-3 promulgated under the Exchange Act provides an
exemption from Section 16(b) liability for certain transactions
by an officer or director pursuant to an employee benefit plan
that complies with the rule. Specifically, the award of
restricted stock or the grant of an option under an employee
benefit plan that complies with Rule 16b-3 will not be deemed a
purchase of a security for Section 16(b) purposes. The Stock
Plan is designed to comply with Rule 16b-3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
STOCK PLAN. UNLESS OTHERWISE SPECIFIED THEREIN, PROXIES
SOLICITED BY THE BOARD WILL BE VOTED FOR THIS PROPOSAL.
Purpose
The purpose of the Stock Plan is to advance the interests of
the Company and promote continuity of management by encouraging
and providing key employees with the opportunity to acquire an
equity interest in the Company and to participate in any increase
in stockholder value as reflected in an increase in the price of
the shares of the Company's Common Stock.
Administration
The Stock Plan is administered by the Compensation and Stock
Option Committee of the Board of Directors (the "Committee").
The Committee is not authorized to exercise any discretion
otherwise authorized if the ability to exercise such discretion
or the exercise of such discretion itself would cause any
compensation attributable to an award under the Stock Plan not to
be "performance based compensation" for purposes of Section
162(m).
Eligibility
Officers and key employees of the Company who, in the
opinion of the Committee, are in a position to contribute
materially to the Company's continued growth and development and
to its long-term financial success are eligible to participate in
the Stock Plan ("Eligible Employees"). Such persons will be
designated by the Committee from time to time under the Stock
Plan.
Stock Subject to the Stock Plan
A total of 1,000,000 shares of Series A Common Stock may be
issued under the Stock Plan, subject to adjustment in certain
circumstances. The Committee is authorized to grant options
under the Stock Plan, which may be "incentive stock options" as
defined in the Code ("ISOs") or nonstatutory stock options
("NSOs"), or to award restricted stock ("Restricted Stock"). The
Committee also is authorized to grant stock appreciation rights
("SARs") under the Stock Plan. No Eligible Employee may be
awarded options or SARs covering more than 700,000 shares of
Common Stock. If any shares of Common Stock are subject to an
option that expires or terminates for any reason or if any shares
of Restricted Stock are forfeited or are reacquired by the
Company, such shares will once again be available for issuance
under the Stock Plan, subject to certain conditions. If an SAR
is exercised and payment is made in cash, the shares of Common
Stock allocable to the portion of SAR surrendered may once again
be issued under the Stock Plan.
Option Grants
The Committee may grant options to Eligible Employees at any
time and from time to time in its discretion, and has complete
discretion consistent with the terms of the Stock Plan to
determine: (a) the number of options to be granted to each
Eligible Employee; (b) whether such options will be ISOs or NSOs;
(c) the exercise price of the option; (d) the duration of the
option; and (e) such other provisions as the Committee may
determine. Each option grant will be evidenced by an option
agreement.
The Stock Plan provides that options with respect to not
more than 600,000 shares of Series A Common Stock may have an
exercise price less than the fair market value of the Common
Stock on the date the option is granted. In the case of an ISO,
no option may have an option price that is less than the fair
market value of the Common Stock on the date the option is
granted (110% of fair market value in the case of an ISO granted
to any person who owns Common Stock possessing more than 10% of
the total combined voting power of all classes of stock of the
Company (a "10% Stockholder")).
The Committee will determine the duration of each option
granted, provided that no option may be exercisable later than
the 10th anniversary of the date of its grant (the fifth
anniversary in the case of an ISO granted to a 10% Stockholder).
Options granted under the Stock Plan may be exercisable at such
times and be subject to such restrictions and conditions as the
Committee may in each instance approve, which need not be the
same for all Eligible Employees.
Terms and Conditions Applicable to Options
Payment. The exercise price of an option is payable to the
Company in full upon exercise either (a) in cash or its
equivalent, or (b) at the discretion of the Committee, by
tendering shares of Common Stock held by the optionee for more
than six months having a fair market value at the time of
exercise equal to the exercise price or (c) by a combination of
(a) and (b). The cash proceeds from the exercise of an option
will be added to the general funds of the Company and may be used
for general corporate purposes.
Restrictions on Stock Transferability. The Committee may
impose such restrictions on any shares of Common Stock acquired
pursuant to the exercise of an option under the Stock Plan as it
deems advisable.
Termination of Employment Due to Retirement, Death or
Disability. The Committee may provide in the option agreement
(a) that if the optionee's employment with the Company is
terminated by reason of retirement or for a reason other than for
cause or following a change in control, any outstanding options
granted to the optionee that are then exercisable will continue
to be exercisable at any time prior to the earlier of the
expiration date of the options and one year after the date of
termination, and any options not then exercisable will terminate
immediately, subject to such exceptions (which must be set forth
in the option agreement) as the Committee, in its sole
discretion, may approve, and (b) what the rights are of an
optionee under any then outstanding option granted to the
optionee pursuant to the Stock Plan if the optionee's employment
with the Company is terminated by reason of death or disability.
Termination of Employment for Cause. If the employment of
the optionee is terminated for cause (as defined in the Stock
Plan), any then outstanding option granted pursuant to the Stock
Plan to the optionee will terminate immediately; provided, that
the Committee may waive, in whole or in part, the automatic
termination of such options and may set forth such waiver or
condition in the option agreement or at any other time, including
following the termination of employment.
Nontransferability and Exercisability of Options. No option
granted under the Stock Plan may be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, otherwise than
by will or by the laws of descent and distribution. Further, all
options granted to an optionee under the Stock Plan are
exercisable during the optionee's lifetime only by such optionee.
No option is exercisable prior to the time a registration
statement under the Securities Act is effective with respect to
the shares of stock issuable upon the exercise of such option,
unless an exemption from such registration is available for such
exercise.
Stock Appreciation Rights
The Committee, in its discretion, in connection with the
grant of an option, may grant to the optionee SARs, the terms and
conditions of which are to be set forth in an agreement. An SAR
will cover the same shares of Common Stock covered by the option
(or such lesser number of shares of Common Stock as the Committee
may determine) and will, except as provided in the Stock Plan, be
subject to the same terms and conditions as the related option.
SARs are subject to the following terms and provisions:
(a) An SAR may be granted:
(i) either at the time of grant, or at any time
thereafter during the term of the option if
related to an NSO; or
(ii) only at the time of grant if related to
an ISO.
(b) An SAR will entitle the holder of the related
option, upon exercise of the SAR, to surrender such
option, or any portion thereof to the extent unexercised,
and to receive payment of an amount determined by
multiplying (i) the excess of the fair market value of a
share of Common Stock on the date of exercise of such SAR
over the exercise price of a share of Common Stock under
the related option, by (ii) the number of shares as to
which such SAR has been exercised. Payment of such
amount may be made by the Company, in the discretion of
the Committee, solely in whole shares of Common Stock in
a number determined at their fair market value on the
date preceding the date of exercise of the SAR, or solely
in cash, or in a combination of cash and Common Stock,
except no payment in cash may be made to an officer of
the Company under certain circumstances. Notwithstanding
the foregoing, the Committee may limit in any manner the
amount payable with respect to any SAR by including such
a limit in the agreement evidencing the SAR at the time
it is granted.
(c) An SAR will be exercisable at such time or
times and only to the extent that a related option is
exercisable, and will not be transferable except to the
extent that such related option may be transferable. An
SAR granted in connection with an ISO will be exercisable
only if the fair market value of a share of Common Stock
on the date of exercise exceeds the purchase price of a
share of Common Stock specified in the related option. No
SAR may be exercised before the date six months after the
date it is granted.
(d) Upon the exercise of an SAR, the related option
will be canceled to the extent of the number of shares of
Common Stock as to which the SAR is exercised, and upon
the exercise of an option granted in connection with an
SAR, the SAR shall be canceled to the extent of the
number of shares of Common Stock as to which the option
is exercised or surrendered.
Restricted Stock
The Committee, at any time and from time to time, may grant
shares of Restricted Stock under the Stock Plan to such Eligible
Employees and in such amounts as it determines in its sole
discretion. Each grant of Restricted Stock will be made pursuant
to a written agreement that will contain such restrictions, terms
and conditions as the Committee may determine in its discretion.
Restrictions upon shares of Restricted Stock will lapse at such
time or times and on such terms and conditions as the Committee
may determine.
The shares of Restricted Stock granted may not be sold,
transferred, pledged, assigned or otherwise alienated or
hypothecated for such period of time as the Committee may
determine, or upon earlier satisfaction of other conditions as
specified by the Committee in its sole discretion and set forth
in the Restricted Stock grant; provided that Restricted Stock
granted to officers, directors or any person who owns, directly
or indirectly, more than 10% of any class of equity security of
the Company that is registered pursuant to Section 12 of the
Exchange Act may not be sold for at least six months after the
date of grant. The Committee may impose such other restrictions
on any shares of Restricted Stock granted to any Eligible
Employee pursuant to the Stock Plan as it may deem advisable.
During the period of restriction, Eligible Employees holding
shares of Restricted Stock may exercise full voting rights with
respect to those shares and may receive all dividends and other
distributions paid with respect to those shares while they are so
held. If any such dividends or distributions are paid in shares
of Common Stock, the shares will be subject to the same
restrictions on transferability as the shares of Restricted Stock
with respect to which they were paid.
Change of Control
The Committee, either at the time options or shares of
Restricted Stock are granted, or, if so provided in the
applicable option agreement or Restricted Stock grant, at any
time thereafter, has the authority to take such actions as it
deems advisable, including to accelerate in whole or in part the
exercisability of options and/or the last day of the period of
restriction upon a Change in Control, as defined in the Stock
Plan.
Amendment, Modification and Termination of the Stock Plan
The Stock Plan will remain in effect, subject to the Board
of Director's right to terminate the Stock Plan earlier, until
all Common Stock subject to it has been purchased or acquired
pursuant to the provisions of the Stock Plan. Notwithstanding the
foregoing, no option or Restricted Stock may be granted under the
Stock Plan on or after December 30, 2004.
The Board of Directors may at any time terminate, and from
time to time may amend or modify, the Stock Plan, provided,
however, that no such action of the Board, without approval of
the stockholders, may:
(a) Increase the total amount of Common Stock which
may be issued under the Stock Plan, except in certain
circumstances.
(b) Materially increase the cost of the Stock Plan
or materially increase the benefits to participants in
the Stock Plan.
(c) Extend the period during which options or
Restricted Stock may be granted.
(d) Extend the maximum period after the date of
grant during which options may be exercised.
(e) Change the class of individuals eligible to
receive options or Restricted Stock.
Any amendment which requires stockholder approval in order for
the Stock Plan to continue to comply with Rule 16b-3 of the
Exchange Act or any other law, regulation or stock exchange
requirement will not be effective unless approved by the
requisite vote of stockholders.
Certain Tax Considerations
All options that do not qualify for federal income tax
purposes as ISOs will be considered NSOs. Under the Code, the
recipient of an NSO does not recognize taxable income upon the
grant of the option so long as the option does not have a readily
ascertainable fair market value. Instead, the option holder
generally recognizes ordinary income at the time the option is
exercised in an amount equal to the difference between the fair
market value of the shares on the date of exercise and the
purchase price. However, if the stock received upon exercise is
not transferable and is subject to a substantial risk of
forfeiture, the recipient will not recognize income until either
the stock becomes transferable or the substantial risk of
forfeiture expires. The income recognized at such time will
generally equal the fair market value of the stock at that time
less the amount paid for the stock. The Company is required to
withhold federal and state taxes, if applicable, attributable to
the amount recognized by the employee in the year the income is
recognized by the employee. The Company will be entitled to a
tax deduction in the same year and in the same amount as the
taxable income recognized by the employee. The tax basis of
shares purchased by the optionee will generally be equal to the
purchase price plus any gain recognized at date of exercise. The
amount of any gain or loss realized on a subsequent sale of the
stock will be calculated by reference to the seller's tax basis.
The recipient of an ISO does not recognize taxable income
upon the grant of the option or upon the exercise of the option,
and the Company is not entitled to a deduction either upon grant
or exercise of the ISO. Upon the sale or exchange of the shares
received from the exercise of an ISO, if at least two years after
the grant of the option and one year after receipt of the shares
by the optionee, any gain will be treated as long-term capital
gain. If these holding periods are not satisfied, the optionee
will recognize ordinary income, generally measured as the
difference between the exercise price and the lower of the fair
market value of the stock on the date the option is exercised or
the sale price of the stock. The Company will be entitled to a
deduction in the same amount as the ordinary income recognized by
the optionee. Any gain recognized on such a premature
disposition of the shares in excess of the amount treated as
ordinary income will be characterized as a long-term or short-
term capital gain, depending on the optionee's holding period for
the optioned stock.
Other
Notwithstanding anything contained in the Stock Plan or any
agreement to the contrary, if the disposition of shares of Common
Stock acquired pursuant to the Stock Plan is not covered by a
current registration statement under the Securities Act, and is
not otherwise exempt from such registration, such shares of
Common Stock will be restricted against transfer to the extent
required by the Securities Act and Rule 144 or other regulations
thereunder.
As of the date of this Proxy Statement, 652,500 options, all
of them NSOs, are outstanding under the Stock Plan. See
"Approval of Compensation of Certain Executives" for a
description of options issued under the Stock Plan to the Chief
Executive Officer and certain other executives. As of April 27,
1995, the last reported sale price of the Company's Series A
Common Stock on the Nasdaq National Market was $9.375.
APPROVAL OF COMPENSATION OF CERTAIN EXECUTIVES
For many years, the Company has adhered to the principle of
pay-for-performance. Payment of both annual and long-term
incentive compensation to senior officers are based on the
achievement of specific performance measures, as described in the
Compensation Committee report herein.
As discussed above in "Approval of the Company's 1994 Stock
Plan," federal tax law limits to $1 million the deduction that
the Company can take for compensation paid during a taxable year
to any Named Executive unless the compensation is based on the
attainment of "objective" performance goals and the material
terms under which the compensation is to be paid, including the
performance goals, are disclosed to and approved by stockholders.
The performance-based compensation payable to Roland A.
Hernandez, Jose C. Cancela and Peter J. Housman II under their
employment agreements and stock option agreements with the
Company (consisting of annual bonuses and stock options) is
designed to preserve the deductibility of the compensation
payable to each of these employees under current tax law.
Pursuant to the requirements for preserving such deductibility,
disclosure is made below of the material terms of these
performance-based compensation arrangements, including the
performance goals, and stockholders are being requested at the
Annual Meeting to approve these arrangements.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
COMPENSATION OF CERTAIN EXECUTIVES DESCRIBED BELOW. UNLESS
OTHERWISE SPECIFIED THEREIN, PROXIES SOLICITED BY THE BOARD WILL
BE VOTED FOR THIS PROPOSAL.
Under Mr. Hernandez's three-year employment agreement with
the Company, entered into in March 1995, Mr. Hernandez is
entitled to an annual base salary of $700,000 during his term of
employment. In addition, Mr. Hernandez is entitled to a bonus of
up to 150% of his annual base salary upon the Compensation and
Stock Option Committee certifying that certain performance goals
based on the operating income of the Company (adjusted to add
back depreciation and amortization among other adjustments) have
been met. If the Company were to achieve the highest targeted
performance goal in any year during the term of his employment
agreement, Mr. Hernandez's bonus would be $1,050,000 in such
year. Under a separate stock option agreement also entered into
in March 1995, Mr. Hernandez received NSOs under the Stock Plan
to purchase 512,500 shares of the Company's Series A Common Stock
at an exercise price of $10.00 per share. The options vest and
become exercisable in four 128,125 annual increments upon the
Compensation and Stock Option Committee certifying that certain
performance goals based on the operating income of the Company
(adjusted to add back depreciation and amortization among other
adjustments) have been met. If Mr. Hernandez's employment
agreement has not been terminated and the Company does not offer
Mr. Hernandez at least a one year extension on his employment
agreement, the final 128,125 increment will vest and become
exercisable at the end of the three-year term of his employment
agreement provided the Company met certain performance goals
based on the aggregate operating income of the Company (adjusted
to add back depreciation and amortization among other
adjustments) during the three-year term. Notwithstanding the
failure to meet the performance goals, all of the options vest
after nine years if Mr. Hernandez is still employed by the
Company. Upon a "change of control" of the Company (as defined),
all options (other than those for prior completed years in which
the performance goals had not been met ("lost options") at the
time of the change of control) will vest and become exercisable.
If the Company terminates Mr. Hernandez's employment without
cause or Mr. Hernandez terminates his employment as a result of a
diminution in his duties, Mr. Hernandez is entitled to receive
his salary through the term of his agreement and a bonus for the
year in which the termination occurs if the Company achieves the
required targets, and all unvested options other than lost
options will vest. If Mr. Hernandez's employment is terminated
due to death or disability, he is entitled to receive his salary
through the date of termination and a bonus for the year in which
the termination occurs if the Company achieves the required
targets, and all unvested options other than lost options will
vest. All of the options granted to Mr. Hernandez have a term of
10 years from the date of grant.
Under Mr. Cancela's employment agreements with the Company,
Mr. Cancela currently is entitled to an annual base salary of
$400,000. In addition, Mr. Cancela is entitled to a bonus of up
to 100% of his annual base salary upon the Compensation and Stock
Option Committee certifying that certain performance goals based
on the operating income of the Company (adjusted to add back
depreciation and amortization among other adjustments) have been
met. If the Company were to achieve the highest targeted
performance goal in any year during the remaining term of his
employment agreements, Mr. Cancela's bonus would be $400,000 in
such year. Under a separate stock option agreement dated as of
December 31, 1994, Mr. Cancela also was granted NSOs under the
Stock Plan to purchase 50,000 shares of Common Stock at an
exercise price of $7.00 per share. One-half of such options
become exercisable upon the Compensation and Stock Option
Committee certifying that certain performance goals based on the
operating income of the Company (adjusted to add back deprecia
tion and amortization among other adjustments) for the six month
period ending June 30, 1995 have been met; thereafter, if the
Compensation and Stock Option Committee has certified that the
performance goals were met for such six month period, one fourth
of the total number of options granted become exercisable on each
of May 25, 1996 and 1997. In addition, Mr. Cancela's employment
agreement with the Company provides that the Company and Mr.
Cancela will enter into a second stock option agreement on June
30, 1995 pursuant to which he will be granted additional options
to purchase 50,000 shares of Series A Common Stock at an exercise
price equal to the fair market value of the Series A Common Stock
on the date of grant. These options are not contingent on the
achievement of any performance goals and one-third of the options
may be exercised on each of June 30, 1998, 1999 and 2000 so long
as Mr. Cancela is still employed by the Company at the time of
exercise. Upon a "change of control" of the Company (as
defined), all options will vest and become exercisable. All of
the options granted and to be granted to Mr. Cancela have a term
of 10 years from the date of grant.
Under Mr. Housman's employment agreement with the Company,
Mr. Housman is entitled to an annual base salary of $325,000. In
addition, Mr. Housman is entitled to a bonus of up to 100% of his
annual base salary upon the Compensation and Stock Option
Committee certifying that certain performance goals based on the
operating income of the Company (adjusted to add back
depreciation and amortization among other adjustments) have been
met. If the Company were to achieve the highest targeted
performance goal in any year during the term of his employment
agreement, Mr. Housman's bonus would be $325,000 in such year.
Under a separate stock option agreement dated as of December 31,
1994, Mr. Housman also was granted NSOs under the Stock Plan to
purchase 50,000 shares of Common Stock at an exercise price of
$7.00 per share. One-half of such options become exercisable
upon the Compensation and Stock Option Committee certifying that
certain performance goals based on the operating income of the
Company (adjusted to add back depreciation and amortization among
other adjustments) for the six month period ending June 30, 1995
have been met; thereafter, if the Compensation and Stock Option
Committee has certified that the performance goals were met for
such six month period, one fourth of the total number of options
granted become exercisable on each of May 25, 1996 and 1997. In
addition, Mr. Housman's employment agreement with the Company
provides that the Company and Mr. Housman will enter into a
second stock option agreement on June 30, 1995 pursuant to which
he will be granted additional options to purchase 50,000 shares
of Series A Common Stock at an exercise price equal to the fair
market value of the Series A Common Stock on the date of grant.
These options are not contingent on the achievement of any
performance goals and one-third of the options may be exercised
on each of June 30, 1998, 1999 and 2000 so long as Mr. Housman is
still employed by the Company at the time of exercise. Upon a
"change of control" of the Company (as defined), all options will
vest and become exercisable. All of the options granted and to
be granted to Mr. Housman have a term of 10 years from the date
of grant.
For more information regarding Mr. Cancela's and Mr.
Housman's employment agreements and stock option agreements, see
"Executive Compensation -- Employment and Severance Agreements."
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, independent public accountants,
examined the consolidated financial statements of the Company for
the year 1994. The Company has not yet chosen its public
accountant for the current year. Representatives of Deloitte &
Touche are expected to be present at the Annual Meeting and to be
available to respond to appropriate questions, and will have the
opportunity to make a statement if they so desire.
OTHER BUSINESS
The Board of Directors does not know of any matters to be
presented for action at the meeting other than as set forth in
this Proxy Statement. If any other business should properly come
before the meeting, the persons named in the accompanying form of
proxy intend to vote thereon in accordance with their judgment.
STOCKHOLDER PROPOSALS AT THE NEXT ANNUAL MEETING
Stockholders who intend to present proposals at the 1996
Annual Meeting of Stockholders must submit such proposals to the
Company no later than January 24, 1996 in order for them to be
included in the Company's proxy materials for such meeting.
Stockholder proposals must be submitted to the Company, 2290 West
8th Avenue, Hialeah, Florida 33010, Attention: Secretary.
Stockholders are encouraged to submit any such proposals by
certified mail-return receipt requested. The Company reserves
the right to decline to include in the Company's proxy statement
any stockholder's proposal that does not comply with, or may be
excluded under, the applicable rules of the Securities and
Exchange Commission.
By Order of the Board of Directors
Jose M. Sariego
Secretary
APPENDIX A
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TELEMUNDO GROUP, INC.
1994 STOCK PLAN
SECTION 1. Establishment, Purpose, and Effective Date of Plan
1.1 Establishment. Telemundo Group, Inc., a Delaware corporation (the
``Company''), hereby establishes the ``1994 STOCK PLAN'' (the ``Plan'')
for key employees. The Plan permits the grant of Stock Options, Stock
Appreciation Rights and Restricted Stock.
1.2 Purpose. The purpose of the Plan is to advance the interests of
the Company and its Subsidiaries and promote continuity of management by
encouraging and providing key employees with the opportunity to acquire
an equity interest in the Company and to participate in the increase in
shareholder value as reflected in the growth in the price of the shares
of the Company's Stock and by enabling the Company to attract and retain
the services of key employees upon whose judgment, interest, skills, and
special effort the successful conduct of its operations is largely
dependent.
1.3 Effective Date. The Plan shall become effective on the
Consummation Date, as defined in the Second Amended Chapter 11 Plan of
Reorganization of Telemundo Group, Inc. as debtor and debtor-in-
possession, dated April 29, 1994 and confirmed by the United States
Bankruptcy Court for the Southern District of New York on July 20, 1994,
as amended or modified from time to time (the ``Bankruptcy Plan''),
subject to the approval by the affirmative votes of the holders of a
majority of the securities of the Company entitled to vote.
SECTION 2. Definitions; Construction
2.1 Definitions. Whenever used herein, the following terms shall have
the respective meanings set forth below:
(a) ``Act'' means the Securities Exchange Act of 1934, as amended.
(b) ``Apollo'' means, collectively, Apollo Advisors, L.P., a
Delaware limited partnership, Lion Advisors, L.P., a Delaware limited
partnership, Apollo Investment Fund, L.P., a Delaware limited
partnership, Apollo Investment Fund II, L.P., a Delaware limited
partnership, or any investment fund, investment account or other
entity whose investing manager, investment advisor or general
partner, or any principal thereof, is any of the foregoing entities
or individuals or any principal or affiliate of any of them;
provided, however, that no entity or individual shall be deemed
within the definition of Apollo when that entity or individual ceases
to be an affiliate of any of the foregoing entities or individuals or
an investment fund, investment account or other entity whose
investing manager, investment advisor or general partner, or any
principal thereof, is any of the foregoing entities or individuals or
any principal or affiliate of any of them.
(c) ``Board'' means the Board of Directors of the Company.
(d) ``Change in Capitalization'' means any increase or reduction
in the number of shares of Stock, or any change (including, but not
limited to, a change in value) in the shares of Stock or exchange of
shares of Stock for a different number or kind of shares or other
securities of the Company or any other corporation or other entity,
by reason of a reclassification, recapitalization, merger,
consolidation, reorganization, spin-off, split-up, issuance (other
than pursuant to the Bankruptcy Plan) of warrants or rights or
debentures, stock dividend, stock split or reverse stock split,
extraordinary dividend, property dividend, combination or exchange of
shares or otherwise.
(e) A ``Change in Control'' means an event or series of events
after the Consummation Date by which(i) any ``person'' or ``group''
(as such terms are used in Section 13(d) and 14(d) of the Act)
becomes the ``beneficial owner'' (as defined in Rule 13d-3 under the
Act), directly or indirectly, of more than 50% of the aggregate
voting power of all the capital stock of the Company normally
entitled to vote in the election of directors or (ii) during any
period of two consecutive calendar years individuals who at the
beginning of such period constituted the Board (together with any new
directors whose election by the Board or whose nomination for
election by the Company's stockholders was approved by a vote of at
least a majority of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination was previously so approved) cease for any reason to
constitute a majority of the directors then in office; provided,
however, that it shall not constitute a Change in Control if, in the
case of clause (i) above, Apollo and/or TLMD and/or Reliance
Insurance Company, a Pennsylvania corporation, and/or its affiliates
(collectively, ``Reliance'') become the beneficial owners, directly
or indirectly, of more than 50% of the aggregate voting power of all
the capital stock of the Company entitled to vote in the election of
directors or, in the case of clause (ii) above, such Change in
Control would be caused by the designation of directors by Apollo,
TLMD or Reliance. Notwithstanding anything to the contrary set forth
above in this definition, a ``Change in Control'' shall not be deemed
to have occurred upon the happening of any of the events specified in
clauses (i) and (ii) of this definition, if and so long as any shares
of Series B Common Stock of the Company are issued and outstanding
and the holders of such shares have the power to elect at least a
majority of the Board.
(f) ``Code'' means the Internal Revenue Code of 1986, as amended.
(g) ``Committee'' means a committee of the Board designated to
administer the Plan which shall consist solely of two or more members
of the Board who are ``disinterested'' within the meaning of Rule
16b-3 under the Act and ``outside directors'' within the meaning of
Section 162(m) of the Code.
(h) ``Company'' means Telemundo Group, Inc., a Delaware
corporation, and any successors thereto.
(i) ``Disability'' shall have the meaning assigned to the terms
``total disability'' or ``totally disabled'' in the Telemundo Group,
Inc. long-term disability program for salaried employees, provided
the Participant remains totally disabled for six consecutive months;
or, if the Company does not maintain a long-term disability program,
an individual shall have a ``Disability'' if he is unable to engage
in any substantial activity by reason of any medically determinable,
physical or mental impairment that can be expected to result in death
or which has lasted or can be expected to last for a continuous
period of not less than 12 months.
(j) ``Eligible Employee'' means any key employee designated by the
Committee as eligible to participate in the Plan pursuant to
Subsection 3.1.
(k) ``Employee Option'' means an Option granted to an Eligible
Employee pursuant to Section 6.
(l) ``Fair Market Value'' means the mean of the high and low
prices at which the Stock is reported to have traded on the relevant
date as reported on the NASDAQ Electronic Interdealer Quotation
System (``NASDAQ System''); and if there is no trade on the relevant
date, the Fair Market Value shall mean the mean of the low asked and
high bid prices on that date as reported on the NASDAQ System. If the
principal market for the Stock shall become a national securities
exchange then the fair market value shall mean the mean of the high
and low prices at which the Stock is reported to have traded on the
relevant date; and if there is no trade on the relevant date, the
Fair Market Value shall mean the mean of the low asked and high bid
prices on that date. If no Fair Market Value has been established in
accordance with the foregoing, Fair Market Value shall be the value
established by the Board in good faith and, in the case of an
Incentive Stock Option, in accordance with Section 422 of the Code.
(m) ``Option'' means the right to purchase Stock at a stated price
for a specified period of time. For purposes of the Plan an Option
may be either (i) an ``incentive stock option'' within the meaning of
Section 422 of the Code or (ii) a ``nonstatutory stock option.''
(n) ``Option Agreement'' means the agreement evidencing the grant
of an Option as described in Subsection 6.2.
(o) ``Option Price'' means the price at which Stock may be
purchased pursuant to an Option.
(p) ``Optionee'' means a person to whom an Option has been granted
under the Plan.
(q) ``Participant'' means an Eligible Employee who has been
granted and, at the time of reference, holds an Option or share of
Restricted Stock.
(r) ``Period of Restriction'' means the period during which shares
of Restricted Stock are subject to restrictions pursuant to Section 9
of the Plan.
(s) ``Pooling Period'' means, with respect to a Pooling
Transaction, the period ending on the day after the first date on
which the combined entity resulting from the Pooling Transaction
publishes thirty days of combined operating results, or if the Board
makes a determination, such other period following the Pooling
Transaction which the Board reasonably determines is appropriate in
connection with the Pooling Transaction as a means of qualifying for
and pursuing ``pooling of interests'' accounting treatment.
(t) ``Pooling Transaction'' means an acquisition of or by the
Company in a transaction which is intended to be treated as a
``pooling of interests'' under generally accepting accounting
principles.
(u) ``Restricted Stock'' means Stock granted to an Eligible
Employee pursuant to Section 9 of the Plan.
(v) ``Retirement'' shall have the meaning assigned to such term in
the Telemundo Group, Inc. retirement plan, or if such plan is not in
effect, such term shall mean the termination of employment with the
Company by reason of the attainment of the age of sixty.
(w) ``Stock'' means the Series A Common Stock of the Company, par
value of $.01 per share.
(x) ``Stock Appreciation Right'' means the right to receive the
increase in the value of Stock subject to an Option in lieu of
purchasing such Stock.
(y) ``Subsidiary'' means any present or future subsidiary of the
Company, as defined in Section 424(f) of the Code.
(z) ``TLMD'' means TLMD Partners II, L.L.C., a Delaware limited
liability company, and its affiliates, members (including voting
committee members), investing managers and investment advisors, or any
investment fund, investment account or other entity whose investing
manager, investment advisor or general partner, or any principal thereof,
is any of the foregoing entities or individuals or any principal or
affiliate of any of them; provided, however, that no entity or individual
shall be deemed within the definition of TLMD when that entity or
individual ceases to be an affiliate of any of the foregoing entities or
individuals or an investment fund, investment account or other entity
whose investing manager, investment advisor or general partner, or any
principal thereof, is any of the foregoing entities or individuals or any
principal or affiliate of any of them.
2.2 Number. Except when otherwise indicated by the context, the
singular shall include the plural, and the plural shall include the
singular.
SECTION 3. Eligibility and Participation
3.1 Eligibility and Participation. Eligible Employees in the Plan
shall be selected by the Committee from among those officers and other
key employees of the Company and its Subsidiaries who, in the opinion of
the Committee, are in a position to contribute materially to the
Company's continued growth and development and to its long-term financial
success.
SECTION 4. Stock Subject to Plan
4.1 Number. The total number of shares of Stock subject to issuance
under the Plan may not exceed 1,000,000 subject to adjustment upon
occurrence of any of the events indicated in Subsection 4.5. The maximum
number of shares of Stock with respect to which Options or Stock
Appreciation Rights may be granted to any Eligible Employee during the
term of the Plan cannot exceed 700,000. The shares to be delivered under
the Plan may consist, in whole or in part, of authorized but unissued
Stock or treasury Stock, not reserved for any other purpose.
4.2 Unused Stock; Unexercised Rights. In the event any shares of
Stock are subject to an Option, which for any reason expires or is
terminated unexercised as to such shares, or any shares of Stock subject
to a Restricted Stock grant made under the Plan are reacquired by the
Company pursuant to Section 9 of the Plan, such shares again shall become
available for issuance under the Plan.
4.3 Exercise of Stock Appreciation Right. Whenever a Stock
Appreciation Right is exercised and payment of the amount determined in
Subsection 8.1(b) is made in cash, the shares of Stock allocable to the
portion of the Option surrendered may again be the subject of Options or
Restricted Stock hereunder. Whenever a Stock Appreciation Right is
exercised and payment of the amount determined in Subsection 8.1(b) is
made in shares of Stock, no shares of Stock with respect to which the
Stock Appreciation Right is exercised may again be the subject of Options
or Restricted Stock hereunder.
4.4 Restricted Stock. Whenever any shares of Stock granted to an
Eligible Employee are forfeited pursuant to Section 9 herein, such shares
may again be the subject of Options or Restricted Stock hereunder, but
only if the Participant had not been paid any dividend or received any
other benefit of ownership of such forfeited shares.
4.5 Adjustment in Capitalization.
(a) In the event of a Change in Capitalization, the Committee
shall conclusively determine the appropriate adjustments, if any, to
the (i) maximum number and class of shares of Stock or other
securities with respect to which Options or Restricted Stock may be
granted under the Plan; (ii) the number and class of shares of Stock
or other securities which are subject to outstanding Options or
Restricted Stock granted under the Plan, and the purchase price
therefor, if applicable; and (iii) the maximum number of shares of
Stock or other securities with respect to which Options or Stock
Appreciation Rights may be granted to any Eligible Employee during
the term of the Plan.
(b) Any such adjustment in the shares of Stock or other securities
subject to outstanding incentive stock options (including any
adjustments in the purchase price) shall be made in such manner as
not to constitute a modification as defined by Section 424(h)(3) of
the Code and only to the extent otherwise permitted by Sections 422
and 424 of the Code.
(c) If, by reason of a Change in Capitalization, a grantee of
Restricted Stock shall be entitled to, or an Optionee shall be
entitled to exercise an Option with respect to, new, additional or
different shares of stock or securities, such new additional or
different shares shall thereupon be subject to all of the conditions,
restrictions and performance criteria which were applicable to the
Restricted Stock or shares of Stock subject to the Option, as the
case may be, prior to such Change in Capitalization.
SECTION 5. Duration of Plan
5.1 Duration of Plan. The Plan shall remain in effect, subject to the
Board's right to earlier terminate the Plan pursuant to Subsection 12.3
hereof, until all Stock subject to it shall have been purchased or
acquired pursuant to the provisions hereof. Notwithstanding the
foregoing, no Option or Restricted Stock may be granted under the Plan on
or after the tenth anniversary of the Consummation Date.
SECTION 6. Option Grants for Eligible Employees
6.1 Grant of Employee Options. Subject to the provisions of Sections
4 and 5, Employee Options may be granted to Eligible Employees at any
time and from time to time as shall be determined by the Committee. The
Committee shall have complete discretion consistent with the terms of the
Plan in determining whether to grant Employee Options and the number of
Options granted to each Eligible Employee. The Committee also shall
determine whether an Employee Option is to be an incentive stock option
within the meaning of Section 422 of the Code or a nonstatutory stock
option. Nothing in this Section 6 of the Plan shall be deemed to prevent
the grant of nonstatutory stock options in excess of the maximum
established by Section 422 of the Code.
6.2 Option Agreement. Each Employee Option shall be evidenced by an
Option Agreement that shall specify the type of Option granted, the
Option Price, the duration of the Option, the number of shares of Stock
to which the Option pertains and such other provisions as the Committee
shall determine.
6.3 Option Price. The Option Price for each Employee Option shall be
determined by, or in the manner specified by, the Committee; provided
that (i) subject to Section 4.5 hereof, Employee Options with respect to
no more than 600,000 shares of Stock may have an Option Price less than
the Fair Market Value of the Stock on the date the Option is granted and
(ii) in the case of an incentive stock option, no Employee Option shall
have an Option Price that is less than the Fair Market Value of the Stock
on the date the Option is granted (110% of Fair Market Value in the case
of an incentive stock option granted to any person who owns stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary (a ``Ten Percent
Stockholder'')).
6.4 Duration of Employee Options. Each Employee Option shall expire
at such time as the Committee shall determine at the time it is granted;
provided, however, that no Employee Option shall be exercisable later
than the tenth anniversary date of its grant (the fifth anniversary in
the case of an incentive stock option granted to a Ten Percent
Stockholder).
6.5 Exercise of Employee Options. Employee Options granted under the
Plan shall be exercisable at such times and be subject to such
restrictions and conditions as the Committee shall in each instance
approve, which need not be the same for all Eligible Employees.
SECTION 7. Terms and Conditions Applicable to All Options
7.1 Payment. The Option Price shall be payable to the Company in full
upon exercise of an Option either (i) in cash or its equivalent, or (ii)
at the discretion of the Committee, by tendering shares of Stock held by
the Optionee for more than six months having a Fair Market Value at the
time of exercise equal to the Option Price or (iii) by a combination of
(i) and (ii). The proceeds from such a payment shall be added to the
general funds of the Company and shall be used for general corporate
purposes.
7.2 Restrictions on Stock Transferability. The Committee may impose
such restrictions on any shares of Stock acquired pursuant to the
exercise of an Option under the Plan as it may deem advisable, including,
without limitation, restrictions under applicable Federal securities law,
under requirements of any stock exchange upon which such shares of Stock
are then listed and under any blue sky or state securities laws
applicable to such shares.
7.3 Termination of Employment Due to Retirement. The Committee may
provide in the Option Agreement that in the event the employment of the
Optionee is terminated by reason of Retirement or for a reason other than
for Cause or following a Change in Control, any outstanding Options
granted to the Optionee which are then exercisable shall continue to be
exercisable at any time prior to the earlier of the expiration date of
the Options and one year after the date of termination, and any Options
not then exercisable shall terminate immediately, subject to such
exceptions (which shall be set forth in the Option Agreement) as the
Committee may, in its sole discretion, approve.
7.4 Termination of Employment Due to Death or Disability. The
Committee may provide in the Option Agreement the rights of an Optionee
under any then outstanding Option granted to the Optionee pursuant to the
Plan in the event the employment of the Optionee is terminated by reason
of death or Disability.
7.5 Termination of Employment for Cause. Notwithstanding anything to
the contrary herein, if the employment of the Optionee shall terminate
for Cause, any then outstanding Option granted pursuant to the Plan to
the Optionee shall terminate immediately; provided, that the Committee
may waive, in whole or in part, the automatic forfeiture of such Employee
Options and may set forth such waiver or condition in the Option
Agreement or at any other time, including following the termination of
employment. For purposes of this Plan, ``Cause'' means the Optionee's
knowingly or recklessly causing material injury to the Company, the
Optionee's willful misconduct in the performance of (or failure to
perform) his duties, or the Optionee's dishonest, fraudulent or unlawful
behavior involving moral turpitude whether or not in connection with his
employment.
7.6 Nontransferability and Exercisability of Options. No Option
granted under the Plan may be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated, otherwise than by will or by the
laws of descent and distribution. Further, all Options granted to an
Optionee under the Plan shall be exercisable during his lifetime only by
such Optionee. Notwithstanding any provision of the Plan to the contrary,
no Option shall be exercisable prior to the time a registration statement
under the Securities Act of 1933 is effective with respect to the shares
of Stock issuable upon the exercise of such Option, unless an exemption
from such registration is available for such exercise.
SECTION 8. Stock Appreciation Rights
8.1 Stock Appreciation Rights. The Committee may, in its discretion,
in connection with the grant of an Employee Option, grant to the Optionee
Stock Appreciation Rights, the terms and conditions of which shall be set
forth in an agreement. A Stock Appreciation Right shall cover the same
shares of Stock covered by the Option (or such lesser number of shares of
Stock as the Committee may determine) and shall, except as provided in
this Section 8, be subject to the same terms and conditions as the
related Option. Stock Appreciation Rights shall be subject to the
following terms and provisions:
(a) A Stock Appreciation Right may be granted:
(i) either at the time of grant, or at any time thereafter
during the term of the Option if related to a nonstatutory stock
option; or
(ii) only at the time of grant if related to an incentive stock
option.
(b) A Stock Appreciation Right will entitle the holder of the
related Option, upon exercise of the Stock Appreciation Right, to
surrender such Option, or any portion thereof to the extent
unexercised, and to receive payment of an amount determined by
multiplying (i) the excess of the Fair Market Value of a share of
Stock on the date of exercise of such Stock Appreciation Right over
the purchase price of a share of Stock under the related Option, by
(ii) the number of shares as to which such Stock Appreciation Right
has been exercised. Notwithstanding the foregoing, the Committee may
limit in any manner the amount payable with respect to any Stock
Appreciation Right by including such a limit in the agreement
evidencing the Stock Appreciation Right at the time it is granted.
(c) A Stock Appreciation Right will be exercisable at such time or
times and only to the extent that a related Option is exercisable,
and will not be transferable except to the extent that such related
Option may be transferable. A Stock Appreciation Right granted in
connection with an incentive stock option shall be exercisable only
if the Fair Market Value of a share of Stock on the date of exercise
exceeds the purchase price of a share of Stock specified in the
related Option.
(d) Upon the exercise of a Stock Appreciation Right, the related
Option shall be canceled to the extent of the number of shares of
Stock as to which the Stock Appreciation Right is exercised, and upon
the exercise of an Option granted in connection with a Stock
Appreciation Right, the Stock Appreciation Right shall be canceled to
the extent of the number of shares of Stock as to which the Option is
exercised or surrendered.
(e) Stock Appreciation Rights shall be exercised by an Optionee
only by a written notice delivered in person or by mail to the
Secretary of the Company at the Company's principal executive office,
specifying the number of shares of Stock with respect to which the
Stock Appreciation Right is being exercised. If requested by the
Committee, the Optionee shall deliver the agreement evidencing the
Stock Appreciation Right being exercised and the agreement evidencing
any related Option to the Secretary of the Company who shall endorse
thereon a notation of such exercise and return such agreement to the
Optionee.
(f) Payment of the amount determined under Subsection (b) may be
made by the Company in the discretion of the Committee, solely in
whole shares of Stock in a number determined at their Fair Market
Value on the date preceding the date of exercise of the Stock
Appreciation Right, or solely in cash, or in a combination of cash
and Stock. If the Committee decides to make full payment in Stock and
the amount payable results in a fractional share, payment for the
fractional share will be made in cash. Notwithstanding the foregoing,
no payment in the form of cash may be made upon the exercise of a
Stock Appreciation Right pursuant to Subsection (b) to an officer of
the Company or a Subsidiary who is subject to Section 16 of the
Exchange Act, unless the exercise of such Stock Appreciation Right is
made either (i) during the period beginning on the third business day
and ending on the twelfth business day following the date of release
for publication of the Company's quarterly or annual statements of
sales and earnings or (ii) pursuant to an irrevocable election to
receive cash made at least six months prior to the exercise of such
Stock Appreciation Right.
(g) No Stock Appreciation Right may be exercised before the date
six months after the date it is granted.
(h) Subject to the terms of the Plan, the Committee may modify
outstanding awards of Stock Appreciation Rights or accept the
surrender of outstanding awards of Stock Appreciation Rights (to the
extent not exercised) and grant new awards in substitution for them.
Notwithstanding the foregoing, no modification of an award of Stock
Appreciation Rights shall adversely alter or impair any rights or
obligations under the agreement granting such Stock Appreciation
Rights without the Optionee's consent.
SECTION 9. Restricted Stock
9.1 Grant of Restricted Stock. Subject to the provisions of Sections
4 and 5, the Committee, at any time and from time to time, may grant
shares of Restricted Stock under the Plan to such Eligible Employees and
in such amounts as it shall determine in its sole discretion. Each grant
of Restricted Stock shall be made pursuant to a written agreement which
shall contain such restrictions, terms and conditions as the Committee
may determine in its discretion. Restrictions upon shares of Restricted
Stock shall lapse at such time or times and on such terms and conditions
as the Committee may determine.
9.2 Transferability. Except as provided in this Section 9, the shares
of Restricted Stock granted hereunder may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated for such period
of time as shall be determined by the Committee and shall be specified in
the Restricted Stock grant, or upon earlier satisfaction of other
conditions as specified by the Committee in its sole discretion and set
forth in the Restricted Stock grant; provided that Restricted Stock
granted to officers, directors or any person who owns, directly or
indirectly, more than 10% of any class of equity security of the Company
which is registered pursuant to Section 12 of the Act may not be sold for
at least six months after the date of grant.
9.3 Other Restrictions. The Committee may impose such other
restrictions on any shares of Restricted Stock granted to any Eligible
Employee pursuant to the Plan as it may deem advisable including, without
limitation, restrictions under applicable federal or state securities
laws, and may legend the certificates representing Restricted Stock to
give appropriate notice of such restrictions.
9.4 Certificate Legend. In addition to any legends placed on
certificates pursuant to Subsection 9.3 hereof, each certificate
representing shares of Restricted Stock granted pursuant to the Plan
shall bear the following legend:
``The sale or other transfer of the shares of stock represented by
this certificate, whether voluntary, involuntary or by operation of
law, is subject to certain restrictions on transfer set forth in
Telemundo Group, Inc.'s 1994 Stock Plan, rules of administration
adopted pursuant to such Plan and a Restricted Stock grant dated .
A copy of the Plan, such rules and such Restricted Stock grant may
be obtained from the Secretary of Telemundo Group, Inc.''
9.5 Removal of Restrictions. Except as otherwise provided in this
Section 9, shares of Restricted Stock covered by each Restricted Stock
grant made under the Plan shall become freely transferable by the
Eligible Employee after the last day of the Period of Restriction. Once
the shares are released from the restrictions, the Eligible Employee
shall be entitled to have the legend required by Subsection 9.4 removed
from his Stock certificate.
9.6 Voting Rights. During the Period of Restriction, Eligible
Employees holding shares of Restricted Stock granted hereunder may
exercise full voting rights with respect to those shares.
9.7 Dividends and Other Distributions. During the Period of
Restriction, Eligible Employees holding shares of Restricted Stock
granted hereunder shall be entitled to receive all dividends and other
distributions paid with respect to those shares while they are so held.
If any such dividends or distributions are paid in shares of Stock, the
shares shall be subject to the same restrictions on transferability as
the shares of Restricted Stock with respect to which they were paid.
SECTION 10. Beneficiary Designation
10.1 Beneficiary Designation. Subject to Subsections 7.6 and 9.2,
each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in case of
the Participant's death before he or she receives any or all of such
benefit. Each designation will revoke all prior designations by the same
Participant, shall be in a form prescribed by the Committee and will be
effective only when filed by the Participant in writing with the
Committee during the lifetime of the Participant. In the absence of any
such designation, benefits remaining unpaid at the Participant's death
shall be paid to the estate of the Participant.
SECTION 11. Rights of Employees
11.1 Employment. Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any Participant's
employment or service at any time nor confer upon any Participant any
right to continue in the employ or service of the Company.
11.2 Participation. No employee shall have a right to be selected as
an Eligible Employee or, having been so selected, to be selected again as
an Optionee or recipient of Restricted Stock. The preceding sentence
shall not be construed or applied so as to deny an employee any
participation in the Plan solely on the basis that the employee was a
Participant in connection with a prior grant of benefits under the Plan.
SECTION 12. Administration; Powers and Duties of the Committee
12.1 Administration. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority action thereof, is
authorized to interpret the Plan, to prescribe, amend, and rescind rules
and regulations relating to the Plan, to provide for conditions and
assurances deemed necessary or advisable to protect the interests of the
Company, and to make all other determinations necessary or advisable for
the administration of the Plan, but only to the extent not contrary to
the express provisions of the Plan. Determinations, interpretations, or
other actions made or taken by the Committee pursuant to the provisions
of the Plan shall be final and binding and conclusive for all purposes
and upon all persons whomsoever. No member of the Committee shall be
personally liable for any action, determination or interpretation made or
taken with respect to the Plan and all members of the Committee shall be
fully indemnified by the Company with respect to any such action,
determination or interpretation.
12.2 Change in Control. Without limiting the authority of the
Committee as provided herein, the Committee, either at the time Employee
Options or shares of Restricted Stock are granted, or, if so provided in
the applicable Option Agreement or Restricted Stock grant, at any time
thereafter, shall have the authority to take such actions as it deems
advisable, including to accelerate in whole or in part the exercisability
of Employee Options and/or the last day of the Period of Restriction upon
a Change in Control. The Option Agreements and Restricted Stock grants
approved by the Committee may contain provisions whereby, in the event of
a Change in Control, the acceleration of the exercisability of Employee
Options and/or the last day of the Period of Restriction may be automatic
or may be subject to the discretion of the Committee or may depend upon
whether the Change in Control shall be approved by a majority of the
members of the Board or such other criteria as the Committee may specify.
Nothing herein shall obligate the Committee to take any action upon a
Change in Control.
12.3 Amendment, Modification and Termination of Plan. The Board may
at any time terminate, and from time to time may amend or modify, the
Plan, provided, however, that no such action of the Board, without
approval of the stockholders, may:
(a) Increase the total amount of Stock which may be issued under
the Plan, except as provided in Subsection 4.5 of the Plan.
(b) Materially increase the cost of the Plan or materially
increase the benefits to Participants.
(c) Extend the period during which Options or Restricted Stock may
be granted.
(d) Extend the maximum period after the date of grant during which
Options may be exercised.
(e) Change the class of individuals eligible to receive Options or
Restricted Stock.
Any amendment which requires stockholder approval in order for the
Plan to continue to comply with Rule 16b-3 of the Act or any other law,
regulation or stock exchange requirement shall not be effective unless
approved by the requisite vote of stockholders. No amendment,
modification or termination of the Plan shall in any manner adversely
affect any Options or Restricted Stock theretofore granted to any
Participant under the Plan, without the consent of that Participant.
12.4 Interpretation. Unless otherwise expressly stated in the
relevant Agreement, any grant of Options, Stock Appreciation Rights and
Restricted Stock is intended to be performance-based compensation within
the meaning of 162(m)(4)(C) of the Code. The Committee shall not be
entitled to exercise any discretion otherwise authorized hereunder with
respect to such Options, Stock Appreciation Rights or Restricted Stock if
the ability to exercise such discretion or the exercise of such
discretion itself would cause the compensation attributable to such
Options to fail to qualify as such performance-based compensation.
SECTION 13. Tax Withholding
13.1 Tax Withholding. At such times as an Eligible Employee
recognizes taxable income in connection with the receipt of shares,
securities, cash or property hereunder (a ``Taxable Event''), the
Eligible Employee shall pay to the Company an amount equal to the
federal, state and local income taxes and other amounts as may be
required by law to be withheld by the Company in connection with the
Taxable Event (the ``Withholding Taxes'') prior to the issuance, or
release from escrow, of such shares or the payment of such cash. The
Company shall have the right to deduct from any payment of cash to an
Eligible Employee an amount equal to the Withholding Taxes in
satisfaction of the obligation to pay Withholding Taxes. In satisfaction
of his obligation to pay Withholding Taxes to the Company, the Eligible
Employee may make a written election (the ``Tax Election''), which may be
accepted or rejected in the discretion of the Committee, to have withheld
a portion of the shares of Stock then issuable to him having an aggregate
Fair Market Value, on the date preceding the date of such issuance, equal
to the Withholding Taxes, provided that in respect of an Eligible
Employee who may be subject to liability under Section 16(b) of the
Exchange Act either: (i) the Tax Election is made at least six (6) months
prior to the date of the Taxable Event and the Tax Election is
irrevocable with respect to all Taxable Events of a similar nature
occurring prior to the expiration of six (6) months following a
revocation of the Tax Election; or (ii) in the case of the exercise of an
Option (A) the Optionee makes the Tax Election at least six (6) months
after the date the Option was granted, (B) the Option is exercised during
the ten (10) day period beginning on the third business day and ending on
the twelfth business day following the release for publication of the
Company's quarterly or annual statement of sales and earnings (a ``Window
Period'') and (C) the Tax Election is made during the Window Period in
which the related Option is exercised or prior to such Window Period and
subsequent to the immediately preceding Window Period; or (iii) in the
case of a Taxable Event relating to the grant of shares of Restricted
Stock (A) the Eligible Employee makes the Tax Election at least six (6)
months after the date such stock was granted and (B) the Tax Election is
made (x) in the case of a Taxable Event occurring within a Window Period,
during the Window Period in which the Taxable Event occurs, or (y) in the
case of a Taxable Event not occurring within a Window Period, during the
Window Period immediately preceding the Taxable Event relating to such
Restricted Stock. Notwithstanding the foregoing, the Committee may, by
the adoption of rules or otherwise, (i) modify the provisions of this
Section 13.1 or impose such other restrictions or limitations on Tax
Elections as may be necessary to ensure that the Tax Elections will be
exempt transactions under Section 16(b) of the Exchange Act, and (ii)
permit Tax Elections to be made at such other times and subject to such
other conditions as the Committee determines will constitute exempt
transactions under Section 16(b) of the Act.
SECTION 14. Requirements of Law
14.1 Requirements of Law. The granting of Options or Restricted
Stock, and the issuance of shares of Stock upon the exercise of an Option
shall be subject to all applicable laws, rules and regulations, and to
such approvals by any governmental agencies or national securities
exchanges as may be required.
14.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of New
York without giving effect to the choice of law principles thereof,
except to the extent that such law is preempted by federal law.
14.3 Listing, etc. Each Option or share of Restricted Stock is
subject to the requirement that, if at any time the Committee determines,
in its discretion, that the listing, registration or qualification of
shares of Stock issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as
a condition of, or in connection with, the grant of an Option or the
issuance of shares of Stock, no Options or shares of Restricted Stock
shall be granted or payment made or shares of Stock issued, in whole or
in part, unless listing, registration, qualification, consent or approval
has been effected or obtained free of any conditions as reasonably
acceptable to the Committee acting in good faith.
14.4 Restriction on Transfer. Notwithstanding anything contained in
the Plan or any Agreement to the contrary, in the event that the
disposition of shares of Stock acquired pursuant to the Plan is not
covered by a then current registration statement under the Securities Act
of 1933, as amended, and is not otherwise exempt from such registration,
such shares of Stock shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, and Rule 144 or other
regulations thereunder. The Committee may require any individual
receiving shares of Stock pursuant to an Option or share of Restricted
Stock granted under the Plan, as a condition precedent to receipt of such
shares of Stock to represent and warrant to the Company in writing that
the shares of Stock acquired by such individual are acquired without a
view to any distribution thereof and will not be sold or transferred
other than pursuant to an effective registration thereof under said Act
or pursuant to an exemption applicable under the Securities Act of 1933,
as amended, or the rules and regulations promulgated thereunder. The
certificates evidencing any of such shares of Stock shall be
appropriately legended to reflect their status as restricted securities
aforesaid.
Dated: December 30, 1994
APPENDIX
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FORM OF PROXY
PROXY
TELEMUNDO GROUP, INC.
2290 West 8th Avenue
Hialeah, Florida 33010
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, JUNE 27, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF TELEMUNDO GROUP, INC.
The undersigned stockholder of Telemundo Group, Inc. (the
"Company") hereby appoints Leon D. Black and Bruce H. Spector,
and each of them, the true and lawful attorneys, agents and
proxies of the undersigned, with full power of substitution to
each of them, to represent and vote as set forth herein all the
shares of Common Stock held of record by the undersigned on May
19, 1995, at the Annual Meeting of Stockholders of the Company to
be held at Bankers Trust Company, 280 Park Avenue, 1st floor, New
York, New York at 10:00 a.m. local time, on June 27, 1995, and at
any adjournments thereof.
PLEASE MARK YOUR CHOICES LIKE THIS [X] IN BLUE OR BLACK INK
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR ALL NOMINEES AND FOR PROPOSALS 2 AND 3.
1. ELECTION OF DIRECTORS
SERIES A NOMINEES (to be voted on by holders of Series A
Common Stock only): Arthur M. Goldberg; Alan Kolod; Barry
W. Ridings; David E. Yurkerwich
TO WITHHOLD AUTHORITY
FOR ALL NOMINEES LISTED WITHHOLDING AUTHORITY TO VOTE
ABOVE except as marked to vote for all for any individual
to the contrary to the nominees listed above nominee, write that
right nominee's name in the
space below
_____________________
[ ] [ ] _____________________
SERIES B NOMINEES (to be voted on by holders of Series B
Common Stock only): Leon D. Black; Guillermo Bron; Roland
A. Hernandez; Bruce H. Spector; Edward M. Yorke
TO WITHHOLD AUTHORITY
FOR ALL NOMINEES LISTED WITHHOLDING AUTHORITY TO VOTE
ABOVE except as marked to vote for all for any individual
to the contrary to the nominees listed above nominee, write that
right nominee's name in the
space below
_____________________
[ ] [ ]
_____________________
2. APPROVAL OF 1994 STOCK PLAN
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. APPROVAL OF EXECUTIVE COMPENSATION
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
This Proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder. If
no direction is made, this proxy will be voted FOR all the
nominees listed and in favor of Proposals 2 and 3.
Please sign exactly as name appears on stock
certificate. Each joint owner must sign. Executors,
administrators, trustees or guardians must give full title
as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partner
ship, please sign in partnership name by authorized person.
Dated:________________________, 1995
___________________________________
Signature
___________________________________
Signature if held jointly
[ ]
[ ]
Please mark, sign, date and return this Proxy promptly using
the enclosed envelope.
