<PAGE>
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 / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule
14a-12
_____________________CHRIS-CRAFT INDUSTRIES, INC.____________________
(Name of Registrant as specified in Its Charter)
____________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(a)(l)(ii), 14a-6(i)(l), or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange
Act
Rule 14a-6(i)(3).
(1) Title of each class of securities to which transaction
applies:
--------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
--------------------------------------------------------------------
(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:
--------------------------------------------------------------------
<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1994
TO THE STOCKHOLDERS OF
CHRIS-CRAFT INDUSTRIES, INC.:
The annual meeting of the stockholders of Chris-Craft Industries, Inc.
("Chris-Craft") will be held at the Arizona Biltmore, 24th Street & Missouri,
Phoenix, Arizona 85016 on April 28, 1994, at 9:00 A.M., for the purpose of
considering and acting upon the following matters:
(1) Election of directors.
(2) Approval and adoption of the 1994 Management Incentive Plan.
(3) Approval and adoption of the 1994 Director Stock Option Plan.
(4) Approval of performance-based compensation for:
(a) the chief executive officer
(b) the executive vice-president
(5) A stockholder's proposal relating to inclusion of women and
minorities on the Board of Directors, if such proposal is brought before the
meeting.
(6) Ratification of the selection of Price Waterhouse as auditors of
Chris-Craft for the year ending December 31, 1994.
(7) Such other business as may properly come before the meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business on February 28, 1994
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the meeting.
You are cordially invited to attend the meeting. Arrangements have been made
for interested stockholders to visit our Phoenix television station, KUTP, after
the meeting. Whether or not you plan to attend the meeting, you are urged
promptly to complete, date and sign the enclosed proxy and to mail it to
Chris-Craft in the enclosed envelope, which requires no postage if mailed in the
United States. Return of your proxy does not deprive you of your right to attend
the meeting and to vote your shares in person.
Dated: New York, New York
March 25, 1994
By Order of the Board of Directors,
BRIAN C. KELLY, SECRETARY
<PAGE>
CHRIS-CRAFT INDUSTRIES, INC.
767 FIFTH AVENUE, NEW YORK, NEW YORK 10153
-------------------
PROXY STATEMENT
-----------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors of Chris-Craft for use at the
annual meeting of stockholders on April 28, 1994 and at any adjournment thereof.
March 25, 1994 is the approximate date on which this Proxy Statement and the
accompanying form of proxy are first being mailed to stockholders.
As of February 28, 1994, the record date for the meeting, Chris-Craft had
outstanding 20,152,297 shares of Common Stock, 7,361,797 shares of Class B
Common Stock, 297,287 shares of $1.40 Convertible Preferred Stock and 73,399
shares of Prior Preferred Stock, being the classes of stock entitled to vote at
the meeting. Each share of Common Stock entitles its holder to one vote, and
each share of Class B Common Stock entitles its holder to ten votes. Each share
of $1.40 Convertible Preferred Stock entitles its holder to 29.2 votes, or 203.7
votes if he was the holder of such share on November 10, 1986 (or is a
"Permitted Transferee," as defined in Chris-Craft's Restated Certificate of
Incorporation). Each share of Prior Preferred Stock entitles its holder to .3
vote, or 6.3 votes if he was the holder of such share on November 10, 1986 (or
is a Permitted Transferee). Notwithstanding the foregoing, if the holder of
record of a share of Class B Common Stock, $1.40 Convertible Preferred Stock or
Prior Preferred Stock is a broker or dealer in securities, a bank or voting
trustee or a nominee of any such, or if such share is otherwise held of record
by a nominee of the beneficial owner of such share, then such share of Class B
Common Stock entitles such record holder to one vote, such share of $1.40
Convertible Preferred Stock entitles such record holder to 29.2 votes, and such
share of Prior Preferred Stock entitles such record holder to .3 vote, except to
the extent that such record holder establishes to Chris-Craft's satisfaction,
pursuant to procedures set forth in Chris-Craft's Restated Certificate of
Incorporation, that such share has been held continuously since November 10,
1986 or its later issuance by a named beneficial owner (whose address must also
be specified). The proxy solicited by this Proxy Statement is revocable at any
time before it is voted.
The presence at the meeting in person or by proxy of stockholders entitled
to cast a majority of the votes at the meeting constitutes a quorum. The
election of directors is decided by a plurality of the votes cast. The favorable
vote of holders of shares entitling them to cast a majority of votes entitled to
be cast by holders present or represented at the meeting is required to approve
the 1994 Management Incentive Plan and the 1994 Director Stock Option Plan. The
favorable vote of holders of shares entitling them to cast a majority of votes
cast on the respective proposals is required to approve the executive
performance-based compensation for the chief executive officer and the executive
vice president. Abstentions have the same legal effect as a vote against the
1994 Management Incentive Plan and the 1994 Director Stock Option Plan, and have
no effect with respect to performance-based compensation for the two executive
officers. Broker non-votes have no effect on the proposals being acted upon.
The proxies named in the enclosed form of proxy and their substitutes will
vote the shares represented by the enclosed form of proxy, if the proxy appears
to be valid on its face, and, where a choice is specified by means of the ballot
on the form of proxy, will vote in accordance with each specification so made.
<PAGE>
ELECTION OF DIRECTORS
NOMINEES OF THE BOARD OF DIRECTORS
The proxy will be voted as specified thereon and, in the absence of contrary
instruction, will be voted for the reelection of Howard Arvey, Lawrence R.
Barnett, James J. Rochlis, and John C. Siegel as directors until the third
annual meeting following the April 28, 1994 meeting, and for the election of Dr.
Jeane J. Kirkpatrick as director until the second annual meeting following the
1994 meeting and until their respective successors are elected and qualified.
Information with respect to each such nominee, as well as the seven present
directors whose terms of office expire at the first or second annual meeting
following the April 28, 1994 meeting, is set forth below:
<TABLE>
<CAPTION>
AGE, HAS SERVED
OTHER POSITIONS WITH CHRIS-CRAFT, PRINCIPAL OCCUPATION FEBRUARY 28, AS DIRECTOR
NAME AND CERTAIN OTHER DIRECTORSHIPS 1994 SINCE
- ------------------------------- ------------------------------------------------------ ----------------- -------------
<S> <C> <C> <C>
NOMINEES FOR THREE-YEAR TERM
Howard Arvey................... Of Counsel, Wildman, Harrold, Allen & Dixon, Chicago 72 1975
law firm
Lawrence R. Barnett............ Consultant, retired Executive Vice President, 80 1963
Chris-Craft; Director, United Television, Inc.
("UTV") (1)
James J. Rochlis............... Consultant, retired Executive Vice President, 77 1958
Chris-Craft
John C. Siegel................. Senior Vice President; Director, BHC and UTV 41 1994
NOMINEE FOR TWO-YEAR TERM
Jeane J. Kirkpatrick........... Leavey Professor of Government, Georgetown University; 67 --
Senior Fellow, the American Enterprise Institute for
Public Policy Research
INCUMBENT DIRECTORS--TWO-YEAR REMAINING TERM
Norman Perlmutter.............. Chairman of the Board and Chief Executive Officer, 60 1975
Heitman Financial Ltd., real estate financial
services; Director, McArthur/Glen Realty Corp.,
United Asset Management Corporation and UTV
Evan C Thompson................ Executive Vice President, Chris-Craft and President, 51 1982
Television Division; Director, UTV
William D. Siegel.............. Senior Vice President; Director, BHC 38 1994
INCUMBENT DIRECTORS--ONE-YEAR REMAINING TERM
David F. Linowes............... Professor of Political Economy and Public Policy and 76 1958
Boeschenstein Professor Emeritus, University of
Illinois
Alvin R. Rozelle............... Retired Commissioner, National Football League 68 1968
Herbert J. Siegel.............. Chairman of the Board and President, Chris-Craft; 65 1959
Chairman of the Board, BHC and UTV
T. Chandler Hardwick, III...... Headmaster, Blair Academy, independent secondary 41 1994
school
<FN>
- ---------
(1) UTV is a majority owned subsidiary of BHC Communications, Inc. ("BHC"),
which is a majority owned subsidiary of Chris-Craft.
</TABLE>
2
<PAGE>
The principal occupation of each of the directors for the past five years is
stated in the foregoing table, except that, until January 1, 1992, Mr. Arvey was
a partner of Arvey, Hodes, Costello & Burman, a Chicago law firm. In case a
nominee shall become unavailable for election, which is not expected, it is
intended that the proxy solicited hereby will be voted for whomever the present
Board of Directors shall designate to fill such vacancy.
Two Senior Vice Presidents and nominees for the Board of Directors of
Chris-Craft, John C. Siegel and William D. Siegel, are sons of Herbert J.
Siegel.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
Chris-Craft has established standing audit and compensation committees,
among others, to assist the Board of Directors in discharging its
responsibilities. Chris-Craft has no nominating committee.
The Audit Committee reviews Chris-Craft's internal controls, the objectivity
of its financial reporting and the scope and results of the auditing engagement.
It meets with appropriate Chris-Craft financial personnel and independent public
accountants in connection with these reviews. This committee recommends to the
Board the appointment of the independent public accountants, subject to
ratification by the stockholders at the annual meeting, to serve as auditors for
the following year in examining the corporate accounts. The public accountants
periodically meet with the Audit Committee and have access to the committee at
any time. The committee held two meetings during 1993. Its members are Messrs.
Arvey and Linowes.
The Compensation Committee makes recommendations to the Board with respect
to the compensation of officers. Its members are Messrs. Arvey, Linowes and
Rozelle. The Committee held four meetings during 1993. The Board Compensation
Committee Report on Executive Compensation appears on page 10.
Chris-Craft's Board of Directors held 8 meetings during 1993. During that
period, Mr. Rozelle attended fewer than 75% of the aggregate number of meetings
held by the Board of Directors and the committee of the Board on which he
served.
VOTING SECURITIES OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The management of Chris-Craft has been informed that, as of February 28,
1994, the persons and groups identified in Table I below, including all
directors, nominees for director, executive officers and all owners known to
Chris-Craft of more than 5% of any class of Chris-Craft voting securities, owned
beneficially, within the meaning of Securities and Exchange Commission ("SEC")
Rule 13d-3, the securities of Chris-Craft reflected in such table. Except as
reflected in Tables II and III, as of February 28, 1994, each director or
executive officer of Chris-Craft disclaims beneficial ownership of securities of
any Chris-Craft subsidiary. Except as otherwise specified, the named beneficial
owner claims sole investment and voting power as to the securities reflected in
the tables.
3
<PAGE>
I. BENEFICIAL OWNERSHIP OF CHRIS-CRAFT STOCK
<TABLE>
<CAPTION>
$1.40 CONVERTIBLE CLASS B
PREFERRED COMMON COMMON
STOCK(2)(3) STOCK(2)(3)(4) STOCK(3)(5)(6)
-------------------- -------------------- --------------------
NUMBER OF PERCENT NUMBER OF PERCENT NUMBER OF PERCENT
BENEFICIAL OWNER(1) SHARES OF CLASS SHARES OF CLASS SHARES OF CLASS
- ---------------------------------------- --------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Howard Arvey............................ 100 * 57,428 * 93,386 *
Lawrence R. Barnett(7).................. 50,900 17.1% 1,924,895 23.0% 2,929,573 13.0%
T. Chandler Hardwick, III............... -- -- -- -- 5,000 --
Jeane J. Kirkpatrick.................... -- -- -- -- 5,000 *
David F. Linowes........................ 10,605 3.6% 208,073 2.7% 360,385 1.8%
Joelen K. Merkel(8)..................... -- -- 20,114 * 57,965 *
Norman Perlmutter....................... -- -- 5,551 * 39,200 *
James J. Rochlis........................ 16,199 5.4% 975,263 12.7% 1,656,230 7.8%
Alvin R. Rozelle........................ -- -- 939 * 39,036 *
Herbert J. Siegel(9).................... 167,057 56.2% 4,555,854 42.9% 6,766,501 25.6%
John C. Siegel(10)...................... 6,000 2.0% 384,842 5.1% 504,026 2.4%
William D. Siegel(10)................... 5,315 1.8% 329,987 4.4% 588,199 2.9%
Evan C Thompson(11)..................... 130 * 633,668 8.6% 1,262,992 6.0%
All directors and executive officers as
a group, including the directors and
executive officers named above(12) (14
persons).............................. 255,684 86.0% 7,914,553 64.1% 12,098,325 38.7%
The Equitable Companies
Incorporated(13)...................... -- -- 1,153,490 15.7% 1,366,512 6.4%
Gabelli & Company, Inc., Gabelli Funds,
Inc., GAMCO Investors, Inc., and Mario
J. Gabelli(14)........................ -- -- 1,226,788 16.7% 5,232,255 24.5%
The Gabelli Equity Trust Inc.(15)....... -- -- 482,086 6.6% 482,086 2.3%
<FN>
- ---------
* Less than 1%.
(1) The address of The Equitable Companies Incorporated is 787 Seventh Avenue,
New York, New York 10019; the address of Gabelli & Company, Inc., Gabelli
Funds, Inc., GAMCO Investors, Inc., and Mario J. Gabelli, The Gabelli
Value Fund, Inc. and The Gabelli Equity Trust Inc. is One Corporate
Center, Rye, New York 10580; the address of each other beneficial owner
named in the table is c/o Chris-Craft Industries, Inc., 767 Fifth Avenue,
New York, New York 10153.
(2) Each share of $1.40 Convertible Preferred Stock is convertible into
9.73794 shares of Common Stock and 19.47587 shares of Class B Common
Stock, except that if such share of $1.40 Convertible Preferred Stock was
transferred after November 10, 1986 other than to a Permitted Transferee,
such share is convertible into 29.21381 shares of Common Stock. Each share
of Class B Common Stock is convertible into one share of Common Stock.
(3) At December 31, 1993, (a) the Trustee of the Chris-Craft Employees' Stock
Purchase Plan (the "Stock Purchase Plan") held 364,323 shares of Class B
Common Stock, 464,855 shares of Common Stock and 246 shares of $1.40
Convertible Preferred Stock (representing 5%, 2% and less than 1% of the
outstanding shares of the respective classes at February 28, 1994), and
(b) the Trustees under the Chris-Craft Profit Sharing Plan (the "Profit
Sharing Plan") held 150,000 shares of Class B Common Stock (representing
2% of the outstanding shares of the class at February 28, 1994). A
committee
</TABLE>
(NOTES CONTINUED ON NEXT PAGE)
4
<PAGE>
<TABLE>
<S> <C>
appointed by the Board of Directors of Chris-Craft to administer the Stock
Purchase Plan is empowered to direct voting of the shares held by the
Trustee under that plan, and the Trustees under the Profit Sharing Plan
are empowered to vote and dispose of the shares held by that plan. Herbert
J. Siegel, James J. Rochlis and Lawrence R. Barnett are the members of the
committee under the Stock Purchase Plan and are the Trustees under the
Profit Sharing Plan. The numbers of shares set forth in the table with
respect to each director or named executive officer other than Herbert J.
Siegel, James J. Rochlis and Lawrence R. Barnett exclude shares held in
the Profit Sharing Plan and include, with respect to the Stock Purchase
Plan, only shares vested at December 31, 1993. The numbers of shares set
forth in the table with respect to each of Herbert J. Siegel, James J.
Rochlis, Lawrence R. Barnett and all directors and executive officers as a
group include all shares held in the Profit Sharing Plan and the Stock
Purchase Plan as of December 31, 1993. If, at February 28, 1994, the
shares of $1.40 Convertible Preferred Stock held in the Stock Purchase
Plan at December 31, 1993 had been converted and the Class B Common Stock
issuable upon such conversion had been added to the Class B Common Stock
then held in the Stock Purchase Plan and the Profit Sharing Plan, the
shares of Class B Common Stock held in the two plans would represent 7% of
the Class B Common Stock that would have been outstanding; if, at February
28, 1994, the shares of $1.40 Convertible Preferred Stock held in the
Stock Purchase Plan at December 31, 1993 had been converted, the Class B
Common Stock then held in the Stock Purchase Plan and the Profit Sharing
Plan, or issuable upon conversion of the $1.40 Convertible Preferred Stock
held in the Stock Purchase Plan, had been converted, and the Common Stock
issuable upon such conversions had been added to the Common Stock then
held in such plans, the shares of Common Stock held in the two plans would
represent 5% of the Common Stock that would have been outstanding.
(4) Includes shares of Class B Common Stock issuable upon conversion of the
$1.40 Convertible Preferred Stock reflected in the table opposite the
identified person or group. In accordance with SEC rules, the percentages
shown have been computed assuming that the only shares converted are those
shares reflected opposite the identified person or group.
(5) Includes shares of Common Stock issuable upon conversion of the $1.40
Convertible Preferred Stock and Class B Common Stock reflected in the
table opposite the identified person or group. In accordance with SEC
rules, the percentages shown have been computed assuming that the only
shares converted are those shares reflected opposite the identified person
or group.
(6) Includes with respect to the following directors the indicated numbers of
shares issuable on exercise of options previously granted under the 1989
Director Stock Option Plan or to be granted immediately following the 1994
annual meeting of stockholders under the 1994 Director Stock Option Plan,
if adopted; Howard Arvey, 30,873; Lawrence R. Barnett, 43,250; T. Chandler
Hardwick, III, 5,000; Jeane J. Kirkpatrick, 5,000; David F. Linowes,
48,876; Norman Perlmutter, 30,873; James J. Rochlis, 48,876; Alvin R.
Rozelle, 37,624.
(7) Ownership includes 10,919 shares of Class B Common Stock owned by a
charitable foundation of which Mr. Barnett and certain members of his
family are the directors.
(8) Ownership includes 17,166 shares of Common Stock issuable pursuant to a
currently exercisable stock option.
(9) Ownership includes 110,000 shares of Common Stock issuable pursuant to a
currently exercisable stock option and excludes an option for 300,000
shares to be granted pursuant to Chris-Craft's 1994 Management Incentive
Plan and 13,000 shares of $1.40 Convertible Preferred Stock, 60,711 shares
of Class B Common Stock and 11,330 shares of Common Stock owned by the
director's wife.
(10) Ownership includes 34,333 shares of Common Stock issuable pursuant to
currently exercisable stock options.
</TABLE>
(NOTES CONTINUED ON NEXT PAGE)
5
<PAGE>
<TABLE>
<S> <C>
(11) Ownership includes 259,368 shares of Common Stock issuable pursuant to
currently exercisable stock options, and excludes an option for 200,000
shares to be granted pursuant to Chris-Craft's 1994 Management Incentive
Plan.
(12) Ownership includes all shares held in the Stock Purchase Plan and the
Profit Sharing Plan as of December 31, 1993 (see Note 3), all other shares
reflected in the table with respect to directors and named executive
officers, and all other shares, including an additional 6,866 shares of
Common Stock issuable pursuant to currently exercisable stock options,
held by an executive officer of Chris-Craft not named in the table. Of the
shares held in the Stock Purchase Plan, 116 shares of $1.40 Convertible
Preferred Stock, 223,022 shares of Class B Common Stock and 363,254 shares
of Common Stock were held for the accounts of employees other than
directors or executive officers.
(13) Shared voting power is claimed as to 77,511 shares of Common Stock.
Information is furnished herein in reliance on Amendment No. 5 to Schedule
13G with respect to Class B Common Stock and Amendment No. 12 to Schedule
13G with respect to Common Stock of The Equitable Companies Incorporated,
each dated February 9, 1994 filed with the SEC jointly with AXA and Alpha
Assurances I.A.R.D. Mutuelle, Alpha Assurances Vie Mutuelle, AXA
Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, and Uni Europe
Assurance Mutuelle, as a group.
(14) Voting power is disclaimed as to 1,011,951 shares of Common Stock and
544,143 shares of Class B Common Stock, and both shared voting and shared
investment power are claimed as to 22,962 shares. Information is furnished
herein in reliance on Amendment No. 24 to Schedule 13D of the named owners
dated October 13, 1993, filed with the SEC.
(15) The named owners disclaim investment power respecting the referenced
shares. Information is furnished herein in reliance on Schedule 13Gs of
the named owners, respectively dated February 19, 1993 and February 15,
1994, filed with the SEC.
</TABLE>
II. BENEFICIAL OWNERSHIP OF BHC CLASS A COMMON STOCK
<TABLE>
<CAPTION>
NUMBER
BENEFICIAL OWNER OF SHARES(1)
- ----------------------------------------------------------------------------------------------------- -------------
<S> <C>
Howard Arvey......................................................................................... 650
Lawrence R. Barnett(2)............................................................................... 309
T. Chandler Hardwick, III............................................................................ --
Jeane J. Kirkpatrick................................................................................. --
David F. Linowes..................................................................................... 151
Joelen K. Merkel(3).................................................................................. 200
Norman Perlmutter.................................................................................... --
James J. Rochlis(2).................................................................................. 1,109
Alvin R. Rozelle..................................................................................... --
Herbert J. Siegel(2)................................................................................. 538
John C. Siegel....................................................................................... --
William D. Siegel.................................................................................... 231
Evan C Thompson...................................................................................... --
All Chris-Craft directors and executive officers as a group,
including the directors and executive officers named above (14 persons)(2)......................... 2,570
<FN>
- ---------
(1) Each amount shown represents less than 1% of the class. In accordance with
SEC rules, percentages have been computed deeming as not outstanding
226,503 shares of BHC Class A Common Stock held by UTV.
(2) Ownership includes 309 shares held in the Chris-Craft Profit Sharing Plan,
of which Messrs. Siegel, Barnett and Rochlis are Trustees. See Note 3 to
Table I.
(3) Shares are owned jointly with the executive officer's husband.
</TABLE>
6
<PAGE>
III. BENEFICIAL OWNERSHIP OF UTV COMMON STOCK
<TABLE>
<CAPTION>
NUMBER PERCENT
OF OF
BENEFICIAL OWNER SHARES CLASS
- ---------------------------------------------------------------------------------------- ------- ----
<S> <C> <C>
Howard Arvey............................................................................ -- --
Lawrence R. Barnett(1).................................................................. 229,155 2.2%
T. Chandler Hardwick, III............................................................... -- --
Jeane J. Kirkpatrick.................................................................... -- --
David F. Linowes........................................................................ -- --
Joelen K. Merkel........................................................................ -- --
Norman Perlmutter....................................................................... 2,000 *
James J. Rochlis........................................................................ -- --
Alvin R. Rozelle........................................................................ -- --
Herbert J. Siegel(1)(2)................................................................. 229,155 2.2%
John C. Siegel.......................................................................... 229,155 2.2%
William D. Siegel....................................................................... -- --
Evan C Thompson......................................................................... 25,000 *
All Chris-Craft directors and executive officers as a group,
including the directors and executive officers named above (14 persons)(1)............ 256,155 2.5%
<FN>
- ---------
* Less than 1%
(1) At December 31, 1993, (a) the Trustee of the Employees' Stock Purchase Plan
of UTV (the "UTV Stock Purchase Plan") held 219,155 shares of UTV Common
Stock (representing 2.1% of the outstanding shares at February 28, 1994),
and (b) the Trustees under the UTV Profit Sharing Plan held 10,000 shares
of UTV Common Stock (representing less than 1% of the outstanding shares at
February 28, 1994). A committee appointed by the Board of Directors of UTV
to administer the UTV Stock Purchase Plan is empowered to direct voting of
the shares held by the Trustee under that plan, and the Trustees under the
UTV Profit Sharing Plan are empowered to vote and dispose of the shares
held by that plan. Herbert J. Siegel, Lawrence R. Barnett, John C. Siegel
and another executive officer of UTV are the members of the committee under
the UTV Stock Purchase Plan and are the Trustees of the UTV Profit Sharing
Plan. The numbers of shares set forth in the table with respect to each of
Herbert J. Siegel, Lawrence R. Barnett, John C. Siegel and all directors
and executive officers as a group include all shares held in the UTV Stock
Purchase Plan and the UTV Profit Sharing Plan as of December 31, 1993.
(2) Ownership excludes 666 shares owned by the director's wife.
</TABLE>
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all plan and non-plan compensation paid to
the named individuals for services rendered in all capacities to Chris-Craft and
its subsidiaries during the three years ended December 31, 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------
ANNUAL AWARDS
COMPENSATION(1) -------
-------------------- SECURITIES
SALARY BONUS UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS(#) COMPENSATION($)
- --------------------------------------- ---- ------- ----------- ------- ------------
<S> <C> <C> <C> <C> <C>
Herbert J. Siegel...................... 1993 884,975 3,677,785 -- 682,620 (2)
Chairman of the Board 1992 860,034 1,298,187 -- 441,752
and President 1991 834,175 1,179,990 -- 521,878
Joelen K. Merkel....................... 1993 200,000 175,000 -- 60,472 (3)
Vice President 1992 125,000 125,000 50,000 38,478
and Treasurer 1991 125,000 40,000 -- 27,882
John C. Siegel......................... 1993 450,000 350,000 -- 123,029 (4)
Senior Vice President 1992 235,000 400,000 100,000 95,381
1991 235,000 135,000 -- 69,341
William D. Siegel...................... 1993 450,000 350,000 -- 122,856 (5)
Senior Vice President 1992 235,000 700,000 100,000 140,256
1991 235,000 140,000 -- 70,091
Evan C Thompson........................ 1993 800,000 600,000 -- 225,279 (6)
Executive Vice President 1992 750,000 300,000 100,000 166,413
and President, Television Division 1991 700,000 204,000 -- 149,441
<FN>
- ---------
(1) Excludes automobile allowance of $1,200 per month paid to each of the named
individuals and perquisites and other personal benefits aggregating less
than the lesser of $50,000 or 10% of the total annual salary and bonus
reported for the named person.
(2) Reflects Chris-Craft contributions, or accruals under the Benefit
Equalization Plan in lieu of contributions and forfeiture allocations, of
$271,990 with respect to the Stock Purchase Plan and $410,630 with respect
to the Profit Sharing Plan.
(3) Reflects Chris-Craft contributions, or accruals under the Benefit
Equalization Plan in lieu of contributions and forfeiture allocations, of
$24,077 with respect to the Stock Purchase Plan and $36,395 with respect to
the Profit Sharing Plan.
(4) Reflects Chris-Craft contributions, or accruals under the Benefit
Equalization Plan in lieu of contributions and forfeiture allocations, of
$48,384 with respect to the Stock Purchase Plan and $74,645 with respect to
the Profit Sharing Plan.
(5) Reflects Chris-Craft contributions, or accruals under the Benefit
Equalization Plan in lieu of contributions and forfeiture allocations, of
$48,211 with respect to the Stock Purchase Plan and $74,645 with respect to
the Profit Sharing Plan.
(6) Reflects Chris-Craft contributions, or accruals under the Benefit
Equalization Plan in lieu of contributions and forfeiture allocations, of
$96,634 with respect to the Stock Purchase Plan and $128,645 with respect
to the Profit Sharing Plan.
</TABLE>
No stock option was granted to any of the named individuals during 1993.
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The following table sets forth information concerning each exercise of stock
options during 1993 by each of the named individuals, along with the year-end
value of unexercised options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
SHARES ACQUIRED VALUE -------------------------- -------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- --------------- ----------- ----------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Herbert J. Siegel.......... 0 0 354,435 0 2,781,181 0
Joelen K. Merkel........... 10,564 214,477 17,166 34,333 130,807 261,621
John C. Siegel............. 70,882 1,056,426 34,333 68,666 251,622 503,244
William D. Siegel.......... 138,392 2,462,260 34,333 68,666 251,622 503,244
Evan C Thompson............ 106,326 2,177,057 259,368 68,666 1,303,645 523,242
</TABLE>
EXECUTIVE OFFICER EMPLOYMENT AGREEMENTS
Chris-Craft entered into employment agreements with Herbert J. Siegel and
Evan C Thompson, as of January 1, 1994.
The 1994 employment agreement with Herbert J. Siegel (Mr. Siegel's
agreement) provides for his continued service as Chief Executive Officer for an
initial term ending December 31, 1998, which term will extend automatically for
one year as of the end of each of the first two years of the term, unless either
party gives contrary notice to the other. Annual base salary is $950,000,
subject to adjustment ("COLA adjustment") annually to reflect price level
increases, as reported in a U.S. Department of Labor Consumer Price Index.
Deferred compensation in the amount of $550,000 annually is credited to the
deferred compensation account referred to under PERFORMANCE-BASED COMPENSATION
FOR HERBERT J. SIEGEL AND EVAN C THOMPSON, as well as interest on the account
balance, to be computed based on the yield of U.S. Treasury instruments maturing
in five years. The account balance will be paid to Mr. Siegel in five annual
installments after termination of the employment term.
Mr. Siegel's agreement provides that in the event of any change in control
of Chris-Craft during the employment term, the employment term will be extended
automatically to the third anniversary following such change in control, if the
employment term otherwise would have terminated before such third anniversary.
Mr. Siegel has the right to terminate the employment term in the event of a
diminution of his authority or other material breach by Chris-Craft of Mr.
Siegel's agreement or the occurrence without his consent of specified
fundamental changes in Chris-Craft. In the event of such termination, he is
entitled to receive in lump sum, an amount equal to the base salary, deferred
compensation and consulting fees that would have been payable to him through the
term of the agreement (assuming no additional extensions of the employment term
after such termination), plus an amount equal to the mean performance bonuses
theretofore paid or payable to him multiplied by the number of years remaining
in the employment term. If Mr. Siegel dies during the employment term, Mr.
Siegel's estate is to receive for each of the three following 12-month periods
an amount equal to "Average Annual Compensation"; and in the event of his
disability, Mr. Siegel is to receive, annually for the remainder of the
employment term, an amount equal to one-half of his Average Annual Compensation.
"Average Annual Compensation" generally means the executive's average base
salary plus bonus for a specified period prior to the event. Additionally, if
any payment to Mr. Siegel pursuant to the agreement should be subject to the
excise tax imposed on " golden parachutes" by Section 4999 of the Code,
Chris-Craft will pay on his behalf or reimburse him in an amount equal to the
sum of the excise tax and related interest and penalties, if any, plus any
income taxes (and related penalties and interest) that may become payable by Mr.
Siegel arising from Chris-Craft's compliance with such payment or reimbursement
obligations, such that he would be in the same position as he would have been
had no excise tax been imposed.
During the consulting term, which will commence on expiration of the
employment term and end 5 years thereafter, Mr. Siegel is to receive annual
compensation of $500,000 (subject to COLA adjustment), is
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<PAGE>
required to devote not more than 20 hours in any month to Chris-Craft's affairs,
and is prohibited from engaging in activity competitive with Chris-Craft. If Mr.
Siegel dies during the consulting term, his estate is to receive the full
consulting fee until the third anniversary of his death or the end of the
consulting term, whichever is earlier; if he is disabled, he is entitled to
receive one-half of the consulting fee until the end of the consulting term. For
each year covered by Mr. Siegel's agreement, Chris-Craft will match on a
cumulative basis up to $200,000 of his charitable contributions in addition to
matching his contributions under any other charitable gift matching program of
Chris-Craft or any subsidiary.
As additional inducement to enter into Mr. Siegel's agreement, Chris-Craft
has made "split-dollar" life insurance agreements with each of Mr. Siegel's two
sons, pursuant to which, under each agreement, Chris-Craft procured and will pay
the full amount of each annual premium for 15 years on last-to-die policies on
the lives of Herbert J. Siegel and his wife. Each of the sons is the owner of
policies having face amounts totaling $15 million, covered by his respective
agreement and has the right to designate and change the beneficiaries
thereunder. The cost of these policies will be shared between Chris-Craft and
BHC in the respective proportions of 15% and 85% until they shall otherwise
agree. The policies and the split-dollar agreements contemplate that an amount
equal to the aggregate premiums paid, but without interest, will be repaid to
Chris-Craft and BHC, upon the death of the last to die of the insureds or, prior
thereto, upon the termination of the split-dollar agreements by the owners of
the policies.
The bonus provisions of Mr. Siegel's agreement being submitted for
stockholder approval specify that Chris-Craft will pay Mr. Siegel a cash bonus
equal to 1 1/2% of the amount by which Chris-Craft "Pre-tax Income" as defined,
exceeds $36,000,000 for each fiscal year, as more fully described under
PERFORMANCE-BASED COMPENSATION FOR HERBERT J. SIEGEL AND EVAN C THOMPSON.
Mr. Thompson's 1994 employment agreement (Mr. Thompson's agreement) provides
for his continued service in his current capacities on substantive terms similar
to those specified in Mr. Siegel's agreement, except that there are three
automatic one-year renewal terms, unless Mr. Thompson gives contrary notice
respecting the first two or either party gives contrary notice respecting the
third; annual deferred compensation is in the amount of $250,000, and Mr.
Thompson can elect each year whether amounts deferred for such year will be paid
in lump sum immediately, or over five years, after termination of the employment
term; Mr. Thompson's consulting fee is $250,000 per year (subject to COLA
adjustment) and the consulting term will end May 31, 2007; if Mr. Thompson dies
during the employment term or the consulting term, a death benefit is payable
until the earlier of the first anniversary of his death or the end of the
consulting term; there is no split-dollar life insurance; Chris-Craft will match
on a cumulative basis up to $100,000 of Mr. Thompson's charitable contributions
during each year of the employment term; and the bonus and stock option
arrangements are as follows:
The bonus provisions of Mr. Thompson's agreement being submitted for
stockholder approval specify that Chris-Craft will pay Mr. Thompson a cash bonus
equal to 1% of the amount by which Chris-Craft's "TV Broadcast Cash Flow" for
each fiscal year exceeds $20 million, up to $50 million, and 2% of the amount by
which TV Broadcast Cash Flow exceeds $50 million, as more fully described under
PERFORMANCE-BASED COMPENSATION FOR HERBERT J. SIEGEL AND EVAN C THOMPSON.
The employment agreements provide that, if the 1994 Management Incentive
Plan is approved by stockholders, Messrs. Siegel and Thompson will be granted
stock options as set forth under 1994 MANAGEMENT INCENTIVE PLAN.
Chris-Craft has also agreed, in the event of Mr. Siegel's death, to pay
$2,000,000 to a beneficiary named by Mr. Siegel. Chris-Craft has purchased, and
is the sole owner and beneficiary of, insurance on the life of Mr. Siegel and
anticipates that the insurance benefits received by Chris-Craft will exceed the
cost, after applicable income taxes, of paying the foregoing death benefit.
-------------------
Benefits under the Chris-Craft Salaried Employees' Pension Plan are based on
a participant's compensation, including salaries, bonuses and commissions. The
plan provides a retirement annuity, generally based on specified percentages of
annual compensation (for 1989 and subsequent years, generally 1.5% of the first
$18,000 of compensation and 2.0% of the remainder) aggregated through the years
of service. Estimated
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<PAGE>
annual benefits payable upon retirement after working to age 65 (including
benefits payable under the predecessor pension plan and the Benefit Equalization
Plan) are, for Joelen K. Merkel, John C. Siegel, William D. Siegel and Evan C
Thompson, $226,675, $469,604, $ 574,018, and $768,761, respectively. Herbert J.
Siegel, who has reached age 65, is currently receiving $79,874 per year from the
predecessor pension plan, and as of February 28, 1994, has accrued an additional
annual benefit of $720,680 under the current pension plan.
Under the Executive Deferred Income Plan, Chris-Craft entered into an
agreement with each participating employee, whereby the employee agreed to defer
$1,000 per year of salary in each of four years, and Chris-Craft agreed to make
annual payments in specified amounts for 10 years in the event of the employee's
death or for 15 years commencing at age 60. The plan also provides supplemental
disability benefits of $10,000 per year from the onset of a disability until
annual payments commence at age 60 or death. Benefits under the plan do not
depend on compensation and are payable in full if the employee has accumulated
20 years of service, or is employed by Chris-Craft, when the condition for
payment occurs. Maximum annual benefits payable in the event of death of Mrs.
Merkel and Messrs. John C. Siegel, William D. Siegel and Thompson would be
$101,585, $ 109,677, $ 136,853 and $55,137, respectively, for 10 years. Annual
benefits payable to Mrs. Merkel and Messrs. John C. Siegel, William D. Siegel
and Thompson commencing at age 60 would be $ 76,798, $83,076, $103,305 and
$31,898, respectively, for 15 years, assuming full vesting of benefits. After an
employee has participated in the plan for four years, premiums for insurance on
his life are paid through policy loans involving no direct out-of-pocket cost to
Chris-Craft. Accordingly, since 1987, Chris-Craft has made no payments under the
plan with respect to the participation of any Chris-Craft executive officer,
other than for interest on policy loans and disability waiver premiums.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee"),
which is comprised of three directors who have never been employees of
Chris-Craft, is responsible for reviewing the recommendations of the Chief
Executive Officer (CEO) and making recommendations to the Board of Directors
with respect to the salaries, bonuses, and other forms of compensation,
including stock option grants, of Chris-Craft's executive officers.
The Committee seeks to attract and retain executive officers of the highest
caliber and motivate them to maximize the success of Chris-Craft's businesses by
linking their compensation to performance. Each executive officer's cash
compensation consists of two components: base salary and annual bonus.
Base salary and bonus for the CEO was fixed by his employment agreement,
which expired at the end of 1993. The contract, originally effective September
1, 1983, provided for an annual base salary that increased solely to reflect
inflation and a performance based bonus equal to 1% of the amount by which
Chris-Craft's "Adjusted Pre-tax Income" for the fiscal year exceeded
$15,000,000. In 1993, Chris-Craft's Adjusted Pre-tax Income exceeded $15,000,000
by $369,615,000, resulting in a higher bonus for the CEO than in 1992 when
Adjusted Pre-tax Income exceeded $15,000,000 by $130,371,000, as Chris-Craft
realized significant gains on the disposition of its Time Warner securities in
1993.
The salary of the Executive Vice President and President, Television
Division was likewise fixed by contract that expired at the end of 1993; his
bonus is based on the recommendation of the CEO and the Committee's evaluation
of his performance. In determining his 1993 bonus, the Committee considered that
Television Division operating income set an all time record and that Television
Division revenues exceeded budgeted and prior year levels. In addition, in 1993,
the Television Division President spearheaded the formation of a new television
network. Based on the foregoing and the CEO's perception of compensation levels
for senior executives of comparable entertainment and communications companies,
the CEO recommended, and the Compensation Committee approved, a larger bonus
than last year's.
The remaining executive officers are not directly responsible for the
operating results of particular businesses. Their salaries for 1993 were fixed
at the end of the prior fiscal year, based on subjective perceptions of salaries
paid by comparable companies for comparable positions and their bonuses were
based on subjective assessments of the executive officers' success at fulfilling
the duties and responsibilities of their respective positions and the particular
tasks assigned to them. The Committee generally adopts
11
<PAGE>
recommendations of the CEO, who bases his recommendations on past salary levels
and his perception of the quality of their respective performances and attempts
to match their salaries with his perception of salary levels at a small number
of companies he considers comparable, which companies are not included in the
S&P Broadcast Media Index but which operate in the entertainment industry. The
CEO assesses executive officer performance in terms of normal responsibilities,
assumption of extra responsibilities, and additional work related to special
projects. No relative weight was assigned to any of the foregoing factors.
Specifically, the bonuses of executive officers reflect their relative
participation and performance, as perceived by the CEO, in various matters,
including analysis and planning relating to government policies such as
legislative and regulatory initiatives, analysis and negotiation of business
acquisitions, planning new business ventures, and assumption of additional
responsibilities. One executive officer's bonus was greater than in prior years,
reflecting an assumption of greater responsibilities following retirement of
another executive officer, while the bonuses of other executive officers were
less than in the prior year because the prior year's bonus had reflected
extraordinary transactions in that year.
Each of the employment agreements for the CEO and the Executive Vice
President provides that current compensation otherwise payable that is not
deductible for federal income tax purposes under Section 162(m) of the Code,
will be credited to a deferred compensation account and paid to the executive
after his employment with Chris-Craft has terminated. No policy has been adopted
with respect to Section 162(m) of the Code for the other executive officers,
since their compensation levels are not in excess of $1 million.
No stock option was granted to any of the named executive officers during
1993.
HOWARD ARVEY DAVID F. LINOWES ALVIN R. ROZELLE
PERFORMANCE GRAPH
The following line graph compares cumulative total shareholder return for
Chris-Craft Common Stock, the Standard & Poor's ("S&P") 500 index and the S&P
Broadcast Media index, assuming the investment of $100 in each in December 1988
and the monthly reinvestment of dividends. The performance shown on the graph is
not necessarily indicative of future performance.
[GRAPH]
12
<PAGE>
Pursuant to SEC rules, the material under the caption, Board Compensation
Committee Report on Executive Compensation, through and including the line graph
and related explanatory material, is not to be deemed "soliciting material" nor
"filed" with the SEC. It is specifically excluded from any material incorporated
by reference in Chris-Craft filings under the Securities Act of 1933 or
Securities Exchange Act of 1934, whether such filings occur before or after the
date of this proxy statement and notwithstanding anything to the contrary set
forth in any such filing.
COMPENSATION OF DIRECTORS
Directors of Chris-Craft receive a retainer of $35,000 per year plus $7,500
per year for service on each of the Audit and Compensation Committees, $3,000
per year for service on each of the ERISA and Investment Committees and $1,000
per year for service on the Benefit Equalization Plan Committee. Officers of
Chris-Craft receive no additional compensation as directors. In 1993, Directors
of Chris-Craft received a retainer of $25,000 per year plus $1,000 for each
meeting of the Board of Directors attended and $3,000 per year for service on
each of the Audit, Compensation, ERISA and Investment Committees and $1,000 per
year for service on the Benefit Equalization Plan Committee. Officers of
Chris-Craft received no additional compensation for service as directors.
Lawrence R. Barnett and James J. Rochlis, each a director and retired
Executive Vice President of Chris-Craft, served as consultants to Chris-Craft
during 1993, each for compensation of $75,000 annually, and are continuing, on a
year-to-year basis, to serve as consultants for the same compensation. Messrs.
Barnett and Rochlis are consulted from time to time, as operating officers deem
necessary, to obtain their advice and the benefit of their experience with
respect to those Chris-Craft operations for which they were responsible during
their years of service as executive vice presidents of Chris-Craft. Mr. Barnett
consults respecting films and other media entertainment for broadcast by
Chris-Craft. Mr. Rochlis consults with respect to Chris-Craft's Industrial
Division and Chris-Craft environmental matters. Chris-Craft also pays premiums
for health insurance for these consultants, which totaled $13,996 for Mr.
Barnett and $9,918 for Mr. Rochlis in 1993.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Lawrence R. Barnett and James J. Rochlis, each a director and retired
Executive Vice President of Chris-Craft, served as consultants to Chris-Craft
during 1993, as more fully described under EXECUTIVE COMPENSATION --
Compensation of Directors.
Laurey J. Barnett, who is the daughter of Lawrence R. Barnett, a director of
Chris-Craft, continued during 1993 to serve UTV as Vice President and Director
of Programming. Her salary and bonus for 1993 aggregated $222,000; she received
a monthly automobile allowance of $600; and she participated in UTV benefit
plans on the same basis as other eligible employees. Ms. Barnett's employment
continues in the same capacity and on the same terms, except that her current
salary is at the rate of $155,000 per year.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Chris-Craft's executive officers and directors are required under the
Securities Exchange Act of 1934 to file reports of ownership and changes in
beneficial ownership of Chris-Craft equity securities with the SEC. Copies of
those reports must also be furnished to Chris-Craft. Based solely on a review of
the copies of reports furnished to Chris-Craft and written representations that
no Forms 5 were required, Chris-Craft believes that during 1993 all filing
requirements applicable to executive officers and directors were complied with,
except as follows: Howard Arvey and Norman Perlmutter each filed their Forms 5
for 1993, respectively, one day and two days late due to the disruption in
courier service as a result of severe weather conditions.
1994 MANAGEMENT INCENTIVE PLAN
The Board of Directors has adopted the 1994 Management Incentive Plan (the
"1994 Plan"), subject to stockholder approval. The Board of Directors believes
that the 1994 Plan is desirable to attract and retain the best available talent
and to encourage the highest level of performance. Fewer than 1,000 shares
remain available for grant under the employee stock option plan most recently
adopted by stockholders, the 1988 Management Incentive Plan.
13
<PAGE>
The 1994 Plan is set forth as Exhibit A to this Proxy Statement, and the
following description is qualified in its entirety by this reference thereto.
Under the 1994 Plan, options to purchase an aggregate of 2,500,000 shares of
Chris-Craft Common Stock, $.50 par value ("Common Stock"), may be granted from
time to time to employees, including officers and directors who are employees,
of Chris-Craft or of any subsidiary of Chris-Craft, who have been so employed
for at least one year at the end of the fiscal year ended immediately prior to
the grant of the option (provided that the Board of Directors may authorize the
grant of an option to an employee who has not served for such period). The
aggregate number of shares which may be subject to options granted to any one
employee within any period of three years shall not exceed 500,000 shares.
Approximately 100 persons, including six executive officers, are expected to be
eligible to participate in the 1994 Plan. Pursuant to the respective employment
agreements with Chris-Craft dated as of January 1, 1994, if the 1994 Management
Incentive Plan is adopted by stockholders at the 1994 Annual Meeting, Chairman,
President, and Chief Executive Officer, Herbert J. Siegel will receive a 10-year
option covering 300,000 shares of Common Stock, and Executive Vice President and
President, Television Division, Evan C Thompson will receive a 10-year option
covering 200,000 shares of Common Stock.
The 1994 Plan is to be administered by a committee (the "Committee"),
appointed by the Board of Directors, which will consist of at least two
disinterested directors. Initially, the members of the Committee will be Howard
Arvey, David F. Linowes and Alvin R. Rozelle. The Committee is generally
empowered to interpret the 1994 Plan, to prescribe rules and regulations
relating thereto, to determine the terms of option agreements, to amend them
with the consent of the optionee, to determine the employees to whom options are
to be granted and to determine the number of shares subject to each option
granted.
The per share exercise price of each option is established by the Committee
and in each instance will not be less than the fair market value of a share of
the Common Stock on the date the option is granted (110% of fair market value on
the date of grant of an ISO, as defined below, if the optionee owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of Chris-Craft or any of its subsidiary corporations (a "10% Holder")).
Upon exercise of an option, the optionee may pay the purchase price with
securities of Chris-Craft previously acquired by him, if so permitted by the
Committee or by the related option agreement.
Options will be exercisable for a term determined by the Committee, which
term will not be greater than ten years from the date of grant (five years for
ISOs granted to a 10% Holder). Unless otherwise provided in an option agreement,
generally an option will become fully exercisable three years from the date of
grant or, subsequent to the first anniversary of the grant of the option, upon
the earliest of the optionee's retirement, death, or permanent and total
disability. Prior thereto, each option shall become exercisable as to one-third
of the number of the shares covered thereby cumulatively upon each anniversary
of the date of the grant. Except in the event of certain terminations of
employment or death or permanent and total disability, no option may be
exercised unless the holder thereof is then an employee of Chris-Craft or any
subsidiary corporation. Options will not be transferable other than by will or
the laws of descent and distribution and may be exercised during the optionee's
lifetime only by the optionee or his guardian or legal representative.
Options granted pursuant to the 1994 Plan may be designated as incentive
stock options ("ISOs") with the attendant tax benefits provided under Section
422 of the Internal Revenue Code of 1986 (the "Code"). The 1994 Plan provides
that the aggregate fair market value (determined at the time an ISO is granted)
of the Common Stock subject to ISOs exercisable for the first time by an
employee during any calendar year (under all plans of Chris-Craft and any
subsidiary corporation) may not exceed $100,000.
Stock appreciation rights ("SARs") may also be awarded to holders of options
granted under the 1994 Plan at any time prior to the exercise in full of the
related option and on the same terms and conditions. A SAR permits a holder of a
related option to surrender the option with respect to all or any part of the
shares covered thereby and to receive from Chris-Craft in exchange therefor a
payment having an aggregate value equal to the Right Value of one share
multiplied by the number of shares as to which the related option is
surrendered. Payment may be made in the form of cash or Common Stock, in the
discretion of the Committee. The Right Value of a share is the greater of (A)
the amount by which the fair market value of one share when the SAR is exercised
exceeds the option price per share and (B) the amount by which the
14
<PAGE>
book value of one share when the SAR is exercised exceeds the book value of one
share when the related option was granted, except that if the related option is
an ISO, the Right Value is determined only pursuant to clause (A). Each SAR is
exercisable for the same term and terminates under the same conditions as the
related option.
Upon any termination of employment that is either for cause or voluntary on
the part of the employee and without the consent of Chris-Craft or any
subsidiary corporation that is the employer, all options held by an optionee
under the 1994 Plan, to the extent not theretofore exercised, will terminate,
except that a non-ISO option held by an employee who continues after termination
of employment to serve Chris-Craft as a consultant may continue in effect. If
employment is otherwise terminated (except by reason of death or permanent and
total disability), an option may be exercised at any time within three months
after such termination, to the extent the optionee was entitled to do so at the
date of termination of employment. If the optionee dies or becomes permanently
and totally disabled subsequent to the first anniversary of the option grant,
the option shall be exercisable as to all shares of Common Stock remaining
subject to the option, and the optionee or his personal representative may
exercise the option within nine months after the earlier of the commencement of
such disability or death.
The number of shares subject to option and the exercise price of options are
subject to adjustment or cash settlement as the Committee determines appropriate
in the event of changes in the outstanding Common Stock by reason of stock
dividends, recapitalizations, mergers, and similar events. In the event of
certain basic changes in Chris-Craft, including a change in control of
Chris-Craft, in the discretion of the Committee, each option shall terminate
simultaneously with such change in control, and Chris-Craft shall pay to the
optionee in lieu thereof a cash settlement equal to the product of the Right
Value of a share of Common Stock and the number of shares subject to the option,
regardless whether any installment is then exercisable.
The Board of Directors may suspend, terminate, modify or amend the 1994
Plan, provided, however, that (except for adjustments by reason of stock
dividends, recapitalizations, mergers and similar events) any increase in the
aggregate number of shares issuable upon the exercise of options, any reduction
in the purchase price of the Common Stock covered by any option, any extension
of the period during which options may be granted or increase in the maximum
term of options, and any material modification in the requirements as to
eligibility for participation in the 1994 Plan shall be subject to the approval
of stockholders. No suspension, termination, modification or amendment of the
1994 Plan may adversely affect an optionee's rights under an option theretofore
granted without the consent of the optionee.
The 1994 Plan also authorizes the Board of Directors to cause Chris-Craft or
any subsidiary to give or arrange for financing, including direct loans, secured
or unsecured, or guaranties of loans by banks, which guaranties may be secured
in whole or in part by assets of Chris-Craft or any subsidiary corporation, to
any eligible participant in the 1994 Plan who shall have been employed by
Chris-Craft or any subsidiary for at least two years at the end of the fiscal
year ending immediately prior to arranging such financing, but the Board of
Directors may in any specific case authorize financing for an employee who has
not served for such period. Such financing shall be for the purpose of providing
funds for the purchase by such person of Common Stock pursuant to the exercise
of an option, for payment of taxes incurred in connection therewith, or
otherwise to purchase or carry a stock investment in Chris-Craft. The maximum
amount of loans made and liabilities for guaranties incurred by Chris-Craft in
connection with all such financing outstanding at any time will not exceed
$5,000,000. Each loan will bear interest. Each recipient of financing will be
personally liable for the full amount of all financing extended to him. If
authorized, such financing will be administered by a special committee of the
Board consisting of not less than two directors, each of whom shall be a
disinterested person.
No option may be granted under the 1994 Plan or financing given or arranged
after February 23, 2004, provided that financing given or arranged prior thereto
may remain outstanding in accordance with such terms and conditions as may have
been established by the Board of Directors or the committee administering such
financing under the 1994 Plan.
On March 16, 1994, the closing sale price of the Common Stock as reported in
the consolidated transaction reporting system was $35.50 per share.
15
<PAGE>
TAX CONSEQUENCES
Chris-Craft has been advised as follows regarding the federal income tax
consequences with respect to stock options, ISOs, SARs and payment in stock of
the exercise price of options under the 1994 Plan.
Optionees will not be taxed upon the grant of an option or a SAR. Except as
noted below, at the time of exercise of an option other than an ISO, the
optionee generally will recognize ordinary income in an amount equal to the
excess of the fair market value of the shares over the option price, and
Chris-Craft generally will be entitled to a deduction in the same amount. The
shares acquired pursuant to the exercise of an option other than an ISO will
have a basis to the optionee equal to their fair market value on, and a holding
period commencing on the day after, the date of exercise.
At the time of exercise of an ISO, the optionee will recognize no income,
and Chris-Craft will not be entitled to any deduction; the optionee generally
will have an item of tax preference equal to the excess of fair market value of
the shares at such time over the option price. Upon exercise of a SAR, the
optionee will be taxed at ordinary income rates on the amount of cash received
or the fair market value of shares acquired, and Chris-Craft generally will be
entitled to a deduction in the same amount.
Upon the sale of a share acquired pursuant to the exercise of an option
other than an ISO, any gain or loss will result in a capital gain or loss
measured by the difference between the optionee's basis and the amount realized
on such sale, provided the share sold is a capital asset in the hands of the
holder. Upon the sale of a share acquired pursuant to the exercise of an ISO,
any gain or loss will result in a capital gain or loss measured by the
difference between the amount realized on such sale and the exercise price,
provided the share sold is a capital asset in the hands of the holder. Such
capital gain or loss will be long term gain or loss if at the time of sale the
optionee held the share at least one year after its issuance to him following
exercise and at least two years since the grant of the option. In the case of a
disposition of a share having a shorter holding period (a "Premature
Disposition"), a portion (or all) of such gain will be taxed at ordinary income
rates to the extent of the lesser of (a) the excess of the fair market value of
the share at the time of exercise over the option price and (b) the gain on the
sale, and Chris-Craft will be entitled to a deduction in the same amount.
If the optionee uses previously acquired shares of Common Stock to pay the
exercise price of a stock option, the optionee will not ordinarily recognize
taxable income to the extent that the number of new shares of Common Stock
received does not exceed the number of previously acquired shares so used. If
non-recognition treatment applies to the payment for option shares with
previously acquired shares, the tax basis and holding period of the shares
received without recognition of taxable income will be determined by reference
to the basis and holding period of the shares surrendered as payment. If a
greater number of shares of Common Stock is received upon exercise than the
number of shares surrendered in payment of the option price, where an ISO is
being exercised, such excess shares will have a zero basis in the hands of the
holder; when an option other than an ISO is being exercised, the option holder
will be required to include in gross income (and Chris-Craft will be entitled to
deduct) an amount equal to the fair market value of the additional shares on the
date the option is exercised less any cash paid for the shares, and the holding
period will commence on the day after the exercise date. However, the Internal
Revenue Service has announced that it will not issue advance rulings with
respect to whether non-recognition treatment applies when an ISO is exercised by
payment of the option price with shares of stock of the granting corporation.
Moreover, if stock previously acquired by exercise of an ISO is transferred
in connection with the exercise of another ISO, and if, at the time of such
transfer, the stock so transferred has not been held for the holding period
required in order to receive favorable treatment under the statutory stock
option rules, then such transfer would be treated as a Premature Disposition.
Accordingly, with respect to the shares so transferred, an option holder would
recognize ordinary income under the rules governing Premature Disposition
discussed earlier in this section. However, the shares so acquired upon exercise
of an ISO can still qualify for ISO treatment, if all of the other ISO
requirements are fulfilled.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE 1994
MANAGEMENT INCENTIVE PLAN.
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1994 DIRECTOR STOCK OPTION PLAN
The Board of Directors has adopted the 1994 Director Stock Option Plan (the
"Director Option Plan"), subject to stockholder approval. The Board of Directors
believes that the Director Option Plan is desirable to encourage ownership in
Chris-Craft by outside directors, whose services are considered essential, by
providing a further incentive to continue to serve as directors and, through
utilization of the incentives provided by the Director Option Plan, to attract
and retain experienced and qualified candidates to fill vacancies on the Board
of Directors which may occur in the future.
The Director Option Plan is set forth as Exhibit B to this Proxy Statement,
and the following description is qualified in its entirety by this reference
thereto.
Under the Director Option Plan, options to purchase an aggregate of 300,000
shares of Chris-Craft Common Stock may be granted from time to time to persons
who are now or shall become incumbent directors who are not, at the respective
times, employees of Chris-Craft or any subsidiary ("Eligible Directors"). The
aggregate number of shares that may be subject to options granted to any one
director under the Director Option Plan shall not exceed 25,000 shares. Each
Eligible Director will be granted an option for 5,000 shares immediately
following each annual meeting, beginning 1994. If the Director Option Plan is
adopted, no further grant will be awarded under the 1989 Director Stock Option
Plan. Seven incumbent directors and nominees will be eligible to participate in
the Director Option Plan, if it is approved by stockholders.
The Director Option Plan is to be administered by the Board of Directors.
The Board is generally empowered to interpret the Director Option Plan, to
prescribe, amend and rescind rules and regulations relating to it and to
determine the terms and provisions of the respective option agreements. The per
share exercise price of each option shall equal the fair market value of a share
of the Common Stock on the date of grant. Upon exercise of an option, the
optionee may pay the purchase price with cash, securities of Chris-Craft already
owned by him, or a combination of cash and securities.
Each option granted under the Director Option Plan will be evidenced by a
written agreement in such form as the Board will from time to time approve. If
the Director Option Plan is approved, immediately following each annual meeting
of stockholders commencing with the 1994 Annual Meeting, each director who is on
that date an Eligible Director will automatically be granted an option to
purchase 5,000 shares of Common Stock. Options will not be transferable other
than by will or the laws of descent and distribution and may be exercised during
the lifetime of the optionee only by him.
No option will be exercisable after the expiration of the earliest of (i)
five years from the date of grant, (ii) three months following (x) the
retirement or resignation of the optionee as a director or (y) the failure of
the optionee to be reelected as a director, or (iii) nine months following the
total and permanent disability or death of the optionee.
The number of shares subject to option and the exercise price of options are
subject to appropriate adjustment by the Board in the event of changes in the
outstanding Common Stock by reason of changes in Chris-Craft's corporate
structure or capitalization, including stock dividends or stock splits.
The Board of Directors may suspend, discontinue or amend the Director Option
Plan provided, however, that (except for adjustments by reason of changes in
Chris-Craft's corporate structure or capitalization) any change in the number of
shares subject to the Director Option Plan, in the definition of the class of
directors eligible to receive options or that will materially increase the
benefits accruing to participants, shall require approval of stockholders. In
addition, provisions of the Director Option Plan relating to the number of
shares covered by an option at its initial grant and the exercise price may not
be amended more frequently then once every six months, except to conform the
plan to provisions of the Internal Revenue Code and ERISA.
On March 16, 1994, the closing sale price of the Common Stock as reported in
the Consolidated Transaction Reporting System was $35.50 per share.
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TAX CONSEQUENCES
Chris-Craft has been advised as follows regarding the federal income tax
consequences applicable to the grant and exercise of options under the Director
Option Plan:
Optionees will not be taxed upon the grant of a stock option. Except as
noted below, at the time of exercise of a stock option, the optionee generally
will recognize ordinary income in an amount equal to the excess of the fair
market value of the shares over the option price, and Chris-Craft generally will
be entitled to a deduction in the same amount. The shares so acquired will have
a basis to the optionee equal to their fair market value on, and a holding
period commencing on the day after, the date of exercise. Upon the sale of a
share so acquired, any gain or loss will result in a capital gain or loss
measured by the difference between the optionee's basis and the amount realized
on such sale, provided the share sold is a capital asset in the hands of the
holder.
If the optionee uses previously acquired shares of Common Stock to pay the
exercise price of a stock option, the optionee will not ordinarily recognize
taxable income to the extent that the number of new shares received upon
exercise of the stock option does not exceed the number of previously acquired
shares so used. If non-recognition treatment applies to the payment for option
shares with previously acquired shares, the tax basis and holding period of the
shares received without recognition of taxable income will be determined by
reference to the basis and holding period of the shares surrendered as payment.
If a greater number of shares of Common Stock is received upon exercise than the
number of shares surrendered in payment of the option price, the option holder
will be required to include in gross income (and Chris-Craft will be entitled to
deduct) an amount equal to the fair market value of the additional shares on the
date the stock option is exercised less any cash paid for the shares, and the
holding period of the additional shares will commence on the day after the
exercise date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE 1994
DIRECTOR STOCK OPTION PLAN.
PERFORMANCE-BASED COMPENSATION FOR
HERBERT J. SIEGEL AND EVAN C THOMPSON
Chris-Craft has entered into employment agreements with Chris-Craft's
Chairman, President and Chief Executive, Herbert J. Siegel, and with
Chris-Craft's Executive Vice President and President of its Television Division,
Evan C Thompson, as of January 1, 1994; earlier employment agreements with each
of them expired December 31, 1993. Under newly enacted Section 162(m) of the
Code, compensation in excess of $1 million paid to the five highest-paid
executive officers of a public company is not deductible expense for federal
income tax purposes, with certain exceptions. One exception covers
performance-based compensation that is approved by stockholders. The bonus
provisions of each of the 1994 agreements are being submitted for approval by
stockholders, with the intention that such approval will qualify those
provisions for such exception. Each of the 1994 agreements provides that current
compensation otherwise payable that is not deductible for federal income tax
purposes will be credited to a deferred compensation account, and paid to the
executive after his employment with Chris-Craft has terminated. Accordingly, if
the bonus provisions of either 1994 agreement are not approved, or the bonus (or
any portion thereof) otherwise payable to either executive is determined for any
other reason to be nondeductible for federal income tax purposes, then after
such determination, the nondeductible amount will not be paid currently, but
will be credited to the executive's deferred compensation account. Information
respecting provisions of the 1994 agreements other than the bonus provisions
appears under EXECUTIVE OFFICER EMPLOYMENT AGREEMENTS.
The bonus provisions of Mr. Siegel's agreement being submitted to
stockholders for approval specify that Chris-Craft will pay Mr. Siegel a cash
bonus equal to 1 1/2% of the amount by which Chris-Craft "Pre-tax Income"
exceeds $36,000,000 for each fiscal year. For purposes of the 1994 agreement,
"Pre-tax Income" means Chris-Craft income before provision for income taxes and
minority interest, as such amount is reported on Chris-Craft's audited
consolidated statements of income included in its annual report to stockholders;
provided that, in determining such "Pre-tax Income," there will be excluded (i)
any loss of any business commenced or newly acquired by Chris-Craft during (or
within the six months next preceding commencement of) the employment term, if
such business would at any time during such term constitute a
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Development Stage Company under Securities and Exchange Commission Regulation
S-X, assuming such business were organized as a separate entity, e.g., the
broadcast television network currently under development, but only to the extent
that the loss of such business, aggregated with the losses of all other such
businesses (if any) so commenced or acquired, exceeds $10,000,000 in any fiscal
year, and provided, further, that such losses incurred by any business shall not
be so excluded for any fiscal year beginning after the fourth anniversary of the
date of commencement or acquisition of such business by Chris-Craft; and (ii)
any goodwill amortization (similarly determined) arising out of a business
acquisition during the employment term. Mr. Siegel's bonus for 1993 would have
been $5,229,000, if it had been computed under the foregoing formula and would
have been $1,939,000 if it had been computed under the foregoing formula, but
excluding extraordinary nonoperating income for gains realized on Chris-Craft's
interest in Time Warner Inc. The Board of Directors has unanimously approved Mr.
Siegel's agreement, and the Compensation Committee has adopted and established
the bonus provisions as a "performance goal" as contemplated by Section 162(m)
of the Code.
The bonus provisions of Mr. Thompson's 1994 employment agreement being
submitted to stockholders for approval specify that Chris-Craft will pay Mr.
Thompson a cash bonus equal to 1% of the amount by which Chris-Craft's "TV
Broadcast Cash Flow" for each year exceeds $20 million, up to $50 million, and
2% of the amount by which TV Broadcast Cash Flow exceeds $50 million (each of
$20 million and $50 million, a "Base Amount"). The bonus computation will be
adjusted if Chris-Craft acquires, in one or more transactions, additional
television stations having aggregate mean TV Broadcast Cash Flow, for the three
fiscal years of each such television station prior to its acquisition by
Chris-Craft, exceeding $10 million, or disposes of a television station having
mean TV Broadcast Cash Flow for the three fiscal years prior to its disposition
by Chris-Craft exceeding $5 million. TV Broadcast Cash Flow for purposes of the
bonus calculation means operating income plus depreciation and amortization of
goodwill and programming contracts, minus payments on programming contracts.The
Board of Directors will consider adjusting the bonus calculation and formulae if
and at such time as Chris-Craft shall own 10 or more television stations or Mr.
Thompson shall have chief operating responsibility for a business owned by
Chris-Craft that derives revenues exceeding $25,000,000 other than from
television broadcasting. Mr. Thompson's bonus for 1993 would have been $712,000,
if it had been computed under the foregoing formula. The Board of Directors has
unanimously approved Mr. Thompson's 1994 employment agreement, and the
Compensation Committee has adopted and established the bonus provisions as a
"performance goal" as contemplated by Section 162(m) of the Code.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE BONUS
PROVISIONS OF EACH OF THE 1994 EMPLOYMENT AGREEMENTS.
STOCKHOLDER PROPOSAL
The Sisters of St. Francis of Philadelphia, Our Lady of Angels Convent-Glen
Riddle, Aston Pennsylvania, 19014 have advised Chris-Craft that they will
"submit for consideration and action by the shareholders" a resolution, and that
they are the holder of record of 18,428 shares of Common Stock. The resolution
together with the proponents' statement in support, and the recommendation of
the Board of Directors with respect thereto, is set forth below:
"Our company's Board of Directors includes neither women nor minorities. We
believe that major corporations, aware that employees, customers and
stockholders include a broad diversity in terms of sex and race, should have a
Board that includes persons of diverse racial backgrounds and gender.
"The Office of Federal Contract Compliance mandates that companies must not
discriminate on the basis of race, sex, color, religion, national origin,
disability, or veterans status. Women and minorities comprise over fifty percent
of America's workforce and the U.S. Department of Labor reports their
advancement is oftentimes hindered by artificial barriers -- glass ceilings. Our
company must make a strong and continued commitment to use its available tools
and resources to remove glass ceiling barriers, because it is our responsibility
under the law, and the right thing to do.
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"While racial and gender diversity among the purchasing population and the
workforce has experienced an enormous increase, the Equal Employment Opportunity
Commission reports 97% of senior ranks of corporations are occupied by white
males. We believe our company needs to open up top management and the board to
qualified people of all races and women.
"We believe Boards of Directors of many corporations have benefitted from
the perspectives of well qualified women and minority members. In addition,
increasingly individual and institutional investors are voting their proxies
against boards which are not representative and have no women or minorities. We
believe it is not in our company's best long range interests to keep an all
white male board, excluding women and minorities. It unfortunately gives the
impression of an "exclusive club" closed to any perspectives beyond those in the
inner sanctum.
"Increasingly major corporations are broadening their boards by including
women and minorities. We believe our company should show similar leadership.
"BE IT RESOLVED, that shareholders request:
"1. The nominating committee of the Board in its search for suitable
Board candidates, make a greater effort to search for qualified women and
minority candidates for nomination to the Board of Directors.
"2. Report on our Corporation's efforts to encourage diversified
representation on our Board of Directors.
"3. Issue a statement publicly committing the company to a policy of
board inclusiveness with the CEO's policy program for steps to take and the
timeline expected to move in that direction."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
Chris-Craft does not discriminate on the basis of race, sex, color,
religion, national origin, disability, or veteran status. Chris-Craft's policy
is to comply with all laws, including those applicable to equal opportunity.
Chris-Craft seeks the best qualified individuals for Board positions. The Board
believes that stockholder interests would not be served by changes in the
composition of the Board of Directors according to an arbitrary timetable.
RATIFICATION OF SELECTION OF AUDITORS
The stockholders are to take action upon ratification of the selection of
Price Waterhouse as auditors of Chris-Craft for its fiscal year ending December
31, 1994. Representatives of Price Waterhouse are expected to be present at the
meeting and will have the opportunity to make a statement if they desire to do
so and be available to respond to appropriate questions. Price Waterhouse was
the independent accountant for Chris-Craft for its fiscal year ended December
31, 1993. If the selection of Price Waterhouse is not ratified, or prior to the
next annual meeting of stockholders such firm shall decline to act or otherwise
become incapable of acting, or if its engagement shall be otherwise discontinued
by the Board of Directors, the Board of Directors will appoint other independent
public accountants whose selection for any period subsequent to the next annual
meeting will be presented for stockholder approval at such meeting.
On February 27, 1992, Price Waterhouse was engaged as the principal
accountant for Chris-Craft, BHC and UTV, and Arthur Andersen & Co. ("Arthur
Andersen"), which was the independent accountant for Chris-Craft, BHC and UTV
for the year ended December 31, 1991, was replaced as their independent
accountant, effective on completion of the 1991 audit. Arthur Andersen's reports
on the financial statements of Chris-Craft, BHC and UTV for 1991 did not contain
an adverse opinion or a disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope or accounting principles. The decision to change
accountants was approved by the audit committees of each of Chris-Craft, BHC and
UTV. Since January 1, 1991 there were no disagreements between Chris-Craft, BHC
or UTV and Arthur Andersen on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to Arthur Andersen's satisfaction, would have
caused Arthur Andersen to make reference to the subject matter of the
disagreements in connection with any such report.
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SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals intended for inclusion in the proxy statement for the
next annual meeting must be received by Chris-Craft at its principal executive
offices by November 30, 1994.
GENERAL
The Board of Directors did not know, a reasonable time before the
commencement of the solicitation, of any business constituting a proper subject
for action by the stockholders to be presented to the meeting other than as set
forth in this Proxy Statement. However, if any other matter should properly come
before the meeting, the persons named in the enclosed form of proxy intend to
vote such proxy in accordance with their best judgment.
CHRIS-CRAFT'S 1993 FORM 10-K ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION, EXCLUSIVE OF EXHIBITS, WILL BE MAILED WITHOUT CHARGE TO ANY
STOCKHOLDER ENTITLED TO VOTE AT THE MEETING, UPON WRITTEN REQUEST TO: BRIAN C.
KELLY, SECRETARY, CHRIS-CRAFT INDUSTRIES, INC., 767 FIFTH AVENUE, NEW YORK, NEW
YORK 10153.
Chris-Craft will bear the entire cost of preparing, assembling, printing and
mailing this Proxy Statement, the accompanying proxy and any additional material
which may be furnished to stockholders. Solicitation material will be furnished
to brokers, fiduciaries and other custodians to forward to beneficial owners of
stock held in their names, and Chris-Craft will reimburse these organizations in
accordance with the New York Stock Exchange schedule of charges for the cost of
forwarding proxy material to such beneficial owners. The solicitation of proxies
will also be made by the use of the mails and through direct communication with
certain stockholders or their representatives by officers, directors or
employees of Chris-Craft, who will receive no additional compensation therefor.
Chris-Craft has engaged Georgeson & Company Inc. to solicit proxies and
distribute materials to brokerage houses, banks, custodians and other nominee
holders and will pay approximately $7,500 for these services, in addition to
reimbursement of certain expenses.
By Order of the Board of Directors,
BRIAN C. KELLY, SECRETARY
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EXHIBIT A
CHRIS-CRAFT INDUSTRIES, INC.
1994 MANAGEMENT INCENTIVE PLAN
1. PURPOSE OF THE 1994 PLAN.
Chris-Craft Industries, Inc. (the "Corporation") desires to attract and
retain the best available talent and to encourage the highest level of
performance. The 1994 Management Incentive Plan (the "1994 Plan") is intended to
contribute significantly to the attainment of these objectives, by affording
eligible employees of the Corporation or any of its parent or subsidiary
corporations the opportunity to acquire and to increase their proprietary
interests in the Corporation and by providing incentives for such employees to
put forth maximum efforts for the success of the business.
2. SCOPE AND DURATION OF THE 1994 PLAN.
Under the 1994 Plan, options ("Options") to purchase Common Stock of the
Corporation, par value $.50 per share ("Common Stock"), and stock appreciation
rights ("Rights"), may be granted. Rights may be granted only in association
with Options. Options may, at the time of grant, also be designated as incentive
stock options ("ISOs") with the attendant tax benefits provided under Section
422 of the Internal Revenue Code of 1986 (the "Code"). The aggregate fair market
value (determined at the time an ISO is granted) of the Common Stock covered by
ISOs exercisable for the first time by an employee during any calendar year
(under all plans of the Corporation and any parent corporation or any of its
subsidiary corporations), may not exceed $100,000.
The aggregate number of shares of Common Stock reserved for grant from time
to time under the 1994 Plan is 2,500,000, which shares may be authorized but
unissued shares or shares which shall have been or which may be reacquired by
the Corporation. The aggregate number of shares which may be subject to Options
granted to any one employee within any period of three years under the 1994 Plan
shall not exceed 500,000 shares. Such aggregate numbers shall be subject to
adjustment as provided in paragraph 12. If an Option shall expire or terminate
for any reason without having been exercised in full or surrendered in full in
connection with the exercise of a Right, the shares represented by the portion
thereof not so exercised or surrendered shall (unless the 1994 Plan shall have
been terminated) become available for other Options to be granted under the 1994
Plan. The 1994 Plan shall become effective upon approval by the stockholders of
the Corporation as provided in paragraph 13. No Option or Right shall be granted
under the 1994 Plan after February 23, 2004. The grant of an Option or a Right
is sometimes referred to herein as an award thereof.
3. ADMINISTRATION OF THE 1994 PLAN.
The Board of Directors shall appoint a 1994 Plan Committee (the "Committee")
to administer the 1994 Plan, except as otherwise specifically provided in the
1994 Plan. The Committee shall consist of not less than two members of the Board
of Directors, each of whom shall be a disinterested person (as hereinafter
defined). The Board of Directors may from time to time appoint members of the
Committee in substitution for or in addition to members previously appointed and
may fill vacancies, however caused, in the Committee.
The Committee shall have plenary authority in its discretion, subject to and
not inconsistent with the express provisions of the 1994 Plan, to direct the
grant of Options, to determine the number of shares and purchase price of the
Common Stock covered by each Option, the employees to whom, and the time or
times at which, Options shall be granted and may be exercised; to designate
Options as ISOs; to direct the grant of Rights in connection with any Option; to
interpret the 1994 Plan; to prescribe, amend, and rescind rules and regulations
relating to the 1994 Plan, including, without limitation, such rules and
regulations as it shall deem advisable so that transactions involving Options or
Rights may qualify for exemption under such rules and regulations as the
Securities and Exchange Commission may promulgate from time to time exempting
transactions from Section 16 (b) of the Securities Exchange Act of 1934 (the
"Exchange Act"); to determine the terms and provisions of and to cause the
Corporation to enter into, agreements with employees in connection with awards
made under the 1994 Plan ("Agreements"), which Agreements may
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vary from one another as the Committee shall deem appropriate; to amend any such
Agreements from time to time, with the consent of the optionee; and to make all
other determinations it may deem necessary or advisable for the administration
of the 1994 Plan. Any interpretation or determination made by the Committee
pursuant to the foregoing shall be conclusive and binding upon any person having
or claiming any interest under the 1994 Plan.
The Committee shall hold its meetings at such times and places as it shall
deem advisable. Members may participate in meetings through conference telephone
or similar arrangements. A majority of the members of the Committee shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by all of the members shall be fully as effective as if it had been made
by a majority vote at a meeting duly called and held. The Committee may appoint
a secretary, shall keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it shall deem advisable. The
Committee may delegate to one or more of its members or to one or more agents
such administrative duties as the Committee may deem advisable and may employ
(or authorize any person to whom it has delegated duties as aforesaid to employ)
one or more persons to render advice with respect to any responsibility the
Committee (or such person) may have under the 1994 Plan.
4. ELIGIBILITY: FACTORS TO BE CONSIDERED IN GRANTING AWARDS.
Options may be granted only to employees (including officers and directors
who are employees) of the Corporation or of any parent or subsidiary corporation
who shall have been so employed for a period of at least one year at the end of
the fiscal year ended immediately prior to the grant; provided that the Board of
Directors may, in any specific case, authorize an award to an employee who shall
not have served for such a period. In determining the persons to whom awards
shall be made and the number of shares to be covered by each option, the
Committee shall take into account the duties of the respective persons, their
present and potential contributions to the success of the Corporation or any
parent or subsidiary corporation, the anticipated number of years of effective
service remaining, and such other factors as the Committee, in its discretion,
shall deem relevant in connection with accomplishing the purposes of the 1994
Plan. No person shall be eligible for an Option grant if he shall have filed
with the Secretary of the Corporation an instrument waiving such eligibility;
provided that any such waiver may be revoked by filing with the Secretary of the
Corporation an instrument of revocation, which revocation will be deemed
effective upon such filing. Subject to the provisions of paragraph 2, more than
one award under the 1994 Plan may be made to any employee.
5. OPTION PRICE.
The purchase price per share of the Common Stock covered by each Option
shall be established by the Committee, but in no event shall it be less than the
fair market value (as hereinafter defined) of a share of Common Stock on the
date the Option is granted.
In the case of an individual who at the time the Option is granted owns
stock possessing more than 10% of the total combined voting power of all classes
of the stock of the Corporation or of its parent or a subsidiary corporation (a
"10% Holder"), the purchase price of the Common Stock covered by any ISO shall
in no event be less than 110% of the fair market value of the Common Stock on
the date the ISO is granted.
6. TERM OF OPTIONS.
The term of each Option shall be fixed by the Committee, but in no event
shall it be more than 10 years from the date of grant, subject to earlier
termination as provided in paragraphs 10 and 11. The term of an ISO granted to a
10% Holder shall be no more than 5 years from the date of grant. The term of any
Option may be extended from time to time by the Committee, provided that no such
extension shall extend the term beyond 10 years from the date of grant.
7. EXERCISE OF OPTIONS.
(a) Subject to the provisions of the 1994 Plan, an Option granted under the
1994 Plan shall become fully exercisable on the third anniversary of the date of
grant. Prior thereto, each Option shall become exercisable as to one-third of
the number of shares originally covered thereby upon the first anniversary of
the date of the grant of the Option; and as to an additional one-third upon the
second anniversary of the date
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of the grant of the Option. Such installments shall be cumulative.
Notwithstanding the foregoing, at any time subsequent to the first anniversary
of the date of grant, the Committee may declare any Option immediately and fully
exercisable, and Options shall automatically become fully exercisable upon the
normal retirement or death or permanent and total disability of an optionee as
provided in paragraphs 10 and 11. Except as provided in paragraphs 10 and 11, no
Option may be exercised unless the optionee has remained an employee of the
Corporation or any parent or subsidiary corporation (or any combination thereof)
continuously from the date of grant.
(b) An Option may be exercised as to any or all full shares as to which the
Option is then exercisable; provided that an Option may not be exercised as to
fewer than 100 shares (or less than all the shares as to which the Option is
then exercisable, if fewer than 100 shares).
(c) The purchase price of the shares as to which an Option is exercised
shall be paid in full in cash at the time of exercise; provided that, if
permitted by the related Agreement or by the Committee, the purchase price may
be paid, in whole or in part, by surrender or delivery to the Corporation of
securities of the Corporation having a fair market value on the date of exercise
equal to the portion of the purchase price being so paid. In addition, the
optionee shall, upon notification of the amount due and prior to or concurrently
with delivery to the optionee of a certificate representing such shares, pay
promptly any amount necessary to satisfy applicable federal, state or local tax
requirements.
(d) No person shall have the rights of a stockholder with respect to shares
covered by an Option until such person becomes the holder of record of such
shares.
8. AWARD AND EXERCISE OF RIGHTS.
(a) A Right may be awarded by the Committee in association with any Option
either at the time such Option is granted or at any time prior to the exercise
in full, termination, or expiration of such Option. Each such Right shall be
subject to the same terms and conditions as the related Option and shall be
exercisable only to the extent such Option is exercisable, and the Right Value,
as hereinafter defined, is a positive amount.
(b) A Right shall entitle the optionee to surrender to the Corporation
unexercised the related Option (or any portion or portions thereof which the
optionee from time to time shall determine to surrender for this purpose) and to
receive in exchange therefor, subject to the provisions of the 1994 Plan and
such rules and regulations as from time to time may be established by the
Committee, a payment having an aggregate value equal to the product of (A) the
Right Value of one share, as hereinafter defined, and (B) the number of shares
covered by the Option, or portion thereof that is surrendered. For purposes of
the 1994 Plan, the Right Value of one share shall be the greater of (x) the
excess of (i) the fair market value of one share on the date on which the Right
is exercised, over (ii) the option price per share of the surrendered Option, or
(y) the excess of (i) the book value of one share as of the last day of the
fiscal quarter of the Corporation ended immediately prior to the date on which
the Right is exercised, over (ii) the book value of one share as of the last day
of the fiscal quarter of the Corporation ended immediately prior to the date of
the grant of the surrendered Option, except that if the surrendered Option is an
ISO, the Right Value shall be determined only pursuant to (x). For purposes of
the 1994 Plan, the book value of one share shall be determined by dividing the
Shareholders' Investment as of the relevant date (after eliminating such portion
of such Shareholders' Investment as of the Committee shall determine to be
applicable to securities of the Corporation other than Common Stock) by the
number of shares issued and outstanding at such date. The Committee may also
make such adjustments to Shareholders Investment as the Committee, in its sole
discretion, shall consider appropriate, in view of the purpose of the 1994 Plan,
to reflect any unusual or non-recurring transaction or any extraordinary income
or expense item. The date on which the Committee or the Corporation shall
receive notice from the optionee of the exercise of a Right shall be considered
the date on which the Right is exercised.
Upon exercise of a Right, an optionee shall indicate to the Committee what
portion of the payment he desires to receive in cash and what portion in shares
of Common Stock of the Corporation; provided, that the Committee shall have sole
discretion to determine in any case or cases that payment will be made in the
form
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<PAGE>
of all cash, all shares, or any combination thereof. If the optionee is to
receive a portion of such payment in shares, the number of shares shall be
determined by dividing the amount of such portion by the fair market value of
one share on the date on which the Right is exercised. The number of shares that
may be received pursuant to the exercise of a Right may not exceed the number of
shares covered by the related Option, or portion thereof, that is surrendered.
No fractional shares will be issued, but instead cash will be paid for any such
fractional share.
No payment will be required from the optionee upon exercise of a Right,
except that the optionee shall, upon notification of the amount due and prior to
or concurrently with delivery to the optionee of cash or a certificate
representing shares, pay promptly any amount necessary to satisfy applicable
federal, state or local tax requirements, and the Corporation shall have the
right to deduct from any payment any taxes required by law to be withheld by the
Corporation with respect to such payment.
(c) Upon exercise of a Right, the number of shares subject to exercise under
the related Option shall be reduced automatically by the number of shares
represented by the Option, or portion thereof, that is surrendered. Shares
subject to Options, or portions thereof, that are surrendered in connection with
the exercise of Rights shall not be available for subsequent Option grants under
the 1994 Plan.
(d) Whether payments upon exercise of Rights are made in cash, shares or a
combination thereof, the Committee shall have discretion as to the timing of the
payments, including whether payment shall be made in a lump sum or in
installments, but payment may not be deferred beyond the first business day of
the fifteenth calendar month next following the month of exercise of a Right.
Deferred payments may bear interest at a rate determined by the Committee. The
Committee may make such other further provisions and adopt such rules and
regulations as it shall deem appropriate, not inconsistent with the 1994 Plan,
related to the timing of the exercise of a Right and the determination of the
form and timing of payment to the optionee upon such exercise.
9. NON-TRANSFERABILITY OF OPTIONS AND RIGHTS.
Options and Rights granted under the 1994 Plan shall not be transferable,
other than by will or the laws of descent and distribution, and Options and
Rights may be exercised, during the lifetime of the optionee, only by the
optionee, or by his guardian or legal representative.
10. TERMINATION OF RELATIONSHIP TO THE CORPORATION.
(a) In the event that any optionee shall cease to be an employee of the
Corporation and of any parent or subsidiary corporation, other than by reason of
death or permanent and total disability, any Option held by such optionee may be
exercised (to the extent that the optionee was entitled to exercise such Option
at the termination of such employment) at any time within three months after
such termination, but not later than the date on which the Option, by its terms,
otherwise would have expired; provided, however, that any Option held by an
employee whose employment shall be terminated either (A) by the Corporation for
cause or (B) voluntarily by the employee and without the consent of the
Corporation or any parent or subsidiary corporation (which consent shall be
presumed in the case of normal retirement), shall, to the extent not theretofore
exercised, forthwith terminate. Notwithstanding the provisions of paragraph 7
specifying the installments in which an Option shall be exercisable, upon an
optionee's actual retirement at any time subsequent to the first anniversary of
the grant of the Option, the Option shall be exercisable (within the time
periods set forth in this paragraph 10(a)) as to all shares of Common Stock
remaining subject to the Option; provided, however, such acceleration shall not
be applicable if the optionee retires prior to his normal retirement date and
without the consent of the Corporation.
(b) Awards made under the 1994 Plan shall not be affected by any change of
duties or position so long as the optionee continues to be an employee of the
Corporation, or any parent or subsidiary corporation.
(c) Any Agreement may contain such provisions as the Committee shall approve
with reference to the determination of the date employment terminates for
purposes of the 1994 Plan and the effect of leaves of absence, which provisions
may vary from one another. Without limiting the foregoing, any Agreement may
provide, for purposes of paragraphs 7(a), 10 and 11, that, with respect to the
award of non-ISO Options to which the Agreement relates, the optionee's
employment shall be deemed not to terminate upon, and such
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<PAGE>
optionee shall be deemed to continue to be employed until, the termination of
the optionee's engagement as a consultant, if such engagement commences within
three months after the optionee ceases to be an employee.
(d) Nothing in the 1994 Plan or in any award made pursuant to the 1994 Plan
shall confer upon any employee any right to continue in the employ of the
Corporation or any parent or subsidiary corporation or affect the right of the
Corporation or such parent or subsidiary corporation to terminate his employment
at any time.
11. DEATH OR DISABILITY OF OPTIONEE.
If an optionee shall die or become permanently and totally disabled within
the meaning of Section 22(e)(3) of the Code, while he is employed by the
Corporation or any parent or any subsidiary corporation, or within three months
after the termination of his employment (other than termination for cause or
voluntarily on the part of the optionee and without the consent of the
Corporation or such parent or subsidiary corporation), such Option may be
exercised as set forth herein by the guardian or legal representative of the
optionee, or by the optionee, at any time within nine months after the earlier
of the death or commencement of permanent and total disability of the optionee,
but not later than the date on which the Option, by its terms, otherwise would
have expired. Notwithstanding the provisions of paragraph 7 specifying the
installments in which an Option shall be exercisable, upon the optionee's death
or commencement of permanent and total disability at any time subsequent to the
first anniversary of the grant of the Option, the Option shall be exercisable
(within the time periods set forth in this paragraph 11) as to all shares of
Common Stock remaining subject to the Option.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
Notwithstanding any other provision of the 1994 Plan, each Agreement may
contain such provisions as the Committee shall determine to be appropriate for
the adjustment of the number and class of shares covered by such Option, the
exercise prices and the number of shares as to which Options shall be
exercisable at any time, and appropriate changes in Rights related to such
Options, in the event of changes in the outstanding Common Stock of the
Corporation by reason of stock dividends, split-ups, reverse splits,
recapitalizations, mergers, consolidations, combinations or exchanges of shares,
spin-offs, reorganizations, liquidations and the like. In the event of any such
change in the outstanding Common Stock of the Corporation, the aggregate number
of shares as to which Options may be granted under the 1994 Plan and to any
employee shall be appropriately adjusted by the Committee, whose determination
shall be conclusive. No adjustment shall be made in the requirements set forth
in paragraph 7(b) with respect to the minimum number of shares that must be
purchased upon any exercise.
In the event that a (i) dissolution, liquidation, merger or consolidation of
the Corporation, (ii) sale of all or substantially all of the assets of the
Corporation or sale of substantially all of the assets or a majority of the
stock of a subsidiary of which the optionee is then an employee, or (iii) change
in control of the Corporation has occurred or is about to occur, then, if the
Committee shall so determine, each Option under the 1994 Plan, if such event
shall occur with respect to the Corporation, or each Option held by an employee
of a subsidiary corporation respecting which such event shall occur, shall be
terminated upon the occurrence of such event, and the Corporation shall pay the
optionee in lieu thereof an amount equal to (i) the Right Value of one share at
the close of business on the day next preceding occurrence of such event,
multiplied by (ii) the full number of shares subject to the Option, without
regard to whether any installment is then otherwise exercisable.
For purposes of the 1994 Plan, the term "change in control" means an event
or series of events that would be required to be described as a change in
control of the Corporation in a proxy or information statement pursuant to
Schedule 14A or 14C promulgated under the Act. The determination whether and
when a change in control has occurred or is about to occur shall be made by vote
of a majority of the persons who shall have constituted the Committee
immediately prior to the occurrence of the event or series of events
constituting such change in control.
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<PAGE>
13. EFFECTIVENESS OF THE 1994 PLAN.
The 1994 Plan shall become effective upon the approval thereof by a majority
of the votes properly cast thereon at a meeting of stockholders of the
Corporation duly called and held. The Committee thereafter may, in its
discretion, make awards under the 1994 Plan, the exercise of which shall be
expressly subject to the conditions that, at the time of exercise, (i) the
shares of Common Stock reserved for purposes of the 1994 Plan shall be duly
listed, upon official notice of issuance, upon the New York Stock Exchange, if
shares of Common Stock are then so listed, and (ii) a Registration Statement
under the Securities Act of 1933 (the "Securities Act") with respect to such
shares shall be effective, or other provision satisfactory to the Committee
shall have been made so that such shares may be issued without violation of the
Securities Act.
14. TERMINATION AND AMENDMENT OF THE 1994 PLAN.
The Board of Directors of the Corporation may, at any time prior to the
termination of the 1994 Plan, suspend, terminate, modify or amend the 1994 Plan;
provided that any increase in the aggregate number of shares reserved for
issuance upon the exercise of Options, any increase in the maximum number of
shares for which Options may be granted to any employee during any period, any
reduction in the purchase price of the Common Stock covered by any Option, any
extension of the period during which Options may be granted or increase beyond
ten years in the maximum term of Options, any change in the formula for
determining the amount payable upon exercise of a Right, or any material
modification in the eligibility requirements for participation in the 1994 Plan,
shall be subject to the approval of stockholders in the manner provided in
paragraph 13, except that any such increase, reduction, or change that may
result from any adjustment authorized by paragraph 12 or any modification or
amendment based on any amendment of the Exchange Act, the Code or change in any
regulation promulgated thereunder (to the extent permitted by the Exchange Act,
the Code, the Securities and Exchange Commission or the Internal Revenue
Service) shall not require such approval. No suspension, termination,
modification or amendment of the 1994 Plan may, without the consent of the
holder of an outstanding option, adversely affect the rights of such holder.
15. FINANCING FOR INVESTMENT IN STOCK OF THE CORPORATION.
Until February 23, 2004, the Board of Directors may cause the Corporation or
any subsidiary to give or arrange for financing, including direct loans, secured
or unsecured, or guaranties of loans by banks, which guaranties may be secured
in whole or in part by assets of the Corporation or any subsidiary, to any
employee of the Corporation or any parent corporation or any subsidiary
corporation who shall have been so employed for a period of at least two years
at the end of the fiscal year ended immediately prior to the arranging of such
financing; but the Board of Directors may, in any specific case, authorize
financing for an employee who shall not have served for such period. Such
financing shall be for the purpose of providing funds for any one or more of:
the purchase by the employee of shares pursuant to the exercise of an Option;
the payment of taxes incurred in connection with such exercise; or otherwise
purchasing or carrying a stock investment in the Corporation. The maximum amount
of financing given and liability incurred by the Corporation and its
subsidiaries in connection with all such financing at any time outstanding shall
not exceed $5,000,000. Such financing shall bear interest at a rate not less
than the lowest rate that avoids imputation of interest at a higher rate under
the Code. Each recipient of such financing shall be personally liable for the
full amount of all financing extended to him. Such financing shall be based upon
the judgment of the Board of Directors that such financing may reasonably be
expected to benefit the Corporation, and that such financing as may be granted
shall be consistent with the Certificate of Incorporation and By-Laws of the
Corporation or such subsidiary, and applicable laws.
If any such financing is authorized by the Board of Directors, such
financing shall be administered by a special committee of the Board to be
denominated the Stock Investment Financing Committee. Such Committee shall
consist of not less than two directors, each of whom shall be a disinterested
person.
16. SEVERABILITY.
In the event that any one or more provisions of the 1994 Plan or any
Agreement, or any action taken pursuant to the 1994 Plan or such Agreement,
should, for any reason, be unenforceable or invalid in any respect under the
laws of the United States, any state of the United States or any other
government, such
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<PAGE>
unenforceability or invalidity shall not affect any other provision of the 1994
Plan or of such or any other Agreement, but in such particular jurisdiction and
instance the 1994 Plan, and the affected Agreement shall be construed as if such
unenforceable or invalid provision had not been contained therein or if the
action in question had not been taken thereunder.
17. EFFECT ON PRIOR OPTION PLANS.
The adoption of the 1994 Plan shall have no effect on outstanding options
previously granted by the Corporation.
18. CERTAIN DEFINITIONS.
(a) The term "parent corporation" and "subsidiary corporation" shall have
the meanings, with respect to the Corporation, set forth in Sections 425(e) and
(f) of the Code, respectively.
(b) The term "disinterested person" shall mean a director who is not, during
the one year prior to service as an administrator of the 1994 Plan, or during
such service, granted or awarded equity securities pursuant to the 1994 Plan or
any other plan of the Corporation or any of its affiliates, except that: (A)
participation in a formula plan meeting the conditions in paragraph (c)(2)(ii)
of Rule 16b-3 promulgated under the Securities Exchange Act of 1934 ("Rule
16b-3") shall not disqualify a director from being a disinterested person, and
(B) participation in an ongoing securities acquisition plan meeting the
conditions in paragraph (d)(2)(i) of Rule 16b-3 shall not disqualify a director
from being a disinterested person.
(c) The term "fair market value" of a share of Common Stock shall mean as of
the date on which such fair market value is to be determined the closing price
of a share of Common Stock as reported in The Wall Street Journal (or a
publication deemed equivalent to The Wall Street Journal for such purpose by the
Committee) for the national securities exchanges and other securities markets
which at the time are included in the stock price quotations of such
publication. In the event that the Committee shall determine such stock price
quotation is not representative of fair market value, the Committee may
determine fair market value in such a manner as it shall deem appropriate under
the circumstances.
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<PAGE>
EXHIBIT B
CHRIS-CRAFT INDUSTRIES, INC.
1994 DIRECTOR STOCK OPTION PLAN
1. PURPOSE
The purpose of this 1994 Director Stock Option Plan (the "Plan") of
Chris-Craft Industries, Inc. (the "Company"), is to encourage ownership in the
Company by outside directors of the Company whose services are considered
essential to the Company's continued progress and thus to provide them with a
further incentive to continue to serve as directors of the Company. The Plan is
also intended to assist the Company through utilization of the incentives
provided by the Plan to attract and retain experienced and qualified candidates
to fill vacancies in the Board of Directors which may occur in the future.
2. ADMINISTRATION
The Plan will be administered by the Board of Directors (the "Board") of the
Company. Subject to the express provisions of the Plan, the Board will have
complete authority to interpret the Plan; to prescribe, amend, and rescind rules
and regulations relating to it; to determine the terms and provisions of the
respective option agreements (which need not be identical); and to make all
other determinations necessary or advisable for the administration of the Plan.
The Board's determinations on the matters referred to in this Section 2 will be
conclusive.
3. PARTICIPATION IN THE PLAN
Persons who are now or shall become incumbent directors of the Company who
are not at the respective times employees of the Company or any subsidiary of
the Company shall be eligible to participate in the Plan (an "Eligible
Director"). A director of the Company shall not be deemed to be an employee of
the Company solely by reason of the existence of a consulting contract or
arrangement between such director and the Company or any subsidiary thereof
pursuant to which the director agrees to provide consulting services to the
Company or its subsidiaries on a regular or occasional basis for a stated
consideration.
4. STOCK SUBJECT TO THE PLAN
The stock subject to the Plan shall consist of 300,000 shares of Common
Stock, $.50 par value, of the Company ("Common Stock"), as the same may be
adjusted pursuant to Section 9. Subject to Section 9, options for not more than
25,000 shares may be granted to an Eligible Director pursuant to the Plan.
Shares issuable on exercise of options granted under this Plan may, as the Board
shall from time to time determine, be either authorized and unissued shares of
Common Stock or issued shares of Common Stock that have been reacquired by the
Company. If an option granted under the Plan shall expire or terminate for any
reason without having been exercised in full, the shares represented by the
portion thereof not so exercised shall (unless the Plan shall have been
terminated) become available for other options to be granted under the Plan.
5. STOCK OPTIONS
Each option granted under this Plan shall be evidenced by a written
agreement in such form as the Board shall from time to time approve, which
agreements shall comply with and be subject to the following terms and
conditions:
A. CURRENT SERVICE OPTIONS. Commencing in 1994, immediately following
each annual meeting of stockholders of the Company, each director who is on
that date an Eligible Director shall automatically be granted under the Plan
an option to purchase 5,000 shares of Common Stock.
B. OPTION PRICE PER SHARE. All options granted hereunder shall be
exercisable at a price per share equal to the fair market value (as
hereinafter defined) of a share of Common Stock on the date of the grant.
For purposes of the Plan, the term "fair market value" of a share of Common
Stock shall mean, as of the date on which such fair market value is to be
determined, the closing price of a share of Common Stock as reported in The
Wall Street Journal (or a publication or reporting service deemed
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<PAGE>
equivalent to The Wall Street Journal for such purpose by the Board) as
reported for the national securities exchanges and other securities markets
which at the time are included in the stock price quotations of such
publication. In the event that the Board shall determine such stock price
quotation is not representative of fair market value, the Board may
determine fair market value in such a manner as it shall deem appropriate
under the circumstances.
C. OPTIONS NONTRANSFERABLE. Each option granted under the Plan by its
terms shall not be transferable by the optionee otherwise than by will, or
by the laws of descent and distribution, and shall be exercisable during the
lifetime of the optionee only by him. No option or interest therein may be
transferred, assigned, pledged, or hypothecated by the optionee during his
lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment, or similar process.
D. EXPIRATION OF OPTIONS. No option shall be exercisable after the
expiration of the earliest of (i) five years from the date when such option
was granted, (ii) three months following (x) the retirement or resignation
of the optionee as a director of the Company or (y) the failure of the
optionee to be re-elected a director of the Company, or (iii) nine months
following the total and permanent disability or death of the optionee.
E. EXERCISE OF OPTIONS. Options may be exercised at any time by notice
to the Company, accompanied by payment of the full purchase price for the
Common Stock as to which they are exercised, as well as any federal, state,
and/or local income tax withholding required in connection with the
exercise. Such purchase price shall be paid in full upon any exercise of an
option (i) by cash, including a personal check payable to the order of the
Company or (ii) by delivering at fair market value, valued as of the date of
delivery, securities issued by the Company already owned by the optionee, or
(iii) by any combination of (i) and (ii).
F. NONSTATUTORY OPTIONS. No option granted under the Plan shall
constitute an "incentive stock option" as that term is defined in the
Internal Revenue Code of 1986.
6. MODIFICATION, EXTENSION, AND RENEWAL OF OPTIONS
The Board shall have the power to modify, extend or renew outstanding
options and authorize the grant of new options in substitution therefor,
provided that such power may not be exercised in a manner which would (i) alter
or impair any rights or obligations under any option previously granted without
the written consent of the optionee or (ii) adversely affect the qualification
of the Plan or any other stock-related plan of the Company under Rule 16b-3
adopted pursuant to the Securities Exchange Act of 1934, or any successor
provision.
7. ASSIGNMENT
The rights and benefits under this Plan may not be assigned and any
attempted assignment of such rights and benefits shall be null and void.
8. LIMITATION OF RIGHTS
A. NO RIGHT TO CONTINUE AS A DIRECTOR. Neither the Plan, nor the granting
of an option or any other action taken pursuant to the Plan, shall constitute or
be evidence of any agreement or understanding, express or implied, that the
Company will retain a director for any period of time, or at any particular rate
of compensation.
B. NO STOCKHOLDERS' RIGHTS FOR OPTIONEES. An optionee or his
representative shall have no rights as a stockholder with respect to the shares
covered by his option until the date of the issuance to him or his
representative of a stock certificate therefor.
9. CHANGES IN PRESENT COMMON STOCK
In the event of any merger, consolidation, reorganization, recapitalization,
stock dividend, stock split or other change in the corporate structure or
capitalization affecting the Company's present Common Stock,
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<PAGE>
appropriate adjustment shall be made by the Board in the number and kind of
shares which are or may become subject to options granted or to be granted
hereunder and the per share option price to be paid therefor.
10. EFFECTIVE DATE AND DURATION OF THE PLAN
If adopted by the stockholders at their 1994 annual meeting, this Plan shall
become effective as of February 24, 1994, the date of its adoption by the Board
and shall terminate on February 23, 2004 (unless earlier discontinued by the
Board), but such termination shall not affect the rights of the holder of any
option outstanding on such date of termination.
11. AMENDMENT OF THE PLAN
The Board may suspend or discontinue the Plan or revise or amend it in any
respect whatsoever; provided, however, that without approval of the stockholders
no revision or amendment shall change the number of shares subject to the Plan
(except as provided in Section 9), change the definition of the class of
directors eligible to receive options, or materially increase the benefits
accruing to participants under the Plan. Notwithstanding the preceding sentence,
none of Sections 3, 5.A, or 5.B shall be amended more than once every six
months, other than to comport with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, federal securities laws or the rules
thereunder.
12. COMPLIANCE WITH LAW, ETC.
Notwithstanding any other provision of this Plan or agreements made pursuant
hereto, the Company shall not be required to issue or deliver any certificate or
certificates for shares of Common Stock under this Plan prior to fulfillment of
all of the following conditions:
(i) Effectiveness of any registration or other qualification of such
shares or the Company under any state or federal law or regulation which the
Board shall, in its absolute discretion or upon the advice of counsel, deem
necessary or advisable; and
(ii) Grant of any other consent, approval or permit from any state or
federal governmental agency or securities exchange which the Board shall, in
its absolute discretion or upon the advice of counsel, deem necessary or
advisable.
13. NOTICE
Any notice to the Company required by this Plan shall be in writing
addressed to the Secretary of the Company at its principal office, and shall be
deemed delivered only when it is received by the Secretary.
14. GOVERNING LAW
This Plan and all determinations made and actions taken pursuant hereto
shall be governed by the law of the State of New York and construed accordingly.
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<PAGE>
CHRIS-CRAFT INDUSTRIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P
R
O
X
Y
LAWRENCE R. BARNETT, JAMES J. ROCHLIS and BRIAN C. KELLY, and each of them,
each with full power of substitution, hereby are authorized to vote, by a
majority of those or their substitutes present and acting at the meeting or,
if only one shall be present and acting, then that one, all of the shares of
Chris-Craft Industries, Inc. that the undersigned would be entitled, if
personally present, to vote at its 1994 annual meeting of stockholders and at
any adjournment thereof, upon such business as may properly come before the
meeting, including the items set forth on the reverse side and in the notice
of annual meeting and the proxy statement.
ELECTION OF DIRECTORS, NOMINEES:
HOWARD ARVEY, LAWRENCE R. BARNETT, JEANE J. KIRKPATRICK, JAMES J. ROCHLIS AND
JOHN C. SIEGEL
PLEASE COMPLETE, DATE AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY.
See Reverse side
<PAGE>
X
0287
PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3,
4(A), 4(B), AND 6 AND AGAINST PROPOSAL 5. THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR PROPOSALS 1, 2, 3, 4(A), 4(B), AND 6 AND AGAINST PROPOSAL 5.
1. Election of Directors (see other side)
FOR AUTHORITY WITHHELD
ALL AS TO ALL
NOMINEES NOMINEES
For, except authority withheld as to the following
nominee(s):______________________________________
FOR AGAINST ABSTAIN
2. Adoption of 1994 Management Incentive Plan
3. Adoption of 1994 Director Stock Option Plan
FOR AGAINST ABSTAIN
4(a). Approval of performance based executive compensation for chief
executive officer.
4(b). Approval of performance based executive compensation for executive vice
president.
5. Stockholder's proposal relating to inclusion of women and minorities on the
Board of Directors.
6. Selection of Price Waterhouse as auditors.
Shareholder name and address
Note: Please sign exactly as your name appears hereon. If the named holder is
a corporation, partnership, or other association, please sign its name and add
your name and title. When signing as attorney, executor, administrator, trustee
or guardian, please also give your full title. If shares are held jointly, EACH
holder should sign.
___________________________________________
___________________________________________
SIGNATURE(S) DATE
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made as of January 1, 1994 between CHRIS-CRAFT
INDUSTRIES, INC., a Delaware corporation ("Chris-Craft"), and EVAN C
THOMPSON (the "Executive").
This Agreement supersedes the Agreement made as of October 1, 1989
between Chris-Craft and the Executive.
The Executive is now, and for many years has been, Executive Vice
President and President of the Television Division of Chris-Craft.
Chris-Craft wishes to secure the continued services of the Executive as its
Executive Vice President and President of its Television Division for an
additional extended period. In addition, because of the position the
Executive holds with Chris-Craft and the position that he will hold during the
term of his full-time employment under this Agreement, Chris-Craft wishes to
secure the further services of the Executive as a consultant to Chris-Craft,
and wishes to insure that the Executive will refrain from competing with
Chris-Craft, after the termination of his full-time employment.
In consideration of the covenants and agreements herein contained,
the parties agree as follows:
1. EMPLOYMENT; TERM
1.1 Chris-Craft shall continue to employ the Executive,
and the Executive shall continue to serve, as
<PAGE>
Executive Vice President and President, Television Division of Chris-Craft
during the Employment Term (as defined in Section 1.2).
1.2 The term of the Executive's employment under Section
1.1 of this Agreement (the "Employment Term") shall commence on January 1,
1994 and end on December 31, 1998, unless extended as provided in this Section
1.2 or Section 8 or sooner terminated pursuant to the provisions of Section 9
or Section 10. On each of December 31, 1996 and December 31, 1997, the
Employment Term shall be automatically extended for one additional year (so
that, on each such December 31, the Employment Term shall have three years to
run) without further action by the parties, unless Executive shall have served
written notice upon Chris-Craft prior to December 31, 1996, or prior to
December 31, 1997, as the case may be, that such extension shall not take
place. On December 31, 1998, the Employment Term shall be automatically
extended for one additional year without further action by the parties, unless
one of the parties shall have served written notice upon the other party prior
to October 1, 1998 that such extension shall not take place. If a notice that
an extension shall not take place is served, the Employment Term shall not,
thereafter, be extended.
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<PAGE>
2. DUTIES AND AUTHORITY.
2.1 During the Employment Term, the Executive shall devote
his full business time and energies to the business and affairs of Chris-Craft
and shall not accept other employment or permit such personal business
interests as he may have to interfere with the performance of his duties
hereunder. Executive's services for Chris-Craft shall include all executive
services and duties commensurate with his position at Chris-Craft that may be
requested of him for or on behalf of any television broadcasting or
programming entity owned or operated by Chris-Craft or any affiliate of
Chris-Craft ("Affiliate"), as defined in Rule 12b-2 of the Securities Exchange
Act of 1934 (the "Exchange Act"). The Executive agrees, during the Employment
Term, to use his best efforts, skill and abilities to promote Chris-Craft's
interests; to serve as a director and officer of Chris-Craft and any of its
domestic subsidiary corporations if elected by the Board of Directors or
stockholders of Chris-Craft or any such subsidiary corporation; and to perform
such duties (consistent with his status set forth below in this Section 2) as
may be assigned to him by the Chief Executive Officer or Board of Directors of
Chris-Craft.
2.2 Subject only to the direction and control of
Chris-Craft's Chief Executive Officer and Chris-Craft's Board of Directors
(which direction and control
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shall be such as is customarily exercised over an executive vice president),
the Executive shall perform all services and duties necessary or appropriate
for the management of Chris-Craft's Television Division business.
2.3 Throughout the Employment Term, the Executive shall be
elected to, and shall continue in, the office denominated that of Executive
Vice President of Chris-Craft and President, Television Division, and shall
continue to perform on behalf of Chris-Craft substantially the same functions,
and have substantially the same authority, duties and responsibilities, as on
the date hereof, and, except as provided in Sections 2.1 and 2.2, Chris-Craft
shall not confer on any other officer or employee authority, responsibility or
power superior or equal to the authority, responsibility or power vested in
the Executive hereunder.
3. LOCATION.
During the Employment Term, the Executive's services under
this Agreement shall be performed principally in Beverly Hills, California, or
elsewhere in the Metropolitan Los Angeles area. The parties, however,
acknowledge and agree that the nature of the Executive's duties hereunder
shall require reasonable domestic and international travel from time to time.
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4. CASH COMPENSATION.
4.1 BASE SALARY. During the Employment Term,
Chris-Craft shall pay to the Executive, in monthly or more frequent
installments in accordance with Chris-Craft's regular payroll practices for
senior executives, a base salary of not less than $950,000 per annum;
provided, however, that such minimum base salary shall be adjusted upward, as
of January 1, 1995, and as of each successive January 1 to the end of the
Employment Term, in proportion to any increase in the Consumer Price Index, as
defined in Section 4.5, between the December levels of the two immediately
preceding years ("COLA Adjustment"). Each such adjustment shall be made
retroactively when the Consumer Price Index for the December next preceding
the date of such adjustment becomes available. It is understood that
Chris-Craft may, at any time, in the discretion of its Board of Directors
increase, but not decrease, the Executive's base salary. In the event that
the Executive's base salary is adjusted by the Board pursuant to the last
preceding sentence, the new base salary shall be adjusted upward, as of each
following January 1, in proportion to any increase in the Consumer Price Index
from the effective date of the last previous adjustment by the Board.
4.2 SECTION 162(M) LIMIT.
4.2.1 In no event shall the sum of the Executive's
base salary and other Remuneration (as defined
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in Section 4.2.2) for any calendar year exceed the Section 162(m) Limit (as
defined in Section 4.2.2). Chris-Craft shall, to the extent foreseeable,
reduce each regular cash compensation payment in any year by the proportion
that (a) the excess of (i) the sum of all such regular cash compensation
payments for such year over (ii) the Section 162(m) Limit bears to (b) the sum
of all such regular cash compensation payments for such year and shall reduce
or omit other cash compensation payments) (other than Excluded Remuneration)
to the extent same would cause Remuneration in such year to exceed the Section
162(m) Limit, provided that in no event will cash compensation payable to the
Executive during any calendar year be reduced below $750,000 (the "Minimum
Annual Payment").
4.2.2 For purposes of this Agreement, "Remuneration"
shall mean "applicable employee remuneration" as defined in Section 162(m) of
the Internal Revenue Code of 1986, as amended from time to time (the "Code"),
or any successor or similar provision, which is paid or incurred with respect
to the Executive by Chris-Craft or any Chris-Craft Affiliate, other than
Excluded Remuneration; "Excluded Remuneration" shall mean any Gross-Up Payment
or other payment required under Section 7 or any forgiveness of indebtedness
under Section 7, or any payment required under Sections 10.1, 10.2 or 10.4;
"Section 162(m) Limit" shall mean $1,000,000, subject to adjustment as
provided in this
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Section 4.2.2; and for purposes of this Section 4.2 only, "Chris-Craft
Affiliate" shall mean any corporation which is a member of the same
"controlled group" as Chris-Craft within the meaning of Section 414(b) of the
Code, except that for this purpose Section 1563 of the Code shall be applied
by substituting "50 percent" for "80 percent". If one or more amendments to
Section 162(m) of the Code or any successor or similar provision shall change
the amount of Remuneration for a year that is deductible by Chris-Craft or any
Chris-Craft Affiliate for Federal income tax purposes, a corresponding change
shall be made to the Section 162(m) Limit for purposes of this Agreement for
all years to which any such amendment shall be applicable. Unless and until
there is a Change in Law with respect to a taxable year of Chris-Craft,
Chris-Craft and the Executive acknowledge and agree that subject to
Stockholder Approval as defined in Section 4.4, Remuneration shall not include
any amounts payable to the Executive pursuant to Section 4.4 hereof, and any
amounts includible in the Executive's taxable income with respect to amounts
described in Section 6.1(d). For purposes of the preceding sentence, "Change
in Law" shall mean an amendment to Section 162(m), or the issuance or revision
of one or more judicial decisions or administrative rules, regulations or
other pronouncements, following the date hereof which, in the written legal
opinion of counsel to Chris-Craft, will more likely than not result in the
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inclusion of the amount in question in "applicable employee remuneration" as
defined in Section 162(m) of the Code.
4.2.3 The provisions of this Section 4.2 shall be
interpreted in a manner consistent with the intention of the parties that a
deduction not be disallowed to Chris-Craft or any Chris-Craft Affiliate for
Federal income tax purposes with respect to any Remuneration payable to the
Executive under this Agreement by reason of Code Section 162(m) (other than
subparagraph (4)(F) thereof) or any successor or similar provision (except for
Excluded Remuneration) and the Minimum Annual Payment.
4.3 DEFERRED COMPENSATION. During the Employment Term,
Chris-Craft shall credit to the Executive's Account (as defined in Section
4.3.1) the amount specified in Section 4.3.2.
4.3.1 Chris-Craft shall maintain, on its books, a
special account, comprised of two sub-accounts, Subaccount A and Subaccount B,
with respect to the Executive (the "Account"), in accordance with the terms of
this Agreement, until Executive shall have been paid all amounts required by
Section 4.3.3 to be paid to Executive with respect thereto. Prior to December
1 of each year, Chris-Craft's General Counsel and Secretary shall notify
Executive of the option to select the periods to which compensation payable
pursuant to this Section 4.3 will be deferred and, within fifteen (15) days
following receipt of such notice,
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Executive shall notify Chris-Craft's Vice President -- Finance, if Executive
wishes that the Deferred Compensation (as defined in clause (a) of the first
sentence of Section 4.3.2) be credited to Subaccount A, Subaccount B, or a
combination of both Subaccount A and Subaccount B (any such combination to be
specified in a manner that will not prevent Chris-Craft's Vice
President-Finance from computing on a monthly basis the amounts to be credited
to each subaccount in accordance with Section 4.3.2). Absent such notice from
Executive, Deferred Compensation for such year shall be credited to Subaccount
B. Deferred Compensation for 1994 shall be credited to Subaccount B.
4.3.2 During each year of the Employment Term,
Chris-Craft shall credit, as of the end of each month, (a) to the appropriate
Subaccount, an amount equal to the sum of (i) $20,833.33, subject to COLA
Adjustment, plus (ii) the amounts by which all cash compensation payments or
distributions during such month shall have been reduced or omitted pursuant to
the last sentence of Section 4.2.1 (the "Deferred Compensation"); and (b)
interest on each Subaccount balance as of the end of the preceding month,
computed at a rate to be adjusted as of the last business day of each calendar
quarter to equal the yield, as of the last day of such quarter, as reported in
The Wall Street Journal, on U.S. Treasury Notes maturing in the month that is
five years after the last month of such quarter (the
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"Interest Rate"). Amounts credited to the Account, excluding interest, shall
be deemed compensation for the year credited, for purposes of determining
benefits respecting each of Chris-Craft's qualified employee benefit plans
under Chris-Craft's Benefit Equalization Plan (the "BEP"). If no yield for
such notes is so published as of the last day of a particular quarter, there
shall be substituted the average of the yields so published for the months
next preceding and following. If The Wall Street Journal is not published on
the last day of a particular quarter, there shall be substituted the
appropriate yield reported on the last previous day on which The Wall Street
Journal was published. Following the Employment Term, Chris-Craft shall
credit to Subaccount B, as of the last day of each month (based each month on
a 30-day month and a 360-day year), interest on such Subaccount balance as of
such date, computed at the Interest Rate.
4.3.3 On the January 15 first-occurring following the
year in which expiration or termination of the Employment Term shall have
occurred, Chris-Craft shall pay to the Executive a lump sum equal to the
Subaccount A balance as of such January 15 (including interest accrued in
accordance with Section 4.3.2 at the Interest Rate used for the last quarter
of the previous year through such January 15), and Chris-Craft will have no
further obligation to make any payment to the Executive with respect to
Subaccount A.
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On such January 15, Chris-Craft also shall pay to the Executive an amount
equal to one-fifth of the Subaccount B balance as of such January 15
(including interest accrued through such January 15) (the "First Payment"),
and the balance of such Subaccount shall be reduced by the amount of such
First Payment. On each succeeding January 15, until Chris-Craft shall have
made five payments with respect to Subaccount B (including the First Payment)
pursuant to this Section 4.3.3, Chris-Craft shall pay to the Executive a sum
equal to the amount of the First Payment, plus interest credited to Subaccount
B through the date of such payment, from the first day after the date of the
immediately preceding payment, and the balance shall be reduced by the amount
of such sum, such that the entire Amount of Subaccount B plus any interest
thereon shall have been paid to the Executive by the fourth anniversary of the
First Payment. In the event that for tax purposes Chris-Craft treats any
portion of Subaccount B in a manner consistent with the notion that Executive
should include any unpaid amount (determined without regard to this sentence)
in taxable income, Chris-Craft shall pay such amount to Executive at the time
Executive would be treated as having received such income.
4.4 BONUS.
4.4.1 (a) In addition to his base salary and the
deferred amounts referred to in Section 4.3.2 above,
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the Executive shall be entitled to receive with respect to each fiscal year of
Chris-Craft, or portion thereof, during the Employment Term, a bonus equal to
1% of the amount up to $50,000,000 by which Chris-Craft's "TV Broadcast Cash
Flow" (as defined in Section 4.4.2) for the fiscal year in question exceeds
$20,000,000 (the "Low Base Amount"), and 2% of the amount by which TV
Broadcast Cash Flow exceeds $50,000,000 (the "High Base Amount") (each of the
Low Base Amount and the High Base Amount, a "Base Amount").
(b) If Chris-Craft shall acquire, in one or
more transactions, additional television stations having aggregate Mean TV
Broadcast Cash Flow (as defined below) exceeding $10,000,000, the Proforma
Amount shall be increased, or if Chris-Craft shall dispose of a television
station having Mean TV Broadcast Cash Flow exceeding $5,000,000, the Pro Forma
Amount shall be decreased, by (1) for the year during which the acquisition or
disposition occurs, an amount equal to the Mean TV Broadcast Cash Flow of the
television station (or stations) so acquired or disposed of, multiplied by a
fraction, the numerator of which is the number of days remaining in such year
following such acquisition or disposition and the denominator of which is 365,
and (2) for any other year, an amount equal to the Mean TV Broadcast Cash Flow
of the television station (or stations) so acquired or disposed of, and, in
such event, Executive's bonus, shall be calculated solely pursuant to
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whichever of the following two formulae as shall be applicable (but shall not
be less than zero for any year):
i) If Chris-Craft TV Broadcast Cash
Flow for the year in question shall EXCEED the Pro Forma Amount, the bonus
shall be equal to:
300,000 + .02 [((HIGH BASE AMOUNT/PRO FORMA AMOUNT) X (CHRIS-CRAFT TV
BROADCAST CASH FLOW)) - HIGH BASE AMOUNT]
ii) If Chris-Craft TV Broadcast Cash
Flow for the fiscal year shall be LESS THAN the Pro Forma Amount, the bonus
shall be equal to:
.01 X [((HIGH BASE AMOUNT/PRO FORMA AMOUNT) X (CHRIS-CRAFT TV BROADCAST CASH
FLOW)) - LOW BASE AMOUNT]
(c) The Board of Directors will consider adjusting
the base salary, the Base Amounts, and if applicable, the Pro Forma Amount, or
the percentages or formulae used to calculate the bonus, if, and at such time
as, Chris-Craft shall own ten or more television stations or the Executive
shall have chief operating responsibility for a business owned by Chris-Craft
that derives revenues (determined in accordance with generally accepted
accounting principles) exceeding $25,000,000 other than from television
broadcasting. Any such adjustment shall be determined and
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approved in accordance with the procedures set forth in Section 162(m)(4)(C)
of the Code or any similar or successor provision. In the event such
determination and approval is not obtained, any adjustment shall be treated as
Deferred Compensation payable in accordance with Section 4.3.2.
(d) Subject to the approval of the stockholders of
each of Chris-Craft and BHC Communications, Inc. at their respective 1994
annual meetings ("Stockholder Approval"), the bonus shall be paid to Executive
as soon as practicable, but not later than March 31 of the year following the
end of each such fiscal year. In the event Stockholder Approval is not
obtained, the bonus amounts shall be treated as Deferred Compensation payable
in accordance with Section 4.3.2. The amount of the bonus payable with
respect to any fiscal year that includes but does not end on the last day of
the Employment Term shall be determined by multiplying the bonus which would
have been payable with respect to the whole of such fiscal year (if the whole
of such fiscal year were within the Employment Term) by a fraction, the
numerator of which is the number of days of such year included in the
Employment Term and the denominator of which is 365.
4.4.2 As used in this Section 4.4, the term "TV
Broadcast Cash Flow" shall mean operating income plus depreciation and
amortization of good will and programming contracts, minus payments on
programming
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contracts as such items shall be determined in accordance with generally
accepted accounting principles; "Chris-Craft TV Broadcast Cash Flow" for any
year shall mean the TV Broadcast Cash Flow of television stations owned by
Chris-Craft or any Affiliate of Chris-Craft during any portion of such year;
"Mean TV Broadcast Cash Flow" shall mean the mean TV Broadcast Cash Flow of a
television station for the three full fiscal years of such television station
prior to acquisition or disposition by Chris-Craft; and, until increased or
decreased pursuant to Section 4.4.1(b), the "Pro Forma Amount" shall equal the
High Base Amount.
4.5 CONSUMER PRICE INDEX. The words "Consumer Price
Index," as used in this Agreement shall mean the Consumer Price Index for All
Urban Consumers, U.S. City Average, All Items (1982-84=100), as reported by
the Bureau of Labor Statistics of the U.S. Department of Labor. In the event
that this Consumer Price Index shall be superseded or shall be published by a
different agency, then the superseding index shall be substituted for this
Consumer Price Index in such a manner as to implement the intent of this
Agreement that the Executive's base salary and Deferred Compensation shall be
adjusted annually, beginning as of January 1, 1995, so that the purchasing
power thereof shall be maintained at a level at least equivalent to the
purchasing power thereof at January 1, 1994.
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5. EXPENSES.
In addition to the compensation provided in Section 4 and in
Section 11, Chris-Craft will pay or reimburse the Executive for all reasonable
expenses actually incurred or paid by him during the Employment Term or the
Consulting Term (as defined in Section 11) in the performance of his services
hereunder upon presentation of expense statements, vouchers, or such other
supporting information as Chris-Craft may customarily require of its senior
executives.
6. ADDITIONAL BENEFITS.
6.1 During the Employment Term:
(a) The Executive will be entitled to
reasonable annual vacation periods, not less than an aggregate of six weeks in
each calendar year, with full pay and allowances.
(b) The Executive will be eligible for sick
leave in accordance with Chris-Craft's customary practice for senior
executives.
(c) The Executive will be entitled to
participate in any insurance, pension, profit-sharing, stock option, stock
purchase or other benefit plan of Chris-Craft now existing or hereafter
adopted for the benefit of the employees generally or of the executives of
Chris-Craft.
(d) Upon approval of a new stock option plan by
Chris-Craft stockholders at their 1994 annual
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meeting, Chris-Craft shall grant the Executive a 10-year option covering
200,000 shares that shall be exercisable during the Employment Term and
Consulting Term.
(e) Chris-Craft shall match the Executive's
contributions (including any contribution by any trust of which the Executive
is the grantor) to recognized charities, during each year of the Employment
Term, in an amount equal to the sum of (i) $100,000, plus (ii) the amount by
which (x) the product obtained by multiplying $100,000 by the number of
previous years in which this Agreement shall have been in effect shall exceed
(y) the total amount of all matching contributions made by Chris-Craft
pursuant to this sentence in such previous years. Matching contributions made
by Chris-Craft pursuant hereto shall be in addition to any contributions made
to match Executive's contributions under any other charitable gift matching
program generally applicable with respect to contributions made by employees
or directors of Chris-Craft or any of its subsidiaries.
(f) The Executive shall be entitled to such
additional benefits as may be granted to him from time to time by the Board of
Directors of Chris-Craft.
6.2 No payment or benefit made or provided under this
Agreement shall be deemed to constitute payment to the Executive, his legal
representatives or beneficiaries
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in lieu of, or in reduction of, any benefit or payment under an insurance,
pension, profit-sharing or other benefit plan, and no payment under any such
plan shall reduce any payment or benefit due under this Agreement.
7. CERTAIN ADDITIONAL PAYMENTS BY CHRIS-CRAFT
7.1 Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment,
distribution or transfer by Chris-Craft or any Affiliate or other event
occurring with respect to the Executive and Chris-Craft for the Executive's
benefit (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (including pursuant to any of
Chris-Craft's benefit plans)), determined without regard to any additional
payment required under this Section 7 (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code (and any successor provision
and any similar provision of state or local income tax law) (collectively,
"Section 4999"), or any interest or penalty is incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest
or penalty, hereinafter collectively to be referred to as the "Excise Tax"),
then the Executive shall be entitled to receive or have paid to the Internal
Revenue Service or other appropriate authority (and any relevant state or
local authority) ("IRS") on his behalf an additional payment (a "Gross-Up
Payment") in an
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amount equal to the sum of (a) the Excise Tax plus (b) all other taxes,
penalties and interest (including any excise tax imposed by Section 4999) paid
or payable by Executive on account of the operation of this Section 7, such
that, after payment by Executive of all such other taxes (including any
interest or penalty imposed with respect to such taxes) and any Excise Tax
imposed upon the Gross-Up Payment, Executive shall be in the same position as
he would have been had no Excise Tax been imposed upon the Payments.
7.1.1 Subject to the provisions of Section 7.3, all
determinations required to be made under this Section 7, including whether and
when a Gross-Up Payment is required, the amount of such Gross-Up Payment, and
the assumptions to be utilized in arriving at such determination, shall be
made by Price Waterhouse or any other nationally recognized accounting firm
(the "Accounting Firm") that shall be Chris-Craft's outside auditors at the
time of such determination, which Accounting Firm shall provide detailed
supporting calculations both to the Executive and Chris-Craft within 15
business days of the receipt of notice from Chris-Craft or the Executive that
there has been a Payment that the person giving notice believes may be subject
to the Excise Tax, or such earlier time as shall be requested by Chris-Craft.
All fees and expenses of the Accounting Firm shall be borne solely by
Chris-Craft. Any Gross-Up Payment, as determined pursuant
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to this Section 7, shall be paid by Chris-Craft to the IRS on the Executive's
behalf within five business days after the receipt of the Accounting Firm's
determination. If the Accounting Firm shall determine that no Excise Tax is
payable by the Executive, it shall furnish to the Executive written advice
that failure to report the Excise Tax on the Executive's applicable federal
income tax return would not be reasonably likely to result in the imposition
of a penalty for fraud, negligence, or disregard of rules or regulations. Any
determination by the Accounting Firm shall be binding upon Chris-Craft and the
Executive in determining whether a Gross-Up Payment is required or the amount
thereof (subject to Section 7.1.2 and 7.2), in the absence of material
mathematical or legal error.
7.1.2 As a result of uncertainty in the application of
Section 4999 of the Code that may exist at the time of the initial
determination by the Accounting Firm, it may be possible that in making the
calculations required to be made hereunder, the Accounting Firm shall
determine that a Gross-Up Payment need not be made that properly should be
made ("Underpayment") or that a Gross-Up Payment not properly needed to be
made should be made ("Overpayment"). In the event that Chris-Craft shall
exhaust or fail to adequately pursue its remedies pursuant to Section 7.2, and
the Executive thereafter shall be required to make a payment of any Excise
Tax, the Accounting
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Firm shall determine the amount of the Underpayment that occurred, and
Chris-Craft shall promptly pay the amount thereof to the IRS on the
Executive's behalf. In the event that the Accounting Firm shall determine
that an Overpayment was made, any such Overpayment shall be treated for all
purposes as a loan to the Executive with interest at the applicable Federal
rate provided for in Section 1274(d) of the Code; PROVIDED, HOWEVER, that
the amount to be repaid by the Executive to Chris-Craft shall be reduced to
the extent that any portion of the Overpayment to be repaid will not be offset
by a corresponding reduction in tax by reason of such repayment of the
Overpayment.
7.2 Executive shall give Chris-Craft written notice of any
claim by the IRS that, if successful, would require the payment by Chris-Craft
of a Gross-Up Payment. The Executive shall give such notice within ten
business days after the Executive shall be informed in writing of such claim,
provided that failure by the Executive to provide such notice shall not result
in a waiver or forfeiture of any rights of Executive under this Section 7
except to the extent of actual damages suffered by Chris-Craft as a result of
such failure; provided further that if such failure prevents the contest of
such claim no payment shall be required with respect to such claim by
Chris-Craft under this Section 7. The Executive shall not pay such claim
prior to the expiration of 15 days following the date
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on which the Executive gives such notice to Chris-Craft. If Chris-Craft shall
notify the Executive in writing prior to the expiration of such 15-day period
that Chris-Craft desires to contest such claim, the Executive shall:
(a) give Chris-Craft any information
reasonably requested by Chris-Craft relating to such claim,
(b) take such action in connection with
contesting such claim as Chris-Craft shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by Chris-Craft,
(c) cooperate in good faith with Chris-Craft's
contest of such claim, and
(d) permit Chris-Craft to control any
proceedings to the extent relating to such claim; PROVIDED, HOWEVER, that
Chris-Craft shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and penalties with respect thereto)
imposed in relation to such claim, including all costs and expenses. Without
limiting the foregoing provisions of this Section 7.2, and to the extent its
actions do not
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unreasonably interfere or prejudice the Executive's disputes with the IRS as
to other issues, Chris-Craft shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the IRS in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as Chris-Craft shall
determine; PROVIDED, HOWEVER, that if Chris-Craft shall direct the
Executive to pay such claim and sue for a refund, Chris-Craft shall advance
the amount of such payment to the Executive, on an interest-free basis, and
shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance, and further provided that any extension
of the statute of limitations relating to taxes for the Executive's taxable
year with respect to which such contested amount shall be claimed to be due
shall be limited solely to such claim. Furthermore, Chris-Craft's control of
the contest shall be limited to issues with respect to which
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a Gross-Up Payment would be payable hereunder, and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by
the IRS to the extent that such settlement or contest would not be reasonably
likely to have a material adverse effect on the issues with respect to the
Gross-Up Payment.
7.3 If, after the Executive's receipt of an amount
advanced by Chris-Craft pursuant to Section 7.2, the Executive shall become
entitled to receive any refund with respect to such claim, the Executive shall
promptly pay to Chris-Craft the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after
the Executive's receipt of an amount advanced by Chris-Craft pursuant to
Section 7.2, a determination shall be made that the Executive shall not be
entitled to any refund with respect to such claim, and Chris-Craft shall not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after Chris-Craft shall receive notice of
such determination, then such advance shall be forgiven and shall not be
required to be repaid, and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
7.4 This Section 7 shall remain in full force and effect
following the termination of the Employment Term for any reason until the
expiration of the statute of
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limitations on the assessment of taxes applicable to the Executive for all
periods in which the Executive may incur a liability for taxes (including
Excise Taxes), interest or penalties arising out of the operation of this
Agreement.
8. CHANGE IN CONTROL; EXTENSION OF TERM.
8.1 Chris-Craft, on behalf of itself and its stockholders,
wishes to assure itself of continuity of management in the event of any Change
in Control (as defined in Section 8.2 of this Agreement). Notwithstanding
anything to the contrary in this Agreement, if a Change in Control (as defined
in Section 8.2 hereof) shall occur during the Employment Term, and the
Employment Term shall not have previously terminated for any reason (other
than in connection with or as a result of a Change in Control), the Employment
Term shall automatically be extended to the third anniversary of such Change
in Control, if, pursuant to Section 1.2, the Employment Term otherwise might
have terminated before such third anniversary.
8.2 For the purposes of this Agreement, a "Change in
Control" shall mean:
8.2.1 The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
(a "Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act ("Rule 13d-3")) of 20% or more of the
combined voting power of the then outstanding voting
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securities of Chris-Craft entitled to vote generally in the election of
directors (the "Outstanding Voting Securities"); provided, however, that the
following acquisitions shall not constitute a Change in Control: (v) any
acquisition of a security (i) directly from Chris-Craft that is authorized by
the Incumbent Board, as defined in Section 8.2.2, or (ii) of a class
constituting a class of Outstanding Voting Securities on the date hereof that
results from conversion of a security of any such class; (w) any acquisition
by Chris-Craft; (x) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Chris-Craft or any corporation controlled by
Chris-Craft; (y) any change in ownership of Outstanding Voting Securities by
any Person identified or referred to in "Table I, Beneficial Ownership of
Chris-Craft Stock," in Chris-Craft's Proxy Statement for its 1993 Annual
Meeting of Stockholders, so long as (i) any such Person who is an officer or
director of Chris-Craft remains such, or (ii) any Person that, with respect to
a change in such Person's ownership of Outstanding Voting Securities, as of
the date hereof, would have an obligation to make a filing under Rule 13d-3,
would not be required, in connection with such change in ownership, to change
from filing on Schedule 13G to Schedule 13D or to change any response to
Schedule 13D, Item 4, other than paragraph (a) thereof or paragraph (j), as it
might relate to paragraph (a); or (z) any acquisition by any
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corporation pursuant to a reorganization, merger or consolidation, if,
following such reorganization, merger or consolidation, the conditions
described in clauses (a), (b), and (c) of Section 8.2.3 are satisfied; or
8.2.2 Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the stockholders of Chris-Craft, shall be
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
8.2.3 Approval by the stockholders of Chris-Craft of a
reorganization, merger or consolidation, in each case, unless, following such
reorganization, merger or consolidation: (a) more than 60% of the combined
voting power of the then outstanding voting securities of the corporation
resulting from such reorganization, merger, or
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consolidation, which may be Chris-Craft (the "Resulting Corporation"),
entitled to vote generally in the election of directors (the "Resulting
Corporation Voting Securities") shall then be owned beneficially, directly or
indirectly, by all or substantially all of the Persons who were the beneficial
owners of Outstanding Voting Securities immediately prior to such
reorganization, merger, or consolidation, in substantially the same
proportions as their respective ownerships of Outstanding Voting Securities
immediately prior to such reorganization, merger or consolidation; (b) no
Person (excluding Chris-Craft, any employee benefit plan (or related trust) of
Chris-Craft, the Resulting Corporation, and any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly or
indirectly, 20% or more of the combined voting power of Outstanding Voting
Securities) shall own beneficially, directly or indirectly, 20% or more of the
combined voting power of the Resulting Corporation Voting Securities; and (c)
at least a majority of the members of the board of directors of the
Corporation shall have been members of the Incumbent Board at the time of the
execution of the initial agreement providing for such reorganization, merger
or consolidation; or
8.2.4 Approval by the stockholders of Chris-Craft of
(a) a complete liquidation or dissolution of Chris-Craft or (b) the sale or
other disposition of all or
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substantially all of the assets of Chris-Craft, other than to a corporation
(the "Buyer") with respect to which (i) following such sale or other
disposition, more than 60% of the combined voting power of securities of Buyer
entitled to vote generally in the election of directors ("Buyer Voting
Securities"), shall be owned beneficially, directly or indirectly, by all or
substantially all of the Persons who were the beneficial owners of the
Outstanding Voting Securities immediately prior to such sale or other
disposition, in substantially the same proportion as their respective
ownerships of Outstanding Voting Securities, immediately prior to such sale or
other disposition; (ii) no Person (excluding Chris-Craft and any employee
benefit plan (or related trust) of Chris-Craft or Buyer and any Person that
shall immediately prior to such sale or other disposition own beneficially,
directly or indirectly, 20% or more of the combined voting power of
Outstanding Voting Securities), shall own beneficially, directly or
indirectly, 20% or more of the combined voting power of, Buyer Voting
Securities; and (iii) at least a majority of the members of the board of
directors of Buyer shall have been members of the Incumbent Board at the time
of the execution of the initial agreement or action of the Board providing for
such sale or other disposition of assets of Chris-Craft.
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9. TERMINATION OF AGREEMENT FOR CAUSE.
Chris-Craft may terminate this Agreement, and all of
Chris-Craft's obligations hereunder except its obligation to pay to Executive
amounts accrued to the date of termination, "for cause" upon 30 days written
notice. As used in this Agreement, the term "for cause" shall mean and be
limited to the following events: (a) the Executive's conviction (which
conviction, through lapse of time or otherwise, is not subject to appeal) in a
court of law of a felony involving moral turpitude; (b) the Executive's
material breach of any of the covenants set forth in Section 12; (c) the
Executive's dishonesty in the course of fulfilling his duties hereunder; or
(d) the Executive's continuing, repeated, wilful failure or refusal to perform
his duties in accordance with the terms of Section 2; PROVIDED, HOWEVER,
that this Agreement may not be terminated for cause under the immediately
preceding clause (d), unless the Executive shall have first received written
notice from the Board of Directors of Chris-Craft advising him of the specific
acts or omissions alleged to constitute a failure or refusal to perform his
duties, and such failure or refusal to perform his duties continues after the
Executive shall have had a reasonable opportunity to correct the acts or
omissions cited in such notice. In no event shall the alleged incompetence of
the Executive in the performance of
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his duties hereunder be deemed grounds for termination of this Agreement for
cause.
10. TERMINATION OTHER THAN FOR CAUSE.
10.1 DEATH. If the Executive shall die during the
Employment Term, this Agreement, and all of Chris-Craft's obligations
hereunder, shall terminate, except (a) with regard to payments from the
Account pursuant to Section 4.3.3 (which Account shall include Deferred
Compensation payable through the last day of the month in which his death
occurred) and (b) that Chris-Craft shall pay to the Executive's estate, (i)
within 30 days after his death, the base salary, and bonus with respect to the
then current fiscal year, which would have been payable to the Executive under
Section 4 had the Employment Term ended on the last day of the month in which
his death occurred, and (ii) an amount (payable at the same time as salary is
paid to other executive employees of Chris-Craft) equal to the Executive's
"Average Annual Compensation" (as defined in Section 10.3) at the date of his
death; such amount shall be payable for the 12-month period following the
first day of the month following the month in which the Executive's death
shall occur.
10.2 DISABILITY. If, during the Employment Term, the
Executive shall become disabled (as defined in Chris-Craft's then existing
disability policy) so that he shall be unable substantially to perform his
services
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hereunder, (a) for a period of six consecutive months or (b) for an aggregate
of six months within any period of 12 consecutive months, then the Board of
Directors of Chris-Craft may, at any time during the continuance of such
disability, terminate the Employment Term on 30 days' prior written notice to
the Executive. After such termination, the Executive shall have no further
obligation to perform services for Chris-Craft pursuant to Section 2 but shall
be entitled to receive from Chris-Craft, within 30 days after such
termination, in lieu of the amounts which would otherwise be payable under
Section 4, (i) the base salary, and bonus with respect to the then current
fiscal year, which would have been payable to the Executive under Section 4,
had the Employment Term ended on the last day of the month in which the
Employment Term was terminated pursuant to this Section 10.2, and (ii) an
amount (payable in equal monthly installments on the 15th day of each month)
at an annual rate equal to one-half of the Executive's "Average Annual
Compensation" (as defined in Section 10.3) at the date of the termination of
the Employment Term, such amount to be payable for the period beginning on the
first day of the month following the month in which the Employment Term shall
have been terminated pursuant to this Section 10.2 and ending on the day on
which the Employment Term would have ended (as extended, if theretofore
extended) if not terminated pursuant to this Section 10.2. The Executive
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shall have no obligation to accept any employment offered to him by others in
order to minimize, or to be set off against, the amounts to which he is
entitled pursuant to this Section 10.2. Chris-Craft shall not interpose any
defense against payment of such amounts based on refusal of the Executive to
seek or accept other employment. However, if the Executive shall obtain other
employment, then amounts due to him pursuant to this Section 10.2 shall be
reduced, PRO TANTO, by amounts actually received by him for services
rendered in such other employment during the time amounts are payable pursuant
to said Section 10.2.
10.3 AVERAGE ANNUAL COMPENSATION. As used in Sections
10.1 and 10.2, the term "Average Annual Compensation" shall mean the mean
annual compensation received or receivable by the Executive pursuant to
Section 4 (without regard to the effect of the provisions of Section 4.2) with
respect to each of the three full fiscal years of Chris-Craft immediately
preceding the date of the Executive's death (in the case of Section 10.1) or
the date of the termination of the Employment Term (in the case of Section
10.2); provided, however, that if the Executive shall die, or the Employment
Term shall be terminated due to Executive's disability, prior to January 1,
1997, the Average Annual Compensation shall be the mean of (i) the amount
received or receivable by the Executive, or that would have become receivable
by the Executive, pursuant to
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Section 4 (including salary, Deferred Compensation and bonus and without
regard to the effect of the provisions of Section 4.2) had he worked through
December 31, 1994, and (ii) the mean amount received or receivable by the
Executive pursuant to Section 4 (including salary, Deferred Compensation and
bonus and without regard to the effect of the provisions of Section 4.2) for
each full fiscal year of Chris-Craft, if any, beginning after December 31,
1994 and ending on the December 31 immediately preceding the date of the
Executive's death or date of termination of the Employment Term due to
Executive's disability, as the case may be.
10.4 TERMINATION BY EXECUTIVE.
10.4.1 Executive may, (but shall not be obligated to)
terminate the Employment Term on 60 days' prior written notice given at any
time within two years following a Change in Control or, if during the
Employment Term, (a) the Executive shall not be elected (and continued) as a
director of Chris-Craft or UTV and as Executive Vice President of Chris-Craft
and President of Chris-Craft's Television Division, or Executive shall be
removed from such board or office; or (b) Chris-Craft shall fail to cure a
material breach of this Agreement within 10 days after notice; or (c) the
Executive shall not be continuously afforded the authority, responsibilities
and prerogatives contemplated in Section 2.2 and 2.3; or (d) Chris-Craft
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shall materially reduce any benefit to which Executive is entitled pursuant to
Section 6.1 and shall not have similarly reduced such benefit with respect to
Chris-Craft senior executives generally; or (e) the Executive shall be
required to perform his principal services under this Agreement at a place
other than that set forth in Section 3. Such right to terminate the
Employment Term shall be the Executive's exclusive remedy in the event of the
occurrence of any of the events described in this Section 10.4.1. For
purposes of clause (c) of the preceding sentence, the Executive shall be
deemed not to have been continuously afforded the authority, responsibilities
and prerogatives contemplated in Sections 2.2 and 2.3 if there shall occur any
reduction in the scope, level or nature of the Executive's employment
hereunder, or any demotion, any phasing out or assignment to others, of the
duties contemplated in Section 2. For purposes of this Section 10.4, any
determination made by the Executive in good faith that any of the events
described in clauses (a) through (e) of the first sentence of Section 10.4.1
has occurred shall be conclusive.
10.4.2 If the Executive shall elect to terminate the
Employment Term upon the occurrence of any event described in Section 10.4.1,
or if Chris-Craft shall terminate this Agreement other than for cause or
disability pursuant to Sections 9 and 10 hereof, then the Executive
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shall have no further obligation to perform services for Chris-Craft pursuant
to Section 2, but he shall be entitled to receive from Chris-Craft, 30 days
after the date of termination of the Employment Term, for the period beginning
on the date of such termination and running through the day on which the
Employment Term would have ended (as extended, if theretofore extended) if not
terminated pursuant to this Section 10, assuming no additional extensions of
the Employment Term, and ending on the day on which the Consulting Term would
have ended (the "Cutoff Date"), in lieu of the amounts that would otherwise be
payable hereunder, a lump sum in cash of an amount equal to the aggregate of
(a) compensation that would have been payable each year at the rate of the (i)
base salary payable to the Executive pursuant to Section 4.1 and (ii) all
amounts of Deferred Compensation payable to the Executive pursuant to Section
4.3 (each at the rate in effect on the date of the termination of the
Employment Term (including any COLA Adjustment theretofore required to have
been made)); (b) all consulting fees payable pursuant to Section 11 hereof
subject to COLA Adjustment; and (c) an amount equal to the mean performance
bonuses theretofore paid to or payable to the Executive pursuant to this
Agreement, multiplied by the number of years remaining in the Employment Term
at the date of termination (including the year in which the termination
occurs). Notwithstanding the above, Deferred Compensation
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amounts previously deferred and credited to the Account shall be paid in
accordance with Section 4.3.3. In addition, until the Cutoff Date,
Chris-Craft shall maintain, at its expense, all insurance coverages and
medical and health benefits in respect of the Executive that shall have been
in effect with respect to him prior to the occurrence of the event entitling
the Executive to terminate this Agreement.
11. CONSULTING SERVICES.
Unless the Employment Term shall theretofore have been
terminated for cause pursuant to Section 9, or on account of the death of the
Executive, during the period (i) beginning on the date of termination of the
Employment Term (or, if the Employment Term shall have been terminated
pursuant to Section 10.2 or 10.3, on the date the Employment Term would have
ended (as extended, if theretofore extended) if it had not been terminated
pursuant to said Section 10.2 or 10.3), and (ii) ending May 31, 2007 (the
"Consulting Term"), the Executive shall render to Chris-Craft such
consultation and advice as the Board of Directors or the Chief Executive
Officer of Chris-Craft may request, subject to the Executive's reasonable
convenience and other business activities; PROVIDED, HOWEVER, that the
Executive shall not be required to devote more than 20 hours in any month to
such services, which shall be performed at a time and place mutually
convenient to both parties. For his consulting
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services, the Executive shall receive, as a consulting fee, compensation at
the rate of $250,000 per annum, payable in equal monthly installments;
Chris-Craft shall also provide the Executive with an office and a secretary,
as well as the use of such other facilities and amenities (including, as
examples, any airplane or automotive transportation utilized by Chris-Craft)
as Chris-Craft shall from time to time make available to its most senior
officers. The consulting fee shall be adjusted upward, as of the beginning of
the Consulting Term and as of each successive January 1 to the end of the
Consulting Term, in proportion to any increase in the Consumer Price Index, as
defined in Section 4.4, from the December 1993 level (as of the beginning of
the Consulting Term) and from the December level of the prior year as of each
successive January 1. Each such adjustment shall be made retroactively when
the Consumer Price Index for the month next preceding the date of such
adjustment becomes available. In addition, Executive shall be entitled to
participate in each insurance plan or medical or health plan generally
available to Chris-Craft senior executives. In the event that the Executive
shall be discharged by Chris-Craft during the Consulting Term other than for
cause (as defined in Section 9), he shall nevertheless be entitled to receive
his full consulting fee for the remainder of the Consulting Term. If the
Executive shall die during the Consulting Term, his estate shall be entitled
to receive the
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full consulting fee payable hereunder until the earlier to occur of (a) the
first anniversary of the date of his death or (b) the end of the Consulting
Term. If, during the Consulting Term, the Executive shall be disabled from
performing his consulting services, and such disability shall continue for a
period of six consecutive months or for an aggregate of six months within any
period of 12 consecutive months, or if such disability shall exist at the
start of the Consulting Term and shall be a continuation of a disability for
which the Employment Term shall have been terminated pursuant to Section 10.2,
and the Board of Directors of Chris-Craft, by written notice to the Executive
(before the Executive shall recover from such disability) shall terminate the
Executive's consulting services, the Executive shall have no further
obligation to perform consulting services for Chris-Craft and shall be
entitled to receive compensation at the rate of one-half of the consulting fee
payable hereunder until the end of the Consulting Term.
12. PROTECTION OF CONFIDENTIAL INFORMATION; NON-COMPETITION.
12.1 The Executive agrees that, in view of the fact that
his work for Chris-Craft will bring him into close contact with many
confidential affairs of Chris-Craft not readily available to the public, he
will not at any time (whether during the Employment Term, the Consulting Term,
or thereafter) disclose to any person, firm, corporation,
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partnership or other entity whatsoever (except Chris-Craft or any of its
subsidiaries), or any officer, director, stockholder, partner, associate,
employee, agent or representative of any such firm, corporation or other
entity, any confidential information or trade secrets of Chris-Craft which may
come into his possession during the Employment Term or the Consulting Term
(the "Confidential Materials"). The term "Confidential Materials" does not
include information which (i) at the time of disclosure or thereafter is
generally available to or known by the public otherwise than by reason of the
Executive's disclosure thereof in violation of this Agreement, (ii) is, was or
becomes available to the Executive on a nonconfidential basis from a source
other than Chris-Craft, provided that the Executive has no reason to believe
that such source is or was bound by a confidentiality agreement with
Chris-Craft, (iii) has been made available, or is made available, on an
unrestricted basis to a third party by Chris-Craft, by an individual
authorized to do so, or (iv) is known by the Executive prior to its disclosure
to the Executive. The Executive may use and disclose Confidential Materials
to the extent necessary to assert any right or defend against any claim
arising under this Agreement or pertaining to Confidential Materials or their
use, to the extent necessary to comply with any applicable statute,
constitution, treaty, rule, regulation, ordinance or order, whether of the
United
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States, any state thereof, or any other jurisdiction applicable to the
Executive, or if the Executive receives a request to disclose all or any part
of the information contained in the Confidential Materials under the terms of
a subpoena, order, civil investigative demand or similar process issued by a
court of competent jurisdiction or by a governmental body or agency, whether
of the United States or any state thereof, or any other jurisdiction
applicable to the Executive.
12.2 During the Employment Term, Executive shall devote his
full-time business energies, and time to the performance of this Agreement as
set forth in Section 2.1 hereof. Executive's services during the Consulting
Term shall be rendered on the basis set forth in Section 11. Executive shall
not, either during the Employment Term or the Consulting Term, render services
of any kind to others, engage in any other business activity or acquire any
interest of any type in any other person or entity that would prevent his
fulfilling his obligations under this Agreement or that Executive knows is in
competition with Chris-Craft or any Affiliate. For purposes of this
Agreement, a person or entity shall be deemed to be in competition with
Chris-Craft or any Affiliate if he or it engages in any line of business
substantially the same as any line of business that Chris-Craft or any
Affiliate engages in or has a definitive plan to engage in during the
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term of this Agreement, except that, during the Consulting Term, the
engagement in such activity in a geographical market in which Chris-Craft or
any Affiliate has not engaged for more than two years or in which Executive
knows that Chris-Craft or any Affiliate has no definitive plan to engage or
the engagement in a line of business that Chris-Craft has a definitive plan to
engage in but, of which Executive had no knowledge at any time prior to
Executive's engagement in such business, shall not be deemed in competition
with Chris-Craft or an Affiliate. For purposes of this Section 12 only, the
term "Affiliate" shall not include any entity that would constitute an
Affiliate solely because it is under common control with Chris-Craft.
12.3 Notwithstanding anything to the contrary stated in
this Agreement, Executive may acquire and/or retain, solely as an investment,
and take customary actions to maintain and preserve Executive's ownership of:
(a) securities of any corporation that are
registered under Section 12(b) or 12(g) of the Exchange Act and that are
publicly traded, as long as Executive is not part of any control group of such
corporation and such securities, do not, or if they are convertible
securities, if converted, together with all other securities of such
corporation owned by the executive, would not, constitute more than one
percent (1%) of the outstanding voting power of that corporation;
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(b) any securities of a partnership, trust,
corporation (other than a corporation that has securities covered by the
preceding clause (a)) or other person so long as Executive remains a passive
investor in that entity and does not become part of any control group thereof
and so long as such entity is not, directly or indirectly, in competition with
Chris-Craft or any Affiliate; and
(c) securities of Chris-Craft or any
Affiliate.
12.4 The parties hereto acknowledge that Executive's
performance and services hereunder are of a special, unique, unusual,
extraordinary and intellectual character, which cannot be reasonably or
adequately compensated in an action at law for damages, and that a breach by
Executive of the terms hereof will cause Chris-Craft irreparable injury.
Executive agrees that Chris-Craft is entitled to injunctive and other
equitable relief to prevent a breach or threatened breach of this Section 12,
which shall be in addition to any other rights or remedies to which
Chris-Craft may be entitled.
12.5 If any provisions of this Section 12 as applied to any
circumstance shall be adjudged by a court to be invalid or unenforceable, the
same shall in no way affect any other provision of this Section 12, the
application of such provision in any other circumstances, or the validity
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or enforceability of this Section 12. Chris-Craft and the Executive intend
this Section 12 to be enforced as written. However, if any provision, or any
part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, or otherwise, Chris-Craft and the
Executive agree that the court making such determination shall have the power
to reduce the duration and/or area of such provision, and/or to delete
specific words or phrases ("blue-penciling"), and in its reduced or
blue-penciled form such provision shall then be enforceable and shall be
enforced.
12.6 Chris-Craft and the Executive intend to, and do
hereby, confer jurisdiction to enforce the covenants contained in this Section
12 upon the courts of any state of the United States and any other
governmental jurisdiction within the geographical scope of such covenants. If
the courts of any one or more of such states or jurisdictions shall hold such
covenants wholly unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of Chris-Craft and the Executive that such
determination shall not bar or in any way affect Chris-Craft's right to the
relief provided above in the courts of any other state or jurisdiction within
the geographical scope of such covenants, as to breaches of such covenants in
such other respective states or jurisdictions, the above covenants as
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they relate to each state or jurisdiction being, for this purpose, severable
into diverse and independent covenants.
13. NOTICES.
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 (a) if delivered personally, when delivered; (b) if
delivered by overnight carrier, on the first business day following such
delivery; (c) if delivered by registered or certified mail, return receipt
requested, on the third business day after having been mailed. In any case,
each such notice, request, or consent or other communication shall be
addressed as follows or to such other address as either party shall designate
by notice in writing to the other in accordance herewith
13.1 If to Chris-Craft:
Chris-Craft Industries, Inc.
767 Fifth Avenue
New York, New York 10153
Attention: Board of Directors
with a copy to:
Harold I. Kahen, Esq.
Loeb and Loeb
345 Park Avenue
New York, New York 10154
13.2 If to the Executive to him at his address set forth on
the personnel records of Chris-Craft.
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with a copy to:
Kenneth Doran, Esq.
Gibson, Dunn & Crutcher
2029 Century Park East
Los Angeles, California 90067
14. GENERAL.
14.1 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.
14.2 The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
14.3 This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, between the parties.
14.4 This Agreement and the benefits hereunder are personal
to Chris-Craft and are not assignable or transferable, nor may the services to
be performed hereunder be assigned by Chris-Craft to any person, firm or
corporation; PROVIDED, HOWEVER, that this Agreement and the benefits
hereunder may be assigned by Chris-Craft to any corporation acquiring all or
substantially all of the assets of Chris-Craft or to any corporation into
which Chris-Craft may be merged or consolidated, and this Agreement and the
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benefits hereunder will automatically be deemed assigned to any such
corporation, subject, however, to the Executive's right to terminate the
Employment Term to the extent provided in Section 10.3. In the event of any
assignment of this Agreement to any corporation acquiring all or substantially
all of the assets of Chris-Craft or to any other corporation into which
Chris-Craft may be merged or consolidated, the responsibilities and duties
assigned to the Executive by such successor corporation shall be the
responsibilities and duties of, and compatible with the status of, a senior
executive officer of such successor corporation. Chris-Craft may delegate any
of its obligations hereunder to any subsidiary of Chris-Craft, provided that
such delegation shall not relieve Chris-Craft of any of its obligations
hereunder.
14.5 Whenever this Agreement provides for any payment to
the Executive's estate, such payment may be made instead to such beneficiary
or beneficiaries as the Executive may have designated by written notice to
Chris-Craft. The Executive shall have the right to revoke any such
designation and to redesignate a beneficiary or beneficiaries by written
notice to Chris-Craft to such effect.
14.6 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
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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.
14.7 In case of any dispute or disagreement arising out of,
or in connection with, this Agreement, until the final determination of such
dispute or disagreement Chris-Craft shall continue to pay to the Executive all
of the compensation provided in this Agreement, and the Executive shall be
entitled to continue to receive all of the other benefits provided herein. If
any such dispute or disagreement shall result in legal action between
Chris-Craft and the Executive, the Executive shall be entitled to recover from
Chris-Craft any actual expenses for attorney's fees and disbursements incurred
by him in connection with the Executive's good faith maintenance or defense of
such action, on an after-tax basis. During the pendency of any such action,
Chris-Craft shall pay all actual attorney's fees and expenses incurred by the
Executive in connection
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therewith upon receipt of an undertaking by the Executive to repay such
amounts as shall be found in such action as having been incurred in connection
with the Executive's maintenance or defense of such action other than in good
faith. Chris-Craft shall pay all reasonable attorneys' fees and expenses
incurred by the Executive in connection with the negotiation of this
Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the date first above written.
CHRIS-CRAFT INDUSTRIES, INC.
/s/ EVAN C THOMPSON By /s/ HERBERT I. SIEGEL
-------------------- ---------------------
Evan C Thompson Chairman
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TABLE OF CONTENTS TO EMPLOYMENT AGREEMENT
SECTION PAGE
1. EMPLOYMENT; TERM............................................. 1
2. DUTIES AND AUTHORITY......................................... 3
3. LOCATION..................................................... 4
4. CASH COMPENSATION............................................ 5
5. EXPENSES..................................................... 16
6. ADDITIONAL BENEFITS.......................................... 16
7. CERTAIN ADDITIONAL PAYMENTS BY CHRIS-CRAFT................... 18
8. CHANGE IN CONTROL; EXTENSION OF TERM......................... 25
9. TERMINATION OF AGREEMENT FOR CAUSE........................... 30
10. TERMINATION OTHER THAN FOR CAUSE............................. 31
11. CONSULTING SERVICES.......................................... 37
12. PROTECTION OF CONFIDENTIAL INFORMATION; NON-COMPETITION...... 39
13. NOTICES...................................................... 44
14. GENERAL...................................................... 45
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EMPLOYMENT AGREEMENT
AGREEMENT made as of January 1, 1994 between CHRIS-CRAFT
INDUSTRIES, INC., a Delaware corporation ("Chris-Craft"), and HERBERT J.
SIEGEL (the "Executive").
This Agreement supersedes the Agreement made as of September 1,
1983 between Chris-Craft and the Executive.
The Executive is now, and for many years has been, Chairman of the
Board, President and Chief Executive Officer of Chris-Craft. Chris-Craft
wishes to secure the continued services of the Executive as its Chief
Executive Officer for an additional extended period. In addition, because of
the position the Executive holds with Chris-Craft and the position that he
will hold during the term of his full-time employment under this Agreement,
Chris-Craft wishes to secure the further services of the Executive as a
consultant to Chris-Craft, and wishes to insure that the Executive will
refrain from competing with Chris-Craft, after the termination of his full
time employment.
In consideration of the covenants and agreements herein contained,
the parties agree as follows:
1. EMPLOYMENT; TERM
1.1 Chris-Craft shall continue to employ the Executive,
and the Executive shall continue to serve, as
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Chief Executive Officer of Chris-Craft during the Employment Term (as defined
in Section 1.2).
1.2 The term of the Executive's employment under Section
1.1 of this Agreement (the "Employment Term") shall commence on January 1,
1994 and end on December 31, 1998, unless extended as provided in this Section
1.2 or Section 8 or sooner terminated pursuant to the provisions of Section 9
or Section 10. On each of January 1, 1995 and January 1, 1996, the Employment
Term shall be automatically extended for one additional year (so that, on each
such January 1, the Employment Term shall have five years to run) without
further action by the parties, unless Chris-Craft shall have served written
notice upon the Executive prior to October 1, 1994, or prior to October 1,
1995, as the case may be, that such extension shall not take place. If a
notice that an extension shall not take place is served, the Employment Term
shall not, thereafter, be extended.
2. DUTIES AND AUTHORITY.
2.1 During the Employment Term, the Executive shall devote
his full business time and energies to the business and affairs of Chris-Craft
and shall not accept other employment or permit such personal business
interests as he may have to interfere with the performance of his duties
hereunder. The Executive agrees, during the Employment Term, to use his best
efforts, skill and abilities to promote Chris-Craft's interests; to serve as a
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director and officer of Chris-Craft and any of its domestic subsidiary
corporations if elected by the Board of Directors or stockholders of
Chris-Craft or any such subsidiary corporation; and to perform such duties
(consistent with his status set forth below in this Section 2) as may be
assigned to him by the Board of Directors of Chris-Craft.
2.2 Subject only to the direction and control of
Chris-Craft's Board of Directors (which direction and control shall be such as
is customarily exercised over a chief executive officer), the Executive shall
perform all services and duties necessary or appropriate for the management of
Chris-Craft's business and that of its subsidiaries.
2.3 Throughout the Employment Term, the Executive shall be
elected to, and shall continue in, the office denominated that of chief
executive officer of Chris-Craft in the by-laws or other constitutional
instruments of Chris-Craft (at the date hereof, the Office of Chairman of the
Board is so denominated), and shall continue to perform on behalf of
Chris-Craft substantially the same functions, and have substantially the same
authority, duties and responsibilities, as on the date hereof, and Chris-Craft
shall not confer on any other officer or employee authority, responsibility or
power superior or equal to the authority, responsibility or power vested in
the Executive hereunder.
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3. LOCATION.
During the Employment Term, the Executive's services under
this Agreement shall be performed principally in New York, New York, or
elsewhere in the New York City Metropolitan area. The parties, however,
acknowledge and agree that the nature of the Executive's duties hereunder
shall require reasonable domestic and international travel from time to time.
4. CASH COMPENSATION.
4.1 BASE SALARY. During the Employment Term,
Chris-Craft shall pay to the Executive, in monthly or more frequent
installments in accordance with Chris-Craft's regular payroll practices for
senior executives, a base salary of not less than $950,000 per annum;
provided, however, that such minimum base salary shall be adjusted upward, as
of January 1, 1995, and as of each successive January 1 to the end of the
Employment Term, in proportion to any increase in the Consumer Price Index, as
defined in Section 4.5, between the December levels of the two immediately
preceding years ("COLA Adjustment"). Each such adjustment shall be made
retroactively when the Consumer Price Index for the December next preceding
the date of such adjustment becomes available. It is understood that
Chris-Craft may, at any time, in the discretion of its Board of Directors
increase, but not decrease, the Executive's base salary. In the event that
the Executive's base salary is
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adjusted by the Board pursuant to the last preceding sentence, the new base
salary shall be adjusted upward, as of each following January 1, in proportion
to any increase in the Consumer Price Index from the effective date of the
last previous adjustment by the Board.
4.2 SECTION 162(M) LIMIT.
4.2.1 In no event shall the sum of the Executive's
base salary and other Remuneration (as defined in Section 4.2.2) for any
calendar year exceed the Section 162(m) Limit (as defined in Section 4.2.2).
Chris-Craft shall, to the extent foreseeable, reduce each regular cash
compensation payment in any year by the proportion that (a) the excess of (i)
the sum of all such regular cash compensation payments for such year over (ii)
the Section 162(m) Limit bears to (b) the sum of all such regular cash
compensation payments for such year and shall reduce or omit other cash
compensation payments (other than Excluded Remuneration) to the extent same
would cause Remuneration in such year to exceed the Section 162(m) Limit,
provided that in no event will cash compensation payable to the Executive
during any calendar year be reduced below $750,000 (the "Minimum Annual
Payment").
4.2.2 For purposes of this Agreement, "Remuneration"
shall mean "applicable employee remuneration" as defined in Section 162(m) of
the Internal Revenue Code of 1986, as amended from time to time (the "Code"),
or any
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successor or similar provision, which is paid or incurred with respect to the
Executive by Chris-Craft or any Affiliate of Chris-Craft, other than Excluded
Remuneration; "Excluded Remuneration" shall mean any Gross-Up Payment or other
payment required under Section 7 or any forgiveness of indebtedness under
Section 7, or any payment required under Sections 10.1, 10.2 and 10.4;
"Affiliate" shall mean any corporation which is a member of the same
"controlled group" as Chris-Craft within the meaning of Section 414(b) of the
Code, except that for this purpose Section 1563 of the Code shall be applied
by substituting "50 percent" for "80 percent"; and "Section 162(m) Limit"
shall mean $1,000,000, subject to adjustment as provided in this Section
4.2.2. If one or more amendments to Section 162(m) of the Code or any
successor or similar provision shall change the amount of Remuneration for a
year that is deductible by Chris-Craft or any Affiliate of Chris-Craft for
Federal income tax purposes, a corresponding change shall be made to the
Section 162(m) Limit for purposes of this Agreement for all years to which any
such amendment shall be applicable. Unless and until there is a Change in Law
(defined below) with respect to a taxable year of Chris-Craft, Chris-Craft and
the Executive acknowledge and agree that Remuneration shall not include any
amounts payable to the Executive pursuant to Section 4.4 hereof, and any
amounts includable in the Executive's taxable income with respect to amounts
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described in Section 6.1(d). For purposes of the preceding sentence, "Change
in Law" shall mean an amendment to Section 162(m), or the issuance or revision
of one or more judicial decisions or administrative rules, regulations or
other pronouncements, following the date hereof which, in the written legal
opinion of counsel to Chris-Craft, will more likely than not result in the
inclusion of the amount in question in "applicable employee remuneration" as
defined in Section 162(m) of the Code.
4.2.3 The provisions of this Section 4.2 shall be
interpreted in a manner consistent with the intention of the parties that a
deduction not be disallowed to Chris-Craft or any Affiliate for Federal income
tax purposes with respect to any Remuneration payable to the Executive under
this Agreement by reason of Code Section 162(m) (other than subparagraph
(4)(F) thereof) or any successor or similar provision (except for Excluded
Remuneration) and the Minimum Annual Payment.
4.3 DEFERRED COMPENSATION. During the Employment Term,
Chris-Craft shall credit to the Executive's Account (as defined in Section
4.3.1) the amount specified in Section 4.3.2.
4.3.1 Chris-Craft shall maintain, on its books, a
special account with respect to the Executive (the "Account"), in accordance
with the terms of this Agreement,
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until Executive shall have been paid all amounts credited thereto.
4.3.2 During each year of the Employment Term,
Chris-Craft shall credit to the Account, as of the end of each month, (a) an
amount equal to the sum of (i) $45,833.33, subject to COLA Adjustment plus
(ii) the amounts by which all cash compensation payments or distributions
during such month shall have been reduced or omitted pursuant to the last
sentence of Section 4.2.1; and (b) interest on the Account balance as of the
end of the preceding month, computed at a rate to be adjusted as of the last
day of each calendar quarter to equal the yield, as of the last business day
of such quarter, as reported in The Wall Street Journal, on U.S. Treasury
Notes maturing in the month that is five years after the last month of such
quarter (the "Interest Rate"). Amounts credited to the Account, excluding
interest, shall be deemed compensation for the year credited, for purposes of
determining benefits respecting each of Chris-Craft's qualified employee
benefit plans under Chris-Craft's Benefit Equalization Plan (the "BEP"). If
no yield for such notes is so published as of the last day of a particular
quarter, there shall be substituted the average of the yields so published for
the months next preceding and following. If The Wall Street Journal is not
published on the last day of a particular quarter, there shall be substituted
the appropriate yield
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reported on the last previous day on which The Wall Street Journal was
published. Following the Employment Term, Chris-Craft shall credit to the
Account, as of the last day of each month (based each month on a 30-day month
and a 360-day year), interest on the Account Balance as of such date, computed
at the Interest Rate.
4.3.3 On the January 15 first-occurring following the
year in which expiration or termination of the Employment Term shall have
occurred, Chris-Craft shall pay to the Executive an amount equal to one-fifth
of the Account balance as of such January 15 (including interest accrued in
accordance with Section 4.3.2 through such January 15) (the "First Payment"),
and the Account balance shall be reduced by the amount of such First Payment.
On each succeeding January 15, until Chris-Craft shall have made five payments
(including the First Payment) pursuant to this Section 4.3.3, Chris-Craft
shall pay to the Executive a sum equal to the amount of the First Payment,
plus interest credited to the Account through the date of such payment, from
the first day after the date of the immediately preceding payment, and the
Account balance shall be reduced by the amount of such sum.
4.4 BONUS.
4.4.1 In addition to his base salary and the deferred
amounts referred to in Section 4.3.2 above, the Executive shall be entitled to
receive, with respect to each
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fiscal year of Chris-Craft, or portion thereof, during the Employment Term, a
bonus equal to 1 1/2% of the amount by which Chris-Craft's "Pre-tax Income"
(as defined in Section 4.4.2) for the fiscal year in question exceeds
$36,000,000. The bonus shall be paid to Executive as soon as practicable, but
not later than March 31 of the year following the end of each such fiscal
year. The amount of the bonus payable with respect to any fiscal year that
includes but does not end on the last day of the Employment Term shall be
determined by multiplying the bonus which would have been payable with respect
to the whole of such fiscal year (if the whole of such fiscal year were within
the Employment Term) by a fraction, the numerator of which is the number of
days of such year included in the Employment Term and the denominator of which
is 365.
4.4.2 As used in this Section 4.4, the term "Pre-tax
Income" shall mean Chris-Craft's "Income before provision for income taxes and
minority interest," as such amount is reported on Chris-Craft's audited
consolidated statements of income included in its Annual Report to
Shareholders; provided that, in determining such "Pre-tax Income," for
purposes of this Section 4.4.2, there shall be excluded (i) any loss,
(determined in conformity with generally accepted accounting principles) of
any business commenced or newly acquired by Chris-Craft during (or within the
six months next preceding commencement of)
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the Employment Term, if such business would at any time during such Term
constitute a Development Stage Company under Securities and Exchange
Commission Regulation S-X assuming such business were organized as a separate
entity, e.g., the broadcast television network currently under development;
but only to the extent that the loss of such business, aggregated with the
losses of all other such businesses (if any) so commenced or acquired, exceed
$10,000,000 in any fiscal year and provided further that such losses incurred
by any business shall not be so excluded for any fiscal year beginning after
the fourth anniversary of the date of commencement or acquisition of such
business by Chris-Craft; and (ii) any goodwill amortization (similarly
determined) arising out of a business acquisition during the Employment Term.
As used in the next preceding sentence, the term "Chris-Craft" includes any
entity in which Chris-Craft has a substantial interest, the financial results
of which are reflected in Chris-Craft's consolidated statements of income.
4.5 CONSUMER PRICE INDEX. The words "Consumer Price
Index," as used in this Agreement shall mean the Consumer Price Index for All
Urban Consumers, U.S. City Average, All Items (1982-84=100), as reported by
the Bureau of Labor Statistics of the U.S. Department of Labor. In the event
that this Consumer Price Index shall be superseded or shall be published by a
different agency, then the
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superseding index shall be substituted for this Consumer Price Index in such a
manner as to implement the intent of this Agreement that the Executive's base
salary and Deferred Compensation shall be adjusted annually, beginning as of
January 1, 1995, so that the purchasing power thereof shall be maintained at a
level at least equivalent to the purchasing power thereof at January 1, 1994.
5. EXPENSES.
In addition to the compensation provided in Section 4 and in
Section 11, Chris-Craft will pay or reimburse the Executive for all reasonable
expenses actually incurred or paid by him during the Employment Term or the
Consulting Term (as defined in Section 11) in the performance of his services
hereunder upon presentation of expense statements, vouchers, or such other
supporting information as Chris-Craft may customarily require of its senior
executives.
6. ADDITIONAL BENEFITS.
6.1 During the Employment Term:
(a) The Executive will be entitled to
reasonable annual vacation periods, not less than an aggregate of nine weeks
in each calendar year, with full pay and allowances.
(b) The Executive will also be eligible for
sick leave in accordance with Chris-Craft's customary practice for senior
executives.
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(c) The Executive will be entitled to
participate in any insurance, pension, profit-sharing, stock option, stock
purchase or other benefit plan of Chris-Craft now existing or hereafter
adopted for the benefit of the employees generally or of the executives of
Chris-Craft; provided that the Executive shall begin receiving payments under
the BEP, at the latest, upon attaining age 70, regardless whether the
Executive shall continue to be a Chris-Craft employee at age 70.
(d) Upon approval of a new stock option plan
by Chris-Craft stockholders at their 1994 annual meeting, Chris-Craft shall
grant the Executive a 10-year option covering 300,000 shares that shall be
exercisable during the Employment Term and Consulting Term.
(e) Chris-Craft shall match the Executive's
contributions (including any contribution by any trust of which the Executive
is the grantor) to recognized charities, during each year of the Employment
Term and the Consulting Term, in an amount equal to the sum of (i) $200,000,
plus (ii) the amount by which (x) the product obtained by multiplying $200,000
by the number of previous years in which this Agreement shall have been in
effect shall exceed (y) the total amount of all matching contributions made by
Chris-Craft pursuant to this sentence in such previous years. Matching
contributions made by Chris-Craft pursuant hereto shall be in addition to any
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contributions made to match Executive's contributions under any other
charitable gift matching program generally applicable with respect to
contributions made by employees or directors of Chris-Craft or any of its
subsidiaries.
(f) The Executive shall be entitled to such
additional benefits as may be granted to him from time to time by the Board of
Directors of Chris-Craft.
6.2 As an additional inducement to the Executive to enter
this Employment Agreement, Chris-Craft shall enter into separate written
split-dollar insurance agreements (the "Split Dollar Agreements") with
Executive's sons, John C. Siegel and William D. Siegel, pursuant to which,
under each agreement, Chris-Craft shall procure, and pay the full amount of
each annual premium for 15 years on, split-dollar, last-to-die policies on the
lives of Executive and his wife having face amounts totaling $15,000,000, such
annual premiums to be in amounts set forth on Schedule A for all policies
procured pursuant to this Section 6.2 (I.E., pursuant to both Split Dollar
Agreements). John C. Siegel and William D. Siegel will be the owners of the
policies procured pursuant to their respective agreements and shall have the
full right to designate and change, from time-to-time, the beneficiaries
thereunder.
6.3 No payment or benefit made or provided under this
Agreement shall be deemed to constitute payment
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to the Executive, his legal representatives or beneficiaries in lieu of, or in
reduction of, any benefit or payment under an insurance, pension,
profit-sharing or other benefit plan, and no payment under any such plan shall
reduce any payment or benefit due under this Agreement.
7. CERTAIN ADDITIONAL PAYMENTS BY CHRIS-CRAFT
7.1 Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by Chris-Craft to or for the Executive's benefit (whether paid or
payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (including pursuant to any of Chris-Craft's benefit
plans)), determined without regard to any additional payment required under
this Section 7 (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code (and any successor provision and any similar
provision of state or local income tax law) (collectively, "Section 4999"), or
any interest or penalty is incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest or penalty,
hereinafter collectively to be referred to as the "Excise Tax"), then the
Executive shall be entitled to receive or have paid to the Internal Revenue
Service or other appropriate authority (and any relevant state or local
authority) ("IRS") on his behalf an additional payment (a "Gross-Up Payment")
in an amount equal to the sum of (a) the
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Excise Tax plus (b) all taxes, penalties and interest (including any excise
tax imposed by Section 4999 of the Code) paid or payable by Executive on
account of the operation of this Section 7, such that, after payment by
Executive of all such other taxes (including any interest or penalty imposed
with respect to such taxes) and any Excise Tax imposed upon the Gross-Up
Payment, Executive shall be in the same position as he would have been had no
Excise Tax been imposed upon the Payments.
7.1.1 Subject to the provisions of Section 7.3, all
determinations required to be made under this Section 7, including whether and
when a Gross-Up Payment is required, the amount of such Gross-Up Payment, and
the assumptions to be utilized in arriving at such determination, shall be
made by Price Waterhouse or any other nationally recognized accounting firm
(the "Accounting Firm") that shall be Chris-Craft's outside auditors at the
time of such determination, which Accounting Firm shall provide detailed
supporting calculations both to the Executive and Chris-Craft within 15
business days of the receipt of notice from Chris-Craft or the Executive that
there has been a Payment that the person giving notice believes may be subject
to the Excise Tax, or such earlier time as shall be requested by Chris-Craft.
All fees and expenses of the Accounting Firm shall be borne solely by
Chris-Craft. Any Gross-Up Payment, as determined pursuant
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to this Section 7, shall be paid by Chris-Craft to the IRS on the Executive's
behalf within five business days after the receipt of the Accounting Firm's
determination. If the Accounting Firm shall determine that no Excise Tax is
payable by the Executive, it shall furnish to the Executive written advice
that failure to report the Excise Tax on the Executive's applicable federal
income tax return would not be reasonably likely to result in the imposition
of a penalty for fraud, negligence, or disregard of rules or regulations. Any
determination by the Accounting Firm shall be binding upon Chris-Craft and the
Executive in determining whether a Gross-Up Payment is required or the amount
thereof (subject to Section 7.1.2 and 7.2), in the absence of material
mathematical or legal error.
7.1.2 As a result of uncertainty in the application of
Section 4999 of the Code that may exist at the time of the initial
determination by the Accounting Firm, it may be possible that in making the
calculations required to be made hereunder, the Accounting Firm shall
determine that a Gross-Up Payment need not be made that properly should be
made ("Underpayment") or that a Gross-Up Payment not properly needed to be
made should be made ("Overpayment"). In the event that Chris-Craft shall
exhaust or fail to adequately pursue its remedies pursuant to Section 7.2, and
the Executive thereafter shall be required to make a payment of any Excise
Tax, the Accounting
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Firm shall determine the amount of the Underpayment that occurred, and
Chris-Craft shall promptly pay the amount thereof to the IRS on the
Executive's behalf. In the event that the Accounting Firm shall determine
that an Overpayment was made, any such Overpayment shall be treated for all
purposes as a loan to the Executive with interest at the applicable Federal
rate provided for in Section 1274(d) of the Code; PROVIDED, HOWEVER, that
the amount to be repaid by the Executive to Chris-Craft shall be reduced to
the extent that any portion of the Overpayment to be repaid will not be offset
by a corresponding reduction in tax by reason of such repayment of the
Overpayment.
7.2 Executive shall give Chris-Craft written notice of any
claim by the IRS that, if successful, would require the payment by Chris-Craft
of a Gross-Up Payment. The Executive shall give such notice, within ten
business days after the Executive shall be informed in writing of such claim,
provided that failure by the Executive to provide such notice shall not result
in a waiver or forfeiture of any rights of Executive under this Section 7
except to the extent of actual damages suffered by Chris-Craft as a result of
such failure; provided further that if such failure prevents the contest of
such claim no payment shall be required with respect to such claim by
Chris-Craft under this Section 7. The Executive shall not pay such claim
prior to the expiration of 15 days following the date
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on which the Executive gives such notice to Chris-Craft. If Chris-Craft shall
notify the Executive in writing prior to the expiration of such 15-day period
that Chris-Craft desires to contest such claim, the Executive shall:
(a) give Chris-Craft any information
reasonably requested by Chris-Craft relating to such claim,
(b) take such action in connection with
contesting such claim as Chris-Craft shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by Chris-Craft,
(c) cooperate in good faith with Chris-Craft's
contest of such claim, and
(d) permit Chris-Craft to control any
proceedings to the extent relating to such claim; PROVIDED, HOWEVER, that
Chris-Craft shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and penalties with respect thereto)
imposed in relation to such claim, including all costs and expenses. Without
limiting the foregoing provisions of this Section 7.2, and to the extent its
actions do not
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unreasonably interfere or prejudice the Executive's disputes with the IRS as
to other issues, Chris-Craft shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the IRS in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as Chris-Craft shall
determine; PROVIDED, HOWEVER, that if Chris-Craft shall direct the
Executive to pay such claim and sue for a refund, Chris-Craft shall advance
the amount of such the Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance, and further provided that any extension
of the statute of limitations relating to taxes for the Executive's taxable
year with respect to which such contested amount shall to be due shall be
limited solely to such claim. Furthermore, Chris-Craft's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
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would be payable hereunder, and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the IRS to the extent
that such settlement or contest would not be reasonably likely to have a
material adverse effect on the issues with respect to the Gross-Up Payment.
7.3 If, after the Executive's receipt of an amount
advanced by Chris-Craft pursuant to Section 7.2, the Executive shall become
entitled to receive any refund with respect to such claim, the Executive shall
promptly pay to Chris-Craft the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after
the Executive's receipt of an amount advanced by Chris-Craft pursuant to
Section 7.2, a determination shall be made that the Executive shall not be
entitled to any refund with respect to such claim, and Chris-Craft shall not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after Chris-Craft shall receive notice of
such determination, then such advance shall be forgiven and shall not be
required to be repaid, and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
7.4 This Section 7 shall remain in full force and effect
following the termination of the Employment Term for any reason until the
expiration of the statute of
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limitations on the assessment of taxes applicable to the Executive for all
periods in which the Executive may incur a liability for taxes (including
Excise Taxes), interest or penalties arising out of the operation of this
Agreement.
8. CHANGE IN CONTROL; EXTENSION OF TERM.
8.1 Chris-Craft, on behalf of itself and its stockholders,
wishes to assure itself of continuity of management in the event of any Change
in Control (as defined in Section 8.2 of this Agreement). Notwithstanding
anything to the contrary in this Agreement, if a Change in Control (as defined
in Section 8.2 hereof) shall occur during the Employment Term, and the
Employment Term shall not have previously terminated for any reason (other
than in connection with or as a result of a Change in Control), the Employment
Term shall automatically be extended to the third anniversary of such Change
in Control, if, pursuant to Section 1.2, the Employment Term otherwise might
have terminated before such third anniversary.
8.2 For the purposes of this Agreement, a "Change in
Control" shall mean:
8.2.1 The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act ("Rule 13d-3")) of 20% or more of the combined
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voting power of the then outstanding voting securities of Chris-Craft entitled
to vote generally in the election of directors (the "Outstanding Voting
Securities"); provided, however, that the following acquisitions shall not
constitute a Change in Control: (v) any acquisition of a security (i) directly
from Chris-Craft that is authorized by the Incumbent Board, as defined in
Section 8.2.2, or (ii) of a class constituting a class of Outstanding Voting
Securities on the date hereof that results from conversion of a security of
any such class; (w) any acquisition by Chris-Craft; (x) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
Chris-Craft or any corporation controlled by Chris-Craft; (y) any change in
ownership of Outstanding Voting Securities by any Person identified or
referred to in "Table I, Beneficial Ownership of Chris-Craft Stock," in
Chris-Craft's Proxy Statement for its 1993 Annual Meeting of Stockholders, so
long as (i) any such Person who is an officer or director of Chris-Craft
remains such, or (ii) any Person that, with respect to a change in such
Person's ownership of Outstanding Voting Securities, as of the date hereof,
would have an obligation to make a filing under Rule 13d-3, would not be
required, in connection with such change in ownership, to change from filing
on Schedule 13G to Schedule 13D or to change any response to Schedule 13D,
Item 4, other than paragraph (a) thereof or paragraph (j), as it might
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relate to paragraph (a); or (z) any acquisition by any corporation pursuant to
a reorganization, merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in clauses (a), (b), and (c)
of Section 8.2.3 are satisfied; or
8.2.2 Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the stockholders of Chris-Craft, shall be
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
8.2.3 Approval by the stockholders of Chris-Craft of a
reorganization, merger or consolidation, in each case, unless, following such
reorganization, merger or consolidation: (a) more than 60% of the combined
voting power of the then outstanding voting securities of the
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corporation resulting from such reorganization, merger, or consolidation,
which may be Chris-Craft (the "Resulting Corporation"), entitled to vote
generally in the election of directors (the "Resulting Corporation Voting
Securities") shall then be owned beneficially, directly or indirectly, by all
or substantially all of the Persons who were the beneficial owners of
Outstanding Voting Securities immediately prior to such reorganization,
merger, or consolidation, in substantially the same proportions as their
respective ownerships of Outstanding Voting Securities immediately prior to
such reorganization, merger or consolidation; (b) no Person (excluding
Chris-Craft, any employee benefit plan (or related trust) of Chris-Craft, the
Resulting Corporation, and any Person beneficially owning, immediately prior
to such reorganization, merger or consolidation, directly or indirectly, 20%
or more of the combined voting power of Outstanding Voting Securities) shall
own beneficially, directly or indirectly, 20% or more of the combined voting
power of the Resulting Corporation Voting Securities; and (c) at least a
majority of the members of the board of directors of the Corporation shall
have been members of the Incumbent Board at the time of the execution of the
initial agreement providing for such reorganization, merger or consolidation;
or
8.2.4 Approval by the stockholders of Chris-Craft of
(a) a complete liquidation or dissolution of
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Chris-Craft or (b) the sale or other disposition of all or substantially all
of the assets of Chris-Craft, other than to a corporation (the "Buyer") with
respect to which (i) following such sale or other disposition, more than 60%
of the combined voting power of securities of Buyer entitled to vote generally
in the election of directors ("Buyer Voting Securities"), shall be owned
beneficially, directly or indirectly, by all or substantially all of the
Persons who were the beneficial owners of the Outstanding Voting Securities
immediately prior to such sale or other disposition, in substantially the same
proportion as their respective ownerships of Outstanding Voting Securities,
immediately prior to such sale or other disposition; (ii) no Person (excluding
Chris-Craft and any employee benefit plan (or related trust) of Chris-Craft or
Buyer and any Person that shall immediately prior to such sale or other
disposition own beneficially, directly or indirectly, 20% or more of the
combined voting power of Outstanding Voting Securities), shall own
beneficially, directly or indirectly, 20% or more of the combined voting power
of, Buyer Voting Securities; and (iii) at least a majority of the members of
the board of directors of Buyer shall have been members of the Incumbent Board
at the time of the execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of Chris-Craft.
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9. TERMINATION OF AGREEMENT FOR CAUSE.
Chris-Craft may terminate this Agreement, and all of
Chris-Craft's obligations hereunder except its obligation to pay to the
Executive amounts accrued to the date of termination, "for cause" upon 30 days
written notice. As used in this Agreement, the term "for cause" shall mean
and be limited to the following events: (a) the Executive's conviction (which
conviction, through lapse of time or otherwise, is not subject to appeal) in a
court of law of a felony involving moral turpitude; (b) the Executive's
material breach of any of the covenants set forth in Section 12; (c) the
Executive's dishonesty in the course of fulfilling his duties hereunder; or
(d) the Executive's continuing, repeated, wilful failure or refusal to perform
his duties in accordance with the terms of Section 2; PROVIDED, HOWEVER,
that this Agreement may not be terminated for cause under the immediately
preceding clause (d), unless the Executive shall have first received written
notice from the Board of Directors of Chris-Craft advising him of the specific
acts or omissions alleged to constitute a failure or refusal to perform his
duties, and such failure or refusal to perform his duties continues after the
Executive shall have had a reasonable opportunity to correct the acts or
omissions cited in such notice. In no event shall the alleged incompetence of
the Executive in the
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performance of his duties hereunder be deemed grounds for termination of this
Agreement for cause.
10. TERMINATION OTHER THAN FOR CAUSE.
10.1 DEATH. If the Executive shall die during the
Employment Term, this Agreement, and all of Chris-Craft's obligations
hereunder, shall terminate, except (a) with regard to payments from the
Account pursuant to Section 4.3.3 (which Account shall include Deferred
compensation payable through the last day of the month in which his death
occurred) and (b) that Chris-Craft shall pay to the Executive's estate, (i)
within 30 days after his death, the base salary, and bonus with respect to the
then current fiscal year, which would have been payable to the Executive under
Section 4 had the Employment Term ended on the last day of the month in which
his death occurred, and (ii) an annual amount (payable at the same times as
salary is paid to other executive employees of Chris-Craft) equal to the
Executive's "Average Annual Compensation" (as defined in Section 10.3) at the
date of his death; such annual amount shall be payable for each of the three
12-month periods following the first day of the month following the month in
which the Executive's death shall occur.
10.2 DISABILITY. If, during the Employment Term, the
Executive shall become disabled (as defined in Chris-Craft's then existing
disability policy) so that he shall be unable substantially to perform his
services
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hereunder, (a) for a period of six consecutive months or (b) for an aggregate
of six months within any period of 12 consecutive months, then the Board of
Directors of Chris-Craft may, at any time during the continuance of such
disability, terminate the Employment Term on 30 days' prior written notice to
the Executive. After such termination, the Executive shall have no further
obligation to perform services for Chris-Craft pursuant to Section 2 but shall
be entitled to receive from Chris-Craft, within 30 days after such
termination, in lieu of the amounts which would otherwise be payable under
Section 4, (i) the base salary, and bonus with respect to the then current
fiscal year, which would have been payable to the Executive under Section 4,
had the Employment Term ended on the last day of the month in which the
Employment Term was terminated pursuant to this Section 10.2, and (ii) an
amount (payable at the same times as salary is paid to the other executive
employees of Chris-Craft) at an annual rate equal to one-half of the
Executive's "Average Annual Compensation" (as defined in Section 10.3) at the
date of the termination of the Employment Term, such amount to be payable for
the period beginning on the first day of the month following the month in
which the Employment Term shall have been terminated pursuant to this Section
10.2 and ending on the day on which the Employment Term would have ended (as
extended, if theretofore extended) if not terminated
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pursuant to this Section 10. The Executive shall have no obligation to accept
any employment offered to him by others in order to minimize, or to be set off
against, the amounts to which he is entitled pursuant to this Section 10.2.
Chris-Craft shall not interpose any defense against payment of such amounts
based on refusal of the Executive to seek or accept other employment.
However, if the Executive shall obtain other employment, then amounts due to
him pursuant to this Section 10.2 shall be reduced, PRO TANTO, by amounts
actually received by him for services rendered in such other employment during
the time amounts are payable pursuant to said Section 10.2.
10.3 AVERAGE ANNUAL COMPENSATION. As used in Sections
10.1 and 10.2, the term "Average Annual Compensation" shall mean the mean
annual compensation received or receivable by the Executive pursuant to
Section 4 (without regard to the effect of the provisions of Section 4.2) with
respect to each of the three full fiscal years of Chris-Craft immediately
preceding the date of the Executive's death (in the case of Section 10.1) or
the date of the termination of the Employment Term (in the case of Section
10.2); provided, however, that if the Executive shall die, or the Employment
Term shall be terminated due to his disability, prior to January 1, 1997, the
Average Annual Compensation shall be the mean of (i) the amount received or
receivable by the Executive, or that would have become
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receivable by the Executive pursuant to Section 4 (including salary, Deferred
Compensation and bonus and without regard to the effect of the provisions of
Section 4.2) had he lived through December 31, 1994, and (ii) the mean amount
received or receivable by the Executive pursuant to Section 4 (including
salary, Deferred Compensation and bonus and without regard to the effect of
the provisions of Section 4.2) for each full fiscal year of Chris-Craft, if
any, beginning after December 31, 1994 and ending on the December 31
immediately preceding the date of the Executive's death or the date of the
termination of the Employment Term due to his disability, as the case may be.
10.4 TERMINATION BY EXECUTIVE.
10.4.1 If, during the Employment Term, (a) the
Executive shall not be elected (and continued) as a director and as chief
executive officer of Chris-Craft, or (b) the Executive shall not be
continuously afforded the authority, responsibilities and prerogatives
contemplated in Section 2.2 and 2.3, or (c) Chris-Craft shall, without the
consent of the Executive, be merged or consolidated with any other
corporation, or (d) Chris-Craft shall, without the consent of the Executive,
be dissolved, or (e) Chris-Craft shall, without the consent of the Executive,
sell all or substantially all of its assets, or (f) the Executive shall be
required to perform his principal services under this Agreement at a place
other than that set forth in Section 3,
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or (g) Chris-Craft shall fail to cure a material breach of this Agreement
within 10 days after notice, then the Executive shall have the election (but
not the obligation) to terminate the Employment Term on 60 days' prior written
notice to Chris-Craft. Such right to terminate the Employment Term shall be
the Executive's exclusive remedy in the event of the occurrence of any of the
events described in this Section 10.4.1. For purposes of clause (b) of the
preceding sentence, the Executive shall be deemed not to have been
continuously afforded the authority, responsibilities and prerogatives
contemplated in Sections 2.2 and 2.3 if there shall occur any reduction in the
scope, level or nature of the Executive's employment hereunder, or any
demotion, any phasing out or assignment to others, of the duties contemplated
in Section 2. For purposes of this Section 10.4, any determination made by
the Executive in good faith that any of the events described in clauses (a)
through (g) of the first sentence of this Section 10.4.1 has occurred shall be
conclusive.
10.4.2 If the Executive shall elect to terminate the
Employment Term upon the occurrence of any event described in Section 10.4.1,
or if Chris-Craft shall terminate this Agreement other than for cause or
disability pursuant to Sections 9 and 10 hereof, then the Executive shall have
no further obligation to perform services for Chris-Craft pursuant to Section
2 but he shall be entitled
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to receive from Chris-Craft, 30 days after the date of termination of the
Employment Term, for the period beginning on the date of such termination and
running through the day on which the Employment Term would have ended (as
extended, if theretofore extended) if not terminated pursuant to this Section
10, assuming no additional extensions of the Employment Term, and ending on
the day on which the Consulting Term would have ended (the "Cutoff Date"), in
lieu of the amounts that would otherwise be payable hereunder, a lump sum in
cash of an amount equal to the aggregate of (a) compensation that would have
been payable each year at the rate of the (i) base salary payable to the
Executive pursuant to Section 4.1 and (ii) all amounts of Deferred
Compensation payable to the Executive pursuant to Section 4.3 (each at the
rate in effect on the date of the termination of the Employment Term
(including any COLA Adjustment theretofore required to have been made)); (b)
all consulting fees payable pursuant to Section 11 hereof subject to COLA
Adjustment; and (c) an amount equal to the mean performance bonuses
theretofore paid to or payable to the Executive pursuant to this Agreement,
multiplied by the number of years remaining in the Employment Term at the date
of termination (including the year in which the termination occurs).
Notwithstanding the above, Deferred Compensation amounts, previously deferred
and credited to the Account shall be paid in accordance with Section 4.3.3.
In
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addition, until the Cutoff Date, Chris-Craft shall maintain, at its expense,
all insurance coverages and medical and health benefits in respect of the
Executive that shall have been in effect with respect to him prior to the
occurrence of the event entitling the Executive to terminate this Agreement.
11. CONSULTING SERVICES.
Unless the Employment Term shall theretofore have been
terminated for cause pursuant to Section 9, or on account of the death of the
Executive, during the five-year period (the "Consulting Term") beginning on
the date of termination of the Employment Term (or, if the Employment Term
shall have been terminated pursuant to Section 10.2 or 10.4, on the date the
Employment Term would have ended (as extended, if theretofore extended) if it
had not been terminated pursuant to said Section 10.2 or 10.4), the Executive
shall render to Chris-Craft such consultation and advice as the Board of
Directors or the Chief Executive Officer of Chris-Craft may request, subject
to the Executive's reasonable convenience and other business activities;
PROVIDED, HOWEVER, that the Executive shall not be required to devote more
than 20 hours in any month to such services, which shall be performed at a
time and place mutually convenient to both parties. For his consulting
services, the Executive shall receive, as a consulting fee, compensation at
the rate of $500,000 per annum, payable in
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equal monthly installments; Chris-Craft shall also provide the Executive with
an office and a secretary, as well as the use of such other facilities and
amenities (including, as examples, any airplane or automotive transportation
utilized by Chris-Craft) as Chris-Craft shall from time to time make available
to its most senior officers. Such facilities shall be furnished on a level at
least equivalent to those made available to the Executive under his employment
contract expiring December 31, 1993. The consulting fee shall be adjusted
upward, as of the beginning of the Consulting Term and as of each successive
January 1 to the end of the Consulting Term, in proportion to any increase in
the Consumer Price Index, as defined in Section 4.4, from the December 1993
level (as of the beginning of the Consulting Term) and from the December level
of the prior year as of each successive January 1. Each such adjustment shall
be made retroactively when the Consumer Price Index for the month next
preceding the date of such adjustment becomes available. In addition,
Executive shall be entitled to participate in each insurance plan or medical
or health plan generally available to Chris-Craft senior executives. In the
event that the Executive shall be discharged by Chris-Craft during the
Consulting Term other than for cause (as defined in Section 9), he shall
nevertheless be entitled to receive his full consulting fee for the remainder
of the Consulting Term. If the Executive shall die during the
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Consulting Term, his estate shall be entitled to receive the full consulting
fee payable hereunder until the earlier to occur of (a) the third anniversary
of the date of his death or (b) the end of the Consulting Term. If, during
the Consulting Term, the Executive shall be disabled from performing his
consulting services, and such disability shall continue for a period of six
consecutive months or for an aggregate of six months within any period of 12
consecutive months, or if such disability shall exist at the start of the
Consulting Term and shall be a continuation of a disability for which the
Employment Term shall have been terminated pursuant to Section 10.2, and the
Board of Directors of Chris-Craft, by written notice to the Executive (before
the Executive shall recover from such disability) shall terminate the
Executive's consulting services, the Executive shall have no further
obligation to perform consulting services for Chris-Craft and shall be
entitled to receive compensation at the rate of one-half of the consulting fee
payable hereunder until the end of the Consulting Term.
12. PROTECTION OF CONFIDENTIAL INFORMATION; NON-COMPETITION.
12.1 The Executive agrees that, in view of the fact that
his work for Chris-Craft will bring him into close contact with many
confidential affairs of Chris-Craft not readily available to the public, he
will not at any time (whether during the Employment Term, the Consulting Term,
or
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thereafter) disclose to any person, firm, corporation, partnership or other
entity whatsoever (except Chris-Craft or any of its subsidiaries), or any
officer, director, stockholder, partner, associate, employee, agent or
representative of any such firm, corporation or other entity, any confidential
information or trade secrets of Chris-Craft which may come into his possession
during the Employment Term or the Consulting Term. (the "Confidential
Materials") the term "Confidential Materials" does not include information
which at the time of disclosure or thereafter is generally available to or
known by the public otherwise than by reason of the Executive's disclosure
thereof in violation of this Agreement (ii) is, was or becomes available to
the Executive on a nonconfidential basis from a source other than Chris-Craft,
provided that the Executive has no reason to believe that such source is or
was bound by a confidentiality agreement with Chris-Craft, (iii) has been made
available, or is made available, on an unrestricted basis to a third party by
Chris-Craft, by an individual authorized to do so, or (iv) is known by the
Executive prior to its disclosure to the Executive. The Executive may use and
disclose Confidential Materials to the extent necessary to assert any right or
defend against any claim arising under this Agreement or pertaining to
Confidential Materials or their use, to the extent necessary to comply with
any applicable statute, constitution, treaty,
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rule, regulation, ordinance or order, whether of the United States, any state
thereof, or any other jurisdiction applicable to the Executive, or if the
Executive receives a request to disclose all or any part of the information
contained in the Confidential Materials under the terms of a subpoena, order,
civil investigative demand or similar process issued by a court of competent
jurisdiction or by a governmental body or agency, whether of the United States
or any state thereof, or any other jurisdiction applicable to the Executive.
12.2 From the date hereof to the last day of the Consulting
Term, the Executive will not, except on behalf of Chris-Craft or any of its
subsidiaries, directly or indirectly, whether as an officer, director,
stockholder, partner, associate, employee, agent or representative, become or
be interested in, or associated with, any other person, firm, corporation,
partnership or other entity whatsoever, engaged in a business competitive with
any of the businesses of Chris-Craft or any of its subsidiaries in any of the
markets in which Chris-Craft or any of its subsidiaries carries on such
business; provided, however, that the Executive may own as an investor
securities of any such corporation which securities are registered under
Section 12(b) or 12(g) of the Securities Exchange Act of 1934, so long as he
is not part of any control group of such corporation.
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12.3 The Executive agrees that a violation of the covenants
set forth in Section 12.1 or 12.2, or any provision thereof, will cause
irreparable injury to Chris-Craft and that Chris-Craft shall be entitled, in
addition to any other rights and remedies it may have, at law or in equity, to
an injunction enjoining and restraining the Executive from doing or continuing
to do any such act and any other violation or threatened violation of said
Section 12.1 or 12.2.
12.4 If any provision of Section 12 as applied to any
circumstance shall be adjudged by a court to be invalid or unenforceable, the
same shall in no way affect any other provision of this Section 12, the
application of such provision in any other circumstances, or the validity or
enforceability of this Section 12. Chris-Craft and the Executive intend this
Section 12 to be enforced as written. However, if any provision, or any part
thereof, is held to be unenforceable because of the duration of such provision
or the area covered thereby, or otherwise, Chris-Craft and the Executive agree
that the court making such determination shall have the power to reduce the
duration and/or area of such provision, and/or to delete specific words or
phrases ("blue-pencilling"), and in its reduced or blue-pencilled form such
provision shall then be enforceable and shall be enforced.
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12.5 Chris-Craft and the Executive intend to, and do
hereby, confer jurisdiction to enforce the covenants contained in this Section
12 upon the courts of any state of the United States and any other
governmental jurisdiction within the geographical scope of such covenants. If
the courts of any one or more of such states or jurisdictions shall hold such
covenants wholly unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of Chris-Craft and the Executive that such
determination shall not bar or in any way affect Chris-Craft's right to the
relief provided above in the courts of any other state or jurisdiction within
the geographical scope of such covenants, as to breaches of such covenants in
such other respective states or jurisdictions, the above covenants as they
relate to each state or jurisdiction being, for this purpose, severable into
diverse and independent covenants.
13. NOTICES.
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 (a) if delivered personally, when delivered; (b) if
delivered by overnight carrier, on the first business day following such
delivery; (c) if delivered by registered or certified mail, return receipt
requested, on the third business day after having been mailed in New York, New
York. In any case, each such notice, request, or consent or other
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communication shall be addressed as follows or to such other address as either
party shall designate by notice in writing to the other in accordance
herewith:
13.1 If to Chris-Craft:
Chris-Craft Industries, Inc.
767 Fifth Avenue
New York, New York 10153
Attention: Board of Directors
13.2 If to the Executive to him at his address set forth on
the personnel records of Chris-Craft.
With a copy to:
Harold I. Kahen, Esq.
Loeb and Loeb
345 Park Avenue
New York, New York 10154
14. GENERAL.
14.1 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.
14.2 The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
14.3 This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, between the parties.
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14.4 This Agreement and the benefits hereunder are personal
to Chris-Craft and are not assignable or transferable, nor may the services to
be performed hereunder be assigned by Chris-Craft to any person, firm or
corporation; PROVIDED, HOWEVER, that this Agreement and the benefits
hereunder may be assigned by Chris-Craft to any corporation acquiring all or
substantially all of the assets of Chris-Craft or to any corporation into
which Chris-Craft may be merged or consolidated, and this Agreement and the
benefits hereunder will automatically be deemed assigned to any such
corporation, subject, however, to the Executive's right to terminate the
Employment Term in such event as provided in Section 10.4. In the event of
any assignment of this Agreement to any corporation acquiring all or
substantially all of the assets of Chris-Craft or to any other corporation
into which Chris-Craft may be merged or consolidated, the responsibilities and
duties assigned to the Executive by such successor corporation shall be the
responsibilities and duties of, and compatible with the status of, a senior
executive officer of such successor corporation. Chris-Craft may delegate any
of its obligations hereunder to any subsidiary of Chris-Craft, provided that
such delegation shall not relieve Chris-Craft of its obligations hereunder.
14.5 This Agreement may be amended, modified, superseded,
canceled, renewed or extended and the terms or
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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.
14.6 Whenever this Agreement provides for any payment to
the Executive's estate, such payment may be made instead to such beneficiary
or beneficiaries as the Executive may have designated by written notice to
Chris-Craft. The Executive shall have the right to revoke any such
designation and to redesignate a beneficiary or beneficiaries by written
notice to Chris-Craft to such effect.
14.7 In case of any dispute or disagreement arising out of,
or in connection with, this Agreement, until the final determination of such
dispute or disagreement Chris-Craft shall continue to pay to the Executive all
of the compensation provided in this Agreement, and the Executive shall be
entitled to continue to receive all of
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the other benefits provided herein. If any such dispute or disagreement shall
result in legal action between Chris-Craft and the Executive, the Executive
shall be entitled to recover from Chris-Craft any actual expenses for
attorney's fees and disbursements incurred by him in connection with the
Executive's good faith maintenance or defense of such action, on an after-tax
basis. During the pendency of any such action, Chris-Craft shall pay all
actual attorney's fees and expenses incurred by the Executive in connection
therewith upon receipt of an undertaking by the Executive to repay such
amounts as shall be found in such action as having been incurred in connection
with the Executive's maintenance or defense of such action other than in good
faith.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the date first above written.
CHRIS-CRAFT INDUSTRIES, INC.
/s/ HERBERT J. SIEGEL By /s/ EVAN C THOMPSON
- --------------------- ------------------------
Herbert J. Siegel Executive Vice President
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TABLE OF CONTENTS TO EMPLOYMENT AGREEMENT
SECTION PAGE
1. EMPLOYMENT; TERM............................................... 1
2. DUTIES AND AUTHORITY........................................... 2
3. LOCATION....................................................... 4
4. CASH COMPENSATION.............................................. 4
4.1 BASE SALARY............................................. 4
4.2 SECTION 162(M) LIMIT.................................... 5
4.3 DEFERRED COMPENSATION................................... 7
4.4 BONUS................................................... 9
4.5 CONSUMER PRICE INDEX.................................... 11
5. EXPENSES....................................................... 12
6. ADDITIONAL BENEFITS............................................ 12
7. CERTAIN ADDITIONAL PAYMENTS BY CHRIS-CRAFT..................... 15
8. CHANGE IN CONTROL; EXTENSION OF TERM........................... 22
9. TERMINATION OF AGREEMENT FOR CAUSE............................. 27
10. TERMINATION OTHER THAN FOR CAUSE............................... 28
10.1 DEATH.................................................. 28
10.2 DISABILITY............................................. 28
10.3 AVERAGE ANNUAL COMPENSATION............................ 30
10.4 TERMINATION BY EXECUTIVE............................... 31
11. CONSULTING SERVICES............................................ 34
12. PROTECTION OF CONFIDENTIAL INFORMATION; NON-COMPETITION........ 36
13. NOTICES........................................................ 40
14. GENERAL........................................................ 41
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