Frank and Barbara Biehl - Page 5

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          of NCMI.  Petitioners’ claims were bifurcated, and Mr. Biehl’s              
          wrongful termination claim was tried in March 1996.  The jury               
          returned a $2.1 million verdict in favor of Mr. Biehl.                      
               Following the verdict on the wrongful termination claim, and           
          without resolution by suit of petitioners’ claims for dissolution           
          of NCMI, petitioners and NCMI entered into negotiations looking             
          toward a global settlement.  On December 31, 1996, NCMI made two            
          payments:  $799,000 directly to Mr. Biehl and $401,000 directly             
          to Olimpia, Whelan, & Lively.  During January 1997, petitioners,            
          NCMI, and the other defendants signed and delivered a                       
          “Confidential Settlement Agreement and Release of Claims”                   
          (settlement agreement), which set forth the terms of the                    
          settlement.  The settlement agreement stated that the foregoing             
          payments were made in settlement of Mr. Biehl’s employment-                 
          related claims and in payment of attorney’s fees related to the             
          employment claims, respectively.  The settlement agreement does             
          not refer to NCMI’s payment of the attorney’s fee as a                      
          reimbursement to Mr. Biehl.                                                 
               The settlement agreement resolved petitioners’ dissolution             
          claim by incorporating a stipulation for entry of judgment.  The            
          stipulation provided that the defendants would purchase                     
          petitioners’ stock in NCMI for $1.2 million in an installment               
          sale in final settlement of the corporate dissolution claim.                
          Monthly payments on the installment sale were to begin on January           

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