<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 1996
COMMISSION FILE NUMBER 0-23592
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NEW WORLD COMMUNICATIONS GROUP INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 13-3743606
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3200 WINDY HILL ROAD
SUITE 1100 - WEST
ATLANTA, GEORGIA 30339
(Address of principal executive offices)
(770) 955-0045
(Registrant's telephone number, including area code)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS: YES X NO
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS FILED ALL DOCUMENTS AND
REPORTS REQUIRED TO BE FILED BY SECTION 12, 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN
CONFIRMED BY A COURT. YES X NO
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
AS OF MAY 8, 1996 THE REGISTRANT HAD 28,798,960 SHARES OF CLASS A COMMON
STOCK, PAR VALUE $0.01 PER SHARE, 39,925,157 SHARES OF CLASS B COMMON STOCK,
PAR VALUE $0.01 PER SHARE (INCLUDING CLASS A WARRANTS, $0.01 EXERCISE PRICE),
NO SHARES OF VOTING PREFERRED STOCK, PAR VALUE $0.01 PER SHARE AND NO CLASS A
WARRANTS, SERIES 2 ("NEW $0.01 WARRANTS") OUTSTANDING.
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<PAGE> 2
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
INDEX
PART I. FINANCIAL INFORMATION
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Page
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Item 1. Financial Statements:
Condensed Consolidated Balance Sheet
- March 31, 1996 and December 31, 1995 ......................................... I-1
Condensed Consolidated Statement of Operations
- Three Months Ended March 31, 1996 and 1995 ................................... I-2
Consolidated Statement of Stockholders' Equity .................................. I-3
Condensed Consolidated Statement of Cash Flows
- Three Months Ended March 31, 1996 and 1995 ................................... I-4
Notes to Condensed Consolidated Financial Statements ............................. I-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ............................................ I-8
</TABLE>
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PART II. OTHER INFORMATION
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Item 1. Legal Proceedings ................................................................ II-1
Item 2. Changes in Securities ............................................................ II-1
Item 3. Defaults Upon Senior Securities .................................................. II-1
Item 4. Submission of Matters to a Vote of Security-Holders .............................. II-2
Item 5. Other Information ................................................................ II-2
Item 6. Exhibits and Reports on Form 8-K ................................................. II-2
Signatures........................................................................ II-3
</TABLE>
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NEW WORLD COMMUNICATIONS GROUP INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
---------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash................................................................... $ 51,257 $ 75,361
Receivables............................................................ 161,443 175,210
Television program contract rights..................................... 16,799 23,735
Film costs............................................................. 82,618 83,761
Prepaid expenses....................................................... 4,930 3,705
Deferred income taxes.................................................. 4,410 4,410
------------ ------------
Total current assets............................................... 321,457 366,182
Property, plant and equipment............................................. 212,710 213,059
Long-term receivables..................................................... 17,435 22,819
Television program contract rights........................................ 6,598 5,419
Film costs................................................................ 39,216 35,393
Intangible assets and excess reorganization value......................... 1,510,949 1,522,337
Equity investments........................................................ 36,398 36,549
Other assets.............................................................. 30,223 30,864
Assets held for sale...................................................... - 16,727
------------ ------------
$ 2,174,986 $ 2,249,349
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses.................................. $ 71,081 $ 82,542
Television program contracts payable .................................. 20,157 26,872
Deferred income........................................................ 22,339 35,532
Participations and residuals payable................................... 52,920 43,434
Current portion of long-term debt and notes payable.................... 24,483 32,069
------------ ------------
Total current liabilities........................................... 190,980 220,449
Non-current television program contract rights............................ 7,821 7,448
Long-term debt............................................................ 962,486 976,392
Other non-current liabilities............................................. 23,950 26,257
Participations and residuals payable...................................... 15,183 23,908
Deferred tax credits...................................................... 72,444 77,510
Series A preferred stock, $.01 par value, 1,200,000 shares authorized,
issued and outstanding................................................... 59,870 59,867
Series C preferred stock, $.01 par value, 25,000 shares authorized, issued
and outstanding.......................................................... 245,630 245,444
Series E preferred stock, $.01 par value, 300,000 shares authorized,
issued and outstanding................................................... 30,000 30,000
Commitments and contingencies
Stockholders' equity:
Series B preferred stock, $.01 par value, 250,000 shares authorized,
issued and outstanding............................................ 224,850 224,850
Class A common stock, $.01 par value, 400,000,000 shares
authorized, 28,696,188 and 28,056,860 issued and outstanding...... 287 281
Class B common stock, $.01 par value, 400,000,000 shares authorized,
39,997,931 and 40,548,431 issued and outstanding.................. 400 405
Common stock warrants................................................. 10,500 10,500
Additional paid-in capital............................................ 762,002 761,329
Accumulated deficit................................................... (431,417) (415,291)
------------ ------------
Total stockholders' equity......................................... 566,622 582,074
------------ ------------
$ 2,174,986 $ 2,249,349
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-1
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NEW WORLD COMMUNICATIONS GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------
1996 1995
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Net revenue
Broadcasting.................................... $ 92,577 $ 67,106
Television production and distribution.......... 69,292 47,758
----------- -----------
161,869 114,864
Operating expenses
Direct costs-
Broadcasting.................................. 43,519 38,145
Television production and distribution........ 58,510 36,883
Selling, general and administrative-
Broadcasting................................. 21,904 16,109
Television production and distribution 10,168 8,953
Depreciation and amortization of intangible assets.. 19,062 12,752
Corporate expenses.................................. 5,874 4,076
----------- -----------
Income (loss) from operations.................... 2,832 (2,054)
----------- -----------
Other income (expense):
Interest expense................................. (22,968) (16,885)
Gain on sale of WSBK-TV.......................... - 40,993
Interest and investment income and other......... 1,231 3,685
----------- -----------
Other income (expense), net.................. (21,737) 27,793
----------- -----------
Income (loss) before income taxes................... (18,905) 25,739
Benefit (provision) for income taxes................ 4,601 (33,079)
Equity in loss of affiliates........................ (152) (152)
----------- -----------
Net loss......................................... (14,456) (7,492)
Preferred stock dividends and accretion............. (1,670) (1,100)
----------- -----------
Net loss to common shareholders.................. $ (16,126) $ (8,592)
=========== ===========
Net loss per common equivalent share................ $ (.23) $ (0.13)
=========== ===========
Weighted average shares outstanding.............. 68,627 68,351
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-2
<PAGE> 6
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SERIES B CLASS A CLASS B COMMON ADDITIONAL TOTAL
PREFERRED COMMON COMMON STOCK PAID-IN ACCUMULATED STOCKHOLDERS'
STOCK STOCK STOCK WARRANTS CAPITAL DEFICIT EQUITY
----------- -------- -------- --------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $ 224,850 $ 281 $ 405 $ 10,500 $ 761,329 $ (415,291) $ 582,074
Net loss........................ - - - - - (14,456) (14,456)
Preferred stock dividends and
accretion................... - - - - - (1,670) (1,670)
Interest on note receivable from
stockholder................. - - - - (116) - (116)
Exercise of employee stock
options and $8.47 warrants.. - 1 - - 789 - 790
Conversion of Class B common
stock into Class A common
stock....................... - 5 (5) - - - -
----------- ------ ------ -------- ---------- ----------- ----------
Balance at March 31, 1996....... $ 224,850 $ 287 $ 400 $ 10,500 $ 762,002 $ (431,417) $ 566,622
=========== ====== ====== ======== ========== =========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-3
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NEW WORLD COMMUNICATIONS GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
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<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1996 1995
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<S> <C> <C>
Cash flow from operating activities:
Net loss.......................................................... $ (14,456) $ (7,492)
Adjustments to reconcile net loss to net cash used in operating
activities:
Gain on sale of WSBK-TV........................................ - (40,993)
Deferred taxes................................................. (5,066) 25,120
Equity in loss of affiliates................................... 152 152
Depreciation and amortization of intangible assets............. 19,062 12,752
Television program contract rights amortization over (under)
payments..................................................... (586) 2,089
Film cost amortization over (under) additions.................. (2,680) 3,814
Noncash interest expense, compensation and foreign
exchange..................................................... 474 1,295
Changes in assets and liabilities, net of acquisitions and
dispositions:
Receivables.................................................. 18,991 2,694
Prepaid expenses and other assets............................ (1,371) (5,297)
Current liabilities.......................................... (24,330) (13,057)
Other noncurrent liabilities................................. (2,395) (197)
----------- ------------
Total adjustments..................................... 2,251 (11,628)
----------- ------------
Net cash used in operating activities............................ (12,205) (19,120)
Cash flow from investing activities:
Capital expenditures and equity investments.................. (6,600) (5,329)
Broadcast station acquisitions, net of cash acquired......... - (360,084)
Proceeds from sale of broadcast stations..................... - 207,500
Other........................................................ 157 (500)
----------- ------------
Net cash used in investing activities........................ (6,443) (158,413)
Cash flow from financing activities:
Issuance of debt............................................. - 192,429
Preferred stock dividends paid............................... (1,481) (957)
Repayment of debt............................................ (4,765) (30,295)
Proceeds from exercise of stock options and warrants......... 790 82
Increase in restricted cash.................................. - (77,318)
----------- ------------
Net cash provided by (used in) financing activities.......... (5,456) 83,941
----------- ------------
Net decrease in cash................................................ (24,104) (93,592)
Cash balance, beginning of period................................... 75,361 155,699
----------- ------------
Cash balance, end of period......................................... $ 51,257 $ 62,107
=========== ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-4
<PAGE> 8
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
(CONTINUED)
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THREE MONTHS ENDED
MARCH 31,
--------------------------
1996 1995
--------------------------
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Supplemental disclosures of cash flow information:
Cash paid during the period for interest......................... $ 33,136 $ 27,002
=========== ==========
Supplemental schedule of noncash investing and financing activities:
Purchase of television program contract rights................... $ 2,839 $ 1,854
=========== ==========
Argyle stations purchase:
Fair value of assets acquired.................................... $ 766,112
Purchase option applied to purchase price........................ (100,000)
Cash paid, net of cash received.................................. (360,084)
----------
Liabilities assumed.............................................. $ 306,028
==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
I-5
<PAGE> 9
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
(unaudited)
1. DESCRIPTION OF THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
New World Communications Group Incorporated ("NWCG" or the "Company") is a
vertically integrated entertainment company which operates, through
wholly-owned subsidiaries, twelve broadcast television stations, television
production operations, filmed entertainment libraries, and filmed
entertainment distribution businesses.
INTERIM REPORTING
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
and the rules and regulations of the Securities and Exchange Commission. In
the opinion of management the statements reflect all adjustments, which are
of a normal recurring nature, necessary to present fairly the Company's
financial position, results of operations and cash flows for the unaudited
interim periods presented. Results for the interim periods presented are
not necessarily indicative of the results which might be expected for the
entire year. The unaudited condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements
for the year ended December 31, 1995.
2. ACQUISITIONS, DISPOSITIONS AND PRO FORMA FINANCIAL INFORMATION
WSBK-TV
In March 1995 the Company sold its investment in WSBK-TV (the "Boston
Station") for gross proceeds of $107.5 million. The Company repaid $19.5
million of the Bank Credit Agreement Loans in March 1995 and $77.3 million
of the Step-up Notes in April 1995 from the net proceeds of the Boston
Station sale.
I-6
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NEW WORLD COMMUNICATIONS GROUP INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
(unaudited)
ARGYLE STATIONS
The Company purchased certain debt and equity securities of Argyle
Television Holding Inc. ("Argyle") for total consideration of approximately
$750.4 million, including the $100 million in cash paid for an option in
1994 and assumption of debt of approximately $283.6 million. Argyle
controlled four VHF television stations, KDFW-TV (Dallas, Texas), KTBC-TV
(Austin, Texas), KTVI-TV (St. Louis, Missouri) and WVTM-TV (Birmingham,
Alabama). For financial reporting purposes, the acquisition occurred on
March 31, 1995. FCC approval for change in control of the television
stations occurred on April 14, 1995. The acquisition has been accounted
for as a purchase.
CANNELL ENTERTAINMENT
In July 1995 the Company purchased Cannell Entertainment Inc. for Series E
Cumulative Convertible Redeemable Preferred Stock ("Series E Preferred
Stock") valued at approximately $30 million and certain other
consideration. The acquisition has been accounted for as a purchase.
PRO FORMA FINANCIAL INFORMATION
The following condensed pro forma financial information gives effect to, as
of January 1, 1995, the purchase of the four Argyle stations, the sale of
the Boston Station, borrowings necessary to fund the acquisition, repayment
of a portion of NW Television's debt and the issuance of preferred stock.
The pro forma financial information does not necessarily reflect the future
results or the results that would have occurred had these transactions
actually occurred on January 1, 1995 (in thousands, except per share).
<TABLE>
<CAPTION>
Pro Forma for the
Three Months
Ended March 31,
1995
-----------------
<S> <C>
Net revenue $ 138,751
Net loss $ (12,438)
================
Net loss per common and common equivalent share $ (.20)
================
</TABLE>
I-7
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company operates broadcast television stations, a television
production company and filmed entertainment distribution businesses.
The following discussion and analysis of the financial condition and
results of operations of the Company should be read in conjunction with the
accompanying unaudited condensed consolidated financial statements and related
notes of the Company and its annual report for the year ended December 31,
1995.
RESULTS OF OPERATIONS
Three months ended March 31, 1996 Compared to 1995. Net revenue
increased $47.0 million or 40.9% in 1996 over 1995. The increase in
broadcasting revenue of $25.5 million reflects an increase of $27.0 million for
the four stations acquired on March 31, 1995 from Argyle Television Holding,
Inc. ("Argyle") and an increase of $4.2 million for the eight original stations
owned for both periods "Eight Stations," offset by a decrease of $5.7 million
reflecting the sale of WSBK-TV (Boston) in March of 1995. On a same station
basis for both periods, net revenue increased $1.6 million due primarily to
political advertising. Production and distribution revenue increased $21.5
million or 45.1% primarily due to increases in network and cable revenues,
reflecting substantially increased production activity.
Operating expenses, excluding depreciation, amortization and corporate
expenses, increased $34.0 million in 1996. The television broadcasting expense
increase of $11.2 million includes $19.0 million from the Argyle stations,
offset by a decrease of $1.6 million for the Eight Stations and by a decrease
of $6.2 million reflecting the sale of WSBK-TV (Boston) in March of 1995. On a
same station basis for both periods, operating expenses increased $.8 million
due to higher costs to support the increase in local programming associated
with the Company's conversion of certain broadcast stations to the Fox Network
offset by lower programming costs. Production and distribution operating
expenses increased $22.8 million due primarily to amortization of production
costs associated with increased production activity.
Depreciation and amortization of intangible assets increased $6.3 million
in 1996 due primarily to the acquisition of the Argyle stations. Corporate
expenses increased $1.8 million in 1996 principally due to increased personnel
and salaries.
Interest expense increased $6.0 million as a result of higher debt
balances for the acquisition of the broadcast television stations and the
Entertainment Line of Credit used primarily to fund the increased production
activity. Interest and investment income and other decreased $2.5 million in
1996 primarily due to lower cash and short-term investment balances.
I-8
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996, the Company has total outstanding debt of $987.0
million. The Company has limited additional borrowing capacity under its
borrowing facilities. Significant expansion of the Company's broadcasting or
production segments will require additional funding not currently available to
the Company.
To service the currently outstanding debt, the Company plans to utilize
broadcasting and production operating cash flow. The Company believes that
operating cash flow will be sufficient to satisfy current requirements for
operating, investing and financing activities of the Company, including debt
service prior to final maturity. In order to meet principal payments upon the
final maturity of its various debt facilities outstanding, the earliest of
which occurs in 1998, the Company will be required to adopt one or more
alternatives, such as refinancing or restructuring its indebtedness, selling
material assets or operations or seeking additional capital contributions. The
Company currently anticipates that any other necessary financing may be
obtained through restructuring or refinancing outstanding capitalization or
possibly through additional equity or debt financings or additional bank credit
arrangements. Should such additional sources of financing be needed to fund
acquisitions or operations and not be obtainable, the Company's liquidity would
be severely adversely affected. There can be no assurance that any of such
actions could be effected on satisfactory terms, that they would enable the
Company to continue to satisfy the Company's capital requirements or that they
would be permitted by the terms of existing or future debt agreements.
The Company's capital budget for 1996 is approximately $30 million,
primarily for the broadcasting segment. In connection with the broadcast
stations' change in affiliation to the Fox Network, the broadcasting segment
provides more locally-produced programming which requires additional capital
expenditures and operating expenses.
I-9
<PAGE> 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See "Item 3. Legal Proceedings" of the Company's Form 10-K for the year
ended December 31, 1995 for a discussion of the action, Steven Cooperman, On
Behalf of Himself and Derivatively on Behalf of SCI Television, Inc., a
Delaware corporation (or its successor corporation, SCI Parent Corporation to
be re-named New World Communications Group, Inc.) v. Ronald O. Perelman, et
al., and SCI Television, Inc., a Delaware corporation (or its successor
corporation, SCI Parent Corporation to be re-named New World Communications
Group, Inc.), Case No. BC100359 (Superior Court of the State of California,
County of Los Angeles).
The Company and its subsidiaries are defendants in a number of other
lawsuits which have arisen in the normal course of business. Management
believes that the ultimate resolution of this litigation will not have a
material adverse effect upon the Company or its subsidiaries.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
(a) Not applicable.
(b) Not applicable.
II-1
<PAGE> 14
Item 4. Submission of Matters to a Vote of Security-Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.1 Employment Agreement, dated as of January 1, 1996, by and
between New World Television Incorporated and Farrell Reynolds.
27.1 Financial Data Schedule (for SEC use only).
(b) Reports filed on Form 8-K:
None.
II-2
<PAGE> 15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
(Registrant)
By: \s\ Joseph P. Page
------------------------
Joseph P. Page
Executive Vice President and
Chief Financial Officer
Dated: May 13, 1996
II-3
<PAGE> 16
EXHIBIT INDEX
Exhibit No. Description
10.1 Employment Agreement, dated as of January 1, 1996, by and
between New World Television Incorporated and Farrell Reynolds.
27.1 Financial Data Schedule (for SEC use only).
<PAGE> 1
EXHIBIT 10.1
Employment Agreement
EMPLOYMENT AGREEMENT, dated as of January 1, 1996, between New World
Television Incorporated a Delaware corporation (the "Company") and Farrell
Reynolds (the "Executive").
The Company wishes to employ the Executive, and the Executive wishes to
accept such employment, on the terms and conditions set forth in this
Agreement.
Accordingly, the Company and the Executive hereby agree as follows:
Employment, Duties and Acceptance.
1.1 Employment, Duties. The Company hereby employs the Executive
for the Term (as defined in Section 2.1), to render exclusive and full-time
services to the Company as Chairman and Chief Executive Officer or in such
other executive position as may be mutually agreed upon by the Company and the
Executive, and to perform such duties consistent with such position as may be
assigned to the Executive by the Board of Directors of the Company or by the
Chief Operating Officer of New World Communications Group Incorporated, a
Delaware Corporation ("NWCG"). Executive's duties will include supervision of
and responsibility for, as the Chief Executive Officer, the broadcasting
operations of NWCG, whether contained in the Company, NWC Acquisition
Corporation, their respective subsidiaries or otherwise as well as the
national advertising and barter time sales and related research activities as
conducted on the date hereof by New World Sales and Marketing, Inc. Executive
will report to the Chief Operating Officer ("COO") of NWCG.
1.2 Acceptance. The Executive hereby accepts such employment and
agrees to render the services described above. During the Term, the Executive
agrees to serve the Company faithfully and to the best of the Executive's
ability, to devote the Executive's entire business time, energy and skill to
such employment, and to use the Executive's best efforts, skill and ability to
promote the Company's interests. The Executive further agrees to accept
election, and to serve during all or any part of the
<PAGE> 2
Term, as an officer or director of the Company and of any subsidiary or
affiliate of the Company, without any compensation therefor other than that
specified in this Agreement, if elected to any such position by the shareholders
or by the Board of Directors of the Company or of any subsidiary or affiliate,
as the case may be.
1.3 Location. The duties to be performed by the Executive hereunder
shall be performed primarily at the office of the Company in Atlanta, Georgia,
subject to reasonable travel required to fulfill his duties and responsibilities
outlined in Section 1.1. The Company acknowledges, however, that the Executive
may maintain his principal residence in Chapel Hill, North Carolina and, to the
extent that Executive does so maintain his principal residence, the Company
shall provide Executive with an additional office in the Chapel Hill area for
the provision of a portion of Executive's services hereunder during the Term.
2. Term of Employment; Certain Post-Term Benefits.
2.1 The Term. The term of the Executive's employment under this
Agreement (the "Term") shall commence on January 1, 1996 and shall end on
December 31, 1998 or such other date on which the Term shall terminate or be
extended pursuant to Section 2.2.
2.2
2.2.1 Termination Without Cause. At any time the Company may, by
written notice to the Executive, terminate the Term for reasons other than those
specified in Sections 4.1, 4.2 and 4.3 hereof (termination "Without Cause"). In
such event, such termination will be treated in the same manner as a termination
by the Executive under Section 4.4 hereof and the Executive and the Company,
following the delivery of such notice of termination under this Section 2.2.1,
shall have the same rights and obligations provided for under such Section 4.4.
2
<PAGE> 3
2.2.2 Extension of the Term. Unless either the Executive or the
Company gives the other written notice of non-extension of the Term at least 365
days prior to the then scheduled termination date of the Term, the Term will
automatically extend on a daily basis until terminated pursuant to the delivery
of such 365 day notice and the elapsing thereafter of such notice period or
pursuant to another provision of this Agreement.
2.3 Special Curtailment. The Term also shall end earlier than the
original December 31, 1998 termination date provided in Section 2.1 or any
extended termination date provided in Section 2.2, in either case if sooner
terminated pursuant to Section 4. Non-extension of the Term shall not be deemed
to be a breach of this Agreement by the Company or a termination of the Term or
this Agreement by the Company Without Cause.
3. Compensation; Benefits.
3.1 Salary. As compensation for all services to be rendered pursuant
to this Agreement, the Company agrees to pay the Executive during the Term a
base salary, payable semi-monthly in arrears, at the annual rate of not less
than $900,000 until December 31, 1996, $975,000 from January 1, 1997 until
December 31, 1997 and $1,050,000 from January 1, 1998 until the end of the Term,
less in each case such deductions or amounts to be withheld as required by
applicable law and regulations (the "Base Salary"). In the event that the
Company, in its sole discretion beyond the requirements of this Agreement, from
time to time determines to increase the Base Salary, such increased amount
shall, from and after the effective date of the increase, constitute "Base
Salary" for purposes of this Agreement.
3.2 Bonus. In addition to the amounts to be paid to the Executive
pursuant to Section 3.1, the Executive shall be eligible to receive the bonus
("Bonus")as described in Paragraph 1 of Appendix II of this Agreement.
3
<PAGE> 4
3.3 Business Expenses. The Company shall pay or reimburse the
Executive for all reasonable expenses actually incurred or paid by the Executive
during the Term in the performance of the Executive's services under this
Agreement (including, without limitation, such expenses incurred for travel
between Chapel Hill, N.C. and Executive's U.S. business destination), upon
presentation of expense statements or vouchers or such other supporting
information as the Company customarily may require of its officers provided,
however, that the maximum amount available for such expenses during any period
may be fixed in advance by the Board of Directors of the Company or the COO of
NWCG. The Company shall also pay for the travel costs of Executive's spouse
from time to time when accompanying Executive on business trips. All travel and
overnight accommodation expenses paid or reimbursed under this Section 3.3 may
be first class as elected and actually incurred by Executive.
3.4 Vacation. During the Term, the Executive shall be entitled to a
vacation period or periods of four weeks taken in accordance with the vacation
policy of the Company during each year of the Term. Vacation time not used by
the end of a year shall be forfeited.
3.5 Fringe Benefits. During the Term, the Executive shall be
entitled to all benefits for which the Executive shall be eligible under any
qualified pension plan, 401(k) plan, group insurance or other so-called
"fringe" benefit plan which the Company provides to its employees generally,
together with executive medical benefits for the Executive, the Executive's
spouse and the Executive's children as from time to time in effect for officers
of the Company generally.
3.6 Additional Benefits. During the Term, the Executive shall be
entitled to such other benefits as are specified in Appendix I to this
Agreement.
4. Termination.
4.1 Death. If the Executive shall die during the Term, the Term
shall terminate and no further
4
<PAGE> 5
amounts or benefits shall be payable hereunder, except that the Executive's
estate shall be entitled to (i) receive continued payments in an amount equal to
60% of the Base Salary in the manner specified in Section 3.1, until the end of
the Term (as in effect under Section 2 hereof (with Executive's death being
treated as a notice of non-renewal under Section 2.2.2) immediately prior to the
Executive's death) plus (ii) a single payment equal to any earned but unpaid
amounts of Base Salary and Bonus plus the Applicable Bonus Amount (as defined in
Appendix II), if any with respect to the year in which Executive dies.
Executive's estate or legal representative will, upon Executive's death, have
such rights to exercise the stock options granted to Executive by NWCG as are
set further in the plan (the "Stock Option Plan") pursuant to which the options
are granted.
4.2 Disability. If during the Term the Executive shall become
physically or mentally disabled, whether totally or partially, such that the
Executive is unable to perform the Executive's services hereunder for (x) a
period of six consecutive months or (y) for shorter periods aggregating six
months during any twelve month period, the Company may at any time after the
last day of the six consecutive months of disability or the day on which the
shorter periods of disability shall have equaled an aggregate of six months, by
written notice to the Executive (but before the Executive has recovered from
such disability), terminate the Term and no further amounts or benefits shall be
payable hereunder, except that the Executive shall be entitled to receive (i)
continued payments in an amount equal to 60% of the Base Salary in the manner
specified in Section 3.1, until the end of the Term (as in effect under Section
2 hereof (with the Company's notice termination being treated also as a notice
of non-renewal under Section 2.2.2) immediately prior to such termination), (ii)
a single payment equal to any earned but unpaid amounts of Base Salary and Bonus
plus the Applicable Bonus Amount, if any with respect to the year in which
Executive becomes disabled and (iii) such amounts and benefits, if any,
specified in Appendix I other than Paragraphs 2, 5, 6, and 8 thereof.
Executive's rights with respect to his NWCG stock options in the event his
employ-
5
<PAGE> 6
ment is terminated due to disability are those set forth in the Stock Option
Plan. If the Executive shall die before receiving all payments to be made by
the Company in accordance with the foregoing, such payments shall be made to a
beneficiary designated by the Executive on a form prescribed for such purpose by
the Company, or in the absence of such designation to the Executive's estate.
4.3 Cause. In the event of gross neglect by the Executive of the
Executive's duties hereunder, conviction of the Executive of any felony,
conviction of the Executive of any lesser crime or offense involving the
property of the Company or any of its subsidiaries or affiliates, willful
misconduct by the Executive in connection with the performance of any material
portion of the Executive's duties hereunder or breach by the Executive of any
material provision of this Agreement, the Company may at any time by written
notice to the Executive terminate the Term and, upon such termination, this
Agreement shall terminate and the Executive shall be entitled to receive no
further amounts or benefits hereunder, except any as shall have been earned to
the date of such termination.
4.4 Company Breach; Termination Without Cause. In the event of the
breach of any material provision of this Agreement by the Company, the Executive
shall be entitled to terminate the Term upon 60 days' prior written notice to
the Company. Upon such termination, or in the event the Company terminates the
Term or this Agreement Without Cause the Company shall fulfill its obligations,
if any, under Paragraph 10 of Appendix I and shall, as its sole other obligation
to the Executive, promptly, in one lump sum payment, pay the Executive an amount
equal to the sum of the following: (i) all earned but unpaid amounts of Base
Salary and Bonus to the date of termination; (ii) the Applicable Bonus Amount,
if any, with respect to the year in which the termination occurs; and (iii) the
difference between (x) the lesser of (A)one year's Base Salary calculated at the
then prevailing rate or (B) the remaining Base Salary to be paid for the balance
of the Term as then in effect and (y) the present value calculated at the then
effective Prime Rate of Chase Bank of the aggregate Consulting fees, if any,
which will be
6
<PAGE> 7
payable to Executive pursuant to Paragraph 10 of Appendix I. The Company's
obligations pursuant to this Section 4.4 are not subject to or in any way
contingent upon any duty on the part of the Executive to mitigate damages by
seeking other employment.
4.5 Litigation Expenses. Except as provided for in Section 5.7, if
the Company and the Executive become involved in any action, suit or proceeding
relating to the alleged breach of this Agreement by the Company or the
Executive, and if a judgment in such action, suit or proceeding is rendered in
favor of the Executive, the Company shall reimburse the Executive for all
expenses (including reasonable attorneys' fees) incurred by the Executive in
connection with such action, suit or proceeding. Such costs shall be paid to
the Executive promptly upon presentation of expense statements or other
supporting information evidencing the incurrence of such expenses.
5. Protection of Confidential Information;
Non-Competition; Non Solicitation
The Executive acknowledges that the Executive's work for the Company
(i) will necessarily bring the Executive into close contact with many
confidential and non-public matters including (without limitation) the Company's
and its affiliates' operating and employment practices and promotional
techniques, the Company's and NWCG's financial matters and other proposals and
plans, (ii) will attach a measure of the Company's valuable goodwill to the
Executive, and (iii) will expose the Executive to business opportunities which
rightfully belong to the Company. The Executive further acknowledges that the
Company and its affiliates, including NWCG, would suffer damage to its and their
business and goodwill should Executive fail to maintain the confidentiality of
information, compete with the Company or NWCG or solicit their employees in
violation of the Agreement.
5.1 The Executive agrees:
7
<PAGE> 8
5.1.1 To keep and retain in the strictest confidence all
confidential matters of the Company and NWCG, including, without limitation,
"know how", trade secrets, customer lists, pricing policies, operational
methods, technical processes, formulae, inventions and research projects, and
other business affairs of the Company and NWCG, learned by the Executive
heretofore or hereafter, and not to disclose them to anyone outside of the
Company or NWCG, either during or after the Executive's employment with the
Company, except in the course of performing the Executive's duties hereunder or
with the Company's express written consent; and
5.1.2 To deliver promptly to the Company on termination of the
Executive's employment by the Company, or at any time the Company may so
request, all memoranda, notes, records, reports, manuals, drawings, blueprints
and other documents (and all copies thereof) relating to the Company's business
and all property associated therewith, which the Executive may then possess or
have under the Executive's control.
5.2 The Executive further agrees:
5.2.1 During the Term, and (if the Term ends other than by non-renewal
or pursuant to Section 4.1 or Section 4.4) for a period of twelve months
thereafter, the Executive shall not, directly or indirectly, enter the employ
of, or render any services to, any person, firm or corporation engaged in any
business competitive with the business of the Company or NWCG or of any of their
respective subsidiaries. Specifically included (without limitation) in such
competitive business would be any business involved in (i) the operation of any
television stations in one or more of the television markets (DMA's) in which
any television station owned or operated (by LMA otherwise) by the Company or
any other subsidiary of NWCG also operates or (ii) the solicitation, sale or
placement of media advertising or advertising availabilities in connection with
programming to be viewed or disseminated by or using television or similar
apparatus within the U.S.; the Executive shall not engage in such business on
the Executive's own account; and the Executive shall not become
8
<PAGE> 9
interested in any such business, directly or indirectly, as an individual,
partner, shareholder, director, officer, principal, agent, employee, trustee,
consultant, or in any other relationship or capacity provided, however, that
nothing contained in this Section 5.2.1 shall be deemed to prohibit the
Executive from acquiring, solely as an investment, up to five percent (5%) of
the outstanding shares of capital stock of any public corporation.
5.2.2 During the Term and for a period of one year thereafter, the
Executive shall not, directly or indirectly, (i) induce or encourage any
employee of the Company, NWCG, or any subsidiary or affiliate of NWCG to leave
employment with the Company, NWCG, or such subsidiary or affiliate, or (ii)
employ, hire, or establish a business with, or cause or encourage any third
person to employ, hire, or establish a business with, any person who was, within
the period of one year preceding such action by the Executive, employed by the
Company, NWCG, or any subsidiary or affiliate of NWCG.
5.3 If the Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the Company
shall have the following rights and remedies in its own right or on behalf of
NWCG or any of the affiliates or subsidiaries of NWCG:
5.3.1 The right and remedy to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Company or the affected party and that money damages
will not provide an adequate remedy to the Company or the affected party; and
5.3.2 The right and remedy to require the Executive to account for and
pay over to the Company all compensation, profits, monies, accruals, increments
or other benefits (collectively "Benefits") derived or received by the Executive
as the result of any transactions constituting a breach of any of the provisions
of the preceding paragraph, and the Executive hereby agrees to account for and
pay over such Benefits to the Company.
9
<PAGE> 10
Each of the rights and remedies enumerated above shall be independent of the
other, and shall be severally enforceable, and all of such rights and remedies
shall be in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity.
5.4 If any of the covenants contained in Sections 5.1 or 5.2, or any
part thereof, hereafter are construed to be invalid or unenforceable, the same
shall not affect the remainder of the covenant or covenants, which shall be
given full effect, without regard to the invalid portions.
5.5 If any of the covenants contained in Sections 5.1 or 5.2, or any
part thereof, are held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision and, in its reduced form, said provision shall then be
enforceable.
5.6 The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in Sections 5.1 and 5.2 upon the courts of any
state within the geographical scope of such covenants. In the event that the
courts of any one or more of such states shall hold such covenants wholly
unenforceable by reason of the breadth of such covenants or otherwise, it is the
intention of the parties hereto that such determination not bar or in any way
affect the Company's right to the relief provided above in the courts of any
other states within the geographical scope of such covenants as to breaches of
such covenants in such other respective jurisdictions, the above covenants as
they relate to each state being for this purpose severable into diverse and
independent covenants.
5.7 In the event that any action, suit or other proceeding in law or
in equity is brought to enforce the covenants contained in Sections 5.1 and 5.2
or to obtain money damages for the breach thereof, and such action results in
the award of a judgment for money damages or in the granting of any injunction
in favor of the Compa-
10
<PAGE> 11
ny, all expenses (including reasonable attorneys' fees) of the Company in such
action, suit or other proceeding shall (on demand of the Company) be paid by the
Executive. In the event the Company fails to obtain a judgment for money
damages or an injunction in favor of the Company, all expenses (including
reasonable attorneys' fees) of the Executive in such action, suit or other
proceeding shall (on demand of the Executive) be paid by the Company.
6. Intellectual Property.
The Company shall be the sole owner of all the products and proceeds
of the Executive's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Executive may
acquire, obtain, develop or create in connection with the performance of his
duties hereunder on behalf of the Company and its affiliates during the Term,
free and clear of any claims by the Executive (or anyone claiming under the
Executive) of any kind or character whatsoever (other than the Executive's right
to receive payments hereunder). The Executive shall, at the request of the
Company, execute such assignments, certificates or other instruments as the
Company may from time to time deem necessary or desirable to evidence,
establish, maintain, perfect, protect, enforce or defend its right, title or
interest in or to any such properties.
7. Indemnification.
The Company will indemnify the Executive, to the maximum extent
permitted by applicable law, against all costs, charges and expenses incurred or
sustained by the Executive in connection with any action, suit or proceeding to
which the Executive may be made a party by reason of the Executive being an
officer, director or employee of the Company or of any subsidiary or affiliate
of the Company.
8. Notices.
11
<PAGE> 12
All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, sent by overnight courier or mailed
first class, postage prepaid, by registered or certified mail (notices mailed
shall be deemed to have been given on the date mailed), as follows (or to such
other address as either party shall designate by notice in writing to the other
in accordance herewith):
If to the Company, to:
New World Television Incorporated
c/o New World Communications Group
Incorporated
35 East 62nd Street
New York, New York 10021
Attention: William C. Bevins
If to the Executive, to: With a copy to:
Farrell Reynolds Marc Chamlin, Esq.
623 Greenwood Road Loeb and Loeb
Chapel Hill, NC 27514 345 Park Avenue
New York, NY
10154-0037
9. General.
9.1 This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely in New York.
9.2 The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
9.3 This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements,
12
<PAGE> 13
arrangements and understandings, written or oral, relating to the subject matter
hereof, including without limitation that certain Employment Agreement dated as
of July 1, 1994 between the Executive and New World Sales and Marketing Inc.,
which agreement is hereby deemed amended in its entirety by this Agreement and
assigned to the Company. No representation, promise or inducement has been made
by either party that is not embodied in this Agreement, and neither party shall
be bound by or liable for any alleged representation, promise or inducement not
so set forth.
9.4 This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may assign its
rights, together with its obligations, hereunder (i) to any affiliate or (ii) to
third parties in connection with any sale, transfer or other disposition of all
or substantially all of its business or assets; in any event the obligations of
the Company hereunder shall be binding on its successors or assigns, whether by
merger, consolidation or acquisition of all or substantially all of its business
or assets.
9.5 This Agreement may be amended, modified, superseded, canceled,
renewed or extended and the terms or covenants hereof may be waived, only by
a written instrument executed by both of the parties hereto, or in the case
of a waiver, by the party waiving compliance. The failure of either party
at any time or times to require performance of any provision hereof shall in no
manner affect the right at a later time to enforce the same. No waiver by
either party of the breach of any term or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be, or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this Agreement.
10. Subsidiaries and Affiliates.
10.1 As used herein, the term "subsidiary" shall mean any corporation
or other business entity controlled directly or indirectly by the corporation or
other business
13
<PAGE> 14
entity in question, and the term "affiliate" shall mean and include any
corporation or other business entity directly or indirectly controlling,
controlled by or under common control with the corporation or other business
entity in question.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NEW WORLD TELEVISION INCORPORATED
By: /s/ David A. Ramon
-----------------------------
David A. Ramon, COO
/s/ Farrell Reynolds
-----------------------------
Farrell Reynolds
14
<PAGE> 15
APPENDIX I
Additional Benefits:
1. Medical Examination. The Executive shall be reimbursed by the Company
for the reasonable cost of one annual medical examination upon presentation of
an expense statement.
2. Automobile. The Company shall afford the Executive the right to use an
automobile on the following continuous basis. The Company shall pay, upon
presentation of an expense statement, all reasonable expenses associated with
the operation of such automobile in the same manner as is, from time to time,
in effect with respect to executive officers of the Company generally,
including, without limitation, all reasonable maintenance and insurance
expenses. The automobile furnished by the Company shall be a late model
top-of-the-line Lexus or like vehicle to be reasonably selected by the
Executive. Upon the expiration of the Term, the Executive promptly shall
return the automobile to the Company.
3. Insurance. The Company agrees to provide the Executive with additional
term life insurance coverage with a face amount of twice the then current Base
Salary on the following basis. The Executive may select a plan of his choice
and may designate the beneficiary of such plan. The Company shall pay, upon
presentation of an expense statement, the periodic premiums relating to such
additional term life insurance payable during the Term.
4. Tax Advisor. The Executive shall be reimbursed by the Company, upon
presentation of an expense statement, for the reasonable fees and disbursements
of a personal tax advisor to be selected by the Executive.
5. Club Membership. The Company shall reimburse the Executive, upon
presentation of an expense statement, for all reasonable initiation fees and
periodic dues for membership in a health club of the Executive's choice.
15
<PAGE> 16
6. Stock Options. Executive has received grants of options to acquire
200,000 shares of New World Communications Group Incorporated stock pursuant to
the 1994 Executive Stock Option Plan ("Stock Option Plan")subject to the vesting
requirements provided for in the grant of those options which include the
provision as to the second 100,000 ($12.375 Options) of such options that if the
Executive is terminated Without Cause, all such options will immediately vest.
The vesting and exerciseability of all the options in the event of Executive's
death or disability will be as provided for under the Stock Option Plan.
7. Estate Planning. The Executive shall be reimbursed by the Company,
upon presentation of an expense statement, for the reasonable fees and
disbursements of an estate planning advisor to be selected by the Executive.
8. Housing. The Company shall continue to provide Executive the use of
and will maintain the apartment which is currently being occupied by the
Executive in New York City (Apartment 6N, 116 Central Park South) (or a
substantially similar apartment) and to reimburse him for his related living
expenses at that location while he is there on the Company's or NWCG's
business.
9. Disability. If the Company elects to terminate the Term pursuant to
Section 4.2 of the Agreement, in addition to the amounts payable under such
Section, for the shorter of the period the Executive remains disabled or until
the Executive has attained the age of 65, the Company shall continue to provide
benefits for the Executive under the corporate group life insurance plan and
for the Executive, his spouse and children under the corporate group medical
(including the executive medical plan) insurance plan, to the extent permitted
by such plans and to the extent such benefits continue to be provided to the
Company's employees or officers, as applicable, generally.
10. Consulting Agreement. If the Agreement is terminated by the Executive
pursuant to Section 4.4 or by the Company Without Cause pursuant to Section
2.2.1 and such date of termination is prior to March 1, 1997, then
16
<PAGE> 17
the Company agrees to retain Executive as an independent consultant until and
through such date at a monthly retainer, payable in arrears, of $2,500 plus
Executive's reasonable out-of-pocket expenses actually incurred in providing
consultancy services to the Company at the request of the COO of NWCG or the COO
of the Company. Executive agrees to provide such consultancy services during
such consultancy period as are actually so requested, subject to his other time
commitments during such period. Payments pursuant to this Paragraph 10 shall be
in addition to any other compensation to which the Executive may be entitled
under the Agreement.
17
<PAGE> 18
APPENDIX II
Bonus Opportunity
1. For each calendar year commencing during the Term, a budget ("Annual Budget)
will be prepared and adopted at or prior to the beginning of such year which
will set forth the aggregate broadcast cash flow to be achieved by the
television stations owned or operated by NWCG and its subsidiaries on a
consolidated basis for that year and for each of the first three quarters
thereof. The Annual Budget will be prepared on a basis which normalizes the
allocation of revenue, costs and expenses among the NWCG television stations
and the other companies owned by NWCG, particularly New World/Genesis
Entertainment Company and New World Sales and Marketing, Inc. The Executive
will participate in the preparation of the Annual Budget and it will be deemed
adopted when approved by the COO of NWCG or the Board of Directors of NWCG.
Within seventy (70) days after the end of each calendar year during the Term,
the measure of achievement of the Annual Budget for such year shall be
calculated by the Company, and based on the following applicable levels of
percentage achievement of the Annual Budget (based on the highest whole
percentage point achieved), the Executive no later than such 70th day shall be
paid the indicated amount (the "Bonus"):
<TABLE>
<CAPTION>
Percentage of Bonus
Achievement Amount
------------- --------
<S> <C>
75% $250,000
80% $300,000
85% $350,000
90% $400,000
95% $500,000
100% $750,000
</TABLE>
18
<PAGE> 19
No Bonus (not including the Applicable Bonus Amount) shall be deemed "earned"
(as such term is used in Sections 4.1(ii), 4.2(ii) and 4.4(i) of the Agreement)
until completion of the year as to which Bonus is being calculated.
2. In the event of termination of the Executive's employment Without Cause
or as a result of his death or disability which, in any such event, occurs
after March 31 in any calendar year but prior to December 31, then Executive or
Executive's representative or estate, as the case may be, shall be paid the
amount ("Applicable Bonus Amount") as provided for in Sections 4.1, 4.2 and 4.4
of the Agreement. The Applicable Bonus Amount shall be calculated to the date
of such termination by reference to the Bonus chart set forth in item 1 above
and completing the following calculation: First, determining the percentage of
achievement of the annual budget (which will be stated in terms of calendar
quarter increments to be achieved) on an aggregate quarter annual basis covering
only completed quarter annual periods as of the date of termination and identify
the Applicable Bonus Amount as if the achievement had occurred for the entire
calendar year; second, multiplying said amount by a fraction, the denominator of
which is 365 and the numerator of which is the number of actual days elapsed in
the year prior to the date of termination; provided, however, that in the event
of termination under Section 4.2, the numerator will be the actual number of
working days during such year that Executive worked and performed the services
required under this Agreement and the denominator will be the full number of
working days in such year. So, for example, if Executive is terminated Without
Cause on July 15, 1997, then the percentage of achievement of the annual budget
will be determined by looking only at the first two completed calendar quarters
of 1997. If the aggregate achievement for the first two quarters is 90% of the
portion of the Annual Budget applicable to the first two quarters, then the
Bonus Amount will be $400,000 and this amount will be multiplied by a fraction
of 197/365 (i.e.,
19
<PAGE> 20
197 days elapsed) so that Executive would be entitled to receive the Applicable
Bonus Amount of $215,890.
20
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT MARCH 31, 1996 (UNAUDITED) AND THE
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH
31, 1996 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 51,257
<SECURITIES> 0
<RECEIVABLES> 161,443
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 321,457
<PP&E> 212,710
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,174,986
<CURRENT-LIABILITIES> 190,980
<BONDS> 962,486
335,500
224,850
<COMMON> 687
<OTHER-SE> 341,085
<TOTAL-LIABILITY-AND-EQUITY> 2,174,986
<SALES> 0
<TOTAL-REVENUES> 161,869
<CGS> 0
<TOTAL-COSTS> 102,029
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,968
<INCOME-PRETAX> (18,905)
<INCOME-TAX> (4,601)
<INCOME-CONTINUING> (14,456)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,456)
<EPS-PRIMARY> (0.23)
<EPS-DILUTED> (0.23)
</TABLE>
