<PAGE>
CHYRON CORPORATION
5 HUB DRIVE
MELVILLE, NEW YORK 11747
----------------
INFORMATION STATEMENT
PURSUANT TO SECTION 14(F) OF THE
SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 OF REGULATION 14E THEREUNDER
JULY 14, 1995
---------------------
This statement is being furnished to all holders of record at the close of
business on July 13, 1995 of the common stock, par value $0.01 per share
("Common Stock"), of Chyron Corporation (the "Company") in accordance with the
requirements of Section 14(f) of the Securities Exchange Act of 1934 ("Exchange
Act") and Rule 14f-1 of Regulation 14E promulgated thereunder.
<PAGE>
INTRODUCTION
The Company anticipates that a Special Meeting of the Board of Directors of
the Company will be held on or about July 25, 1995, to effectuate, among other
things, a restructuring of the Board. At or immediately prior to such meeting,
it is anticipated that: (a) the Board will approve a resolution increasing the
size of the Board from seven members to nine members; (b) Adolfo Nunez Astray,
Alfred O.P. Leubert, and Miguel S. Moraga will resign as directors of the
Company and members of committees of the Board; and (c) Steven N. Hutchinson,
Wesley W. Lang, Eugene M. Weber, Alan J. Hirschfield, and Sheldon D. Camhy will
be appointed by the existing members of the Board as new directors. The changes
in the size and composition of the Board will become effective as of the closing
of the stock transactions described below under "Stock Purchase Agreements."
This closing will not occur, and the persons appointed as the new directors will
not begin to serve as such, until after the expiration of the 10-day period
beginning on the later of the date of the filing of this Statement with the
Securities and Exchange Commission pursuant to Rule 14f-1 or the date of mailing
of this Statement to the Company's stockholders.
By virtue of the changes in the size and composition of the Board and (i)
the acquisition of Common Stock from Pesa, Inc. ("Pesa") and Sepa Technologies
Ltd., Co. ("Sepa"), by CC Acquisition Company A, L.L.C. ("CCACA") and CC
Acquisition Company B, L.L.C. ("CCACB") pursuant to the stock purchase
agreements described below, and (ii) the proposed participation in such
acquisition of Common Stock by the WP Group (as defined below), there may be
deemed to be, on the date the new directors referred to above take office, a
change in control of the Company.
As of July 13, 1995, the Company had issued and outstanding 87,727,304
shares of Common Stock, par value $0.01 per share, the Company's only class of
voting securities which would be entitled to vote for directors at a
stockholders meeting if one were to be held, each share being entitled to one
vote.
STOCK PURCHASE AGREEMENTS
On May 26, 1995, CCACA and CCACB entered into a stock purchase agreement
(the "Pesa Agreement") by and among CCACA, CCACB, and Pesa with respect to the
purchase of an aggregate of 59,414,732 shares of Common Stock as follows: (i)
30,000,000 shares of Common Stock to be purchased by CCACA for an aggregate
purchase price of $15,600,000, 10,000,000 (the "First Tranche of Shares") of
which shares of Common Stock were delivered on May 26, 1995 concurrently with
the payment by CCACA of $5,000,000 to Pesa and 20,000,000 (the "Second Tranche
of Shares") of which shares of Common Stock were placed in escrow as described
below; and (ii) 29,414,732 shares of Common Stock (the "Installment Shares") to
be purchased by CCACB for an aggregate purchase price of $14,119,071.36 payable
in installments commencing six months following the closing (the "Closing") of
the transaction contemplated by the Pesa Agreement and the Sepa Agreement (as
defined below).
On May 26, 1995, CCACA also entered into a stock purchase agreement (the
"Sepa Agreement") by and among CCACA, Sepa Technologies Ltd., Co. ("Sepa") and
John A. Servizio with respect to the purchase at Closing by CCACA of an
aggregate of 5,000,000 shares of Common Stock, the receipt by CCACA of a right
of first refusal to acquire from Sepa 9,000,000 shares of Common Stock at fair
market value, and the granting by Sepa to CCACA of the right to vote said
9,000,000 shares (the "Sepa Transaction").
In connection with the Pesa Agreement, CCACA entered into an escrow
agreement (the "Pesa Escrow") by and among Pesa, CCACA, and First Union National
Bank of North Carolina, a national banking association, as Escrow Agent, with
respect to the 20,000,000 Second Tranche of Shares. Of such 20,000,000 shares
placed in escrow pursuant to the Pesa Agreement, 10,000,000 of such shares have
been registered in the name of CCACA, and CCACA has, as of May 26, 1995, sole
voting power
2
<PAGE>
with respect to such shares, subject until the Closing, to forfeiture of such
ownership and voting rights under the certain terms of the Pesa Agreement. Of
the balance of the 10,000,000 shares placed in escrow pursuant to the Pesa
Agreement, Pesa retains the sole voting power until the Closing.
It is anticipated that the Closing will occur on or about July 25, 1995.
Pursuant to the Pesa Agreement and the Sepa Agreement, Michael
Wellesley-Wesley, a designee of CCACA, was elected a director of the Company on
May 26, 1995. The Pesa Agreement and the Sepa Agreement also contemplate that
three of the present directors will resign effective as of the Closing, that the
size of the Board will be increased from seven members to nine members, and that
five new directors, designated by CCACA will be appointed by the existing
directors to take office upon the effective date of such resignations to serve
until their respective successors shall be elected and qualify.
CCACA and CCACB have advised the Company that it is presently contemplated
that simultaneous with the Closing, WPG Corporate Development Associates IV,
L.P., WPG Corporate Development Associates IV (Overseas), Ltd., WPG Venture
Partners, Westpool Investment Trust and Charles Diker (collectively, the "WP
Group") will participate in the purchase of the Second Tranche of Shares, the
Installment Shares, and the Sepa Transaction (the "WP Participation").
CHANGE OF CONTROL
As a result of the actions described above under the captions "Introduction"
and "Stock Purchase Agreements," designees of CCACA and, if the WP Participation
is consummated, the WP Group, will constitute a majority of the Board, and CCACA
and the WP Group may be deemed to control the Company. Pursuant to the
transactions contemplated by the Pesa Agreement and the Sepa Agreement, CCACA
and CCACB may be deemed to beneficially own 73,414,732 shares of the Common
Stock, or 83.69% of the outstanding shares of the Common Stock of the Company.
If the WP Participation is consummated, CCACA and CCACB could be deemed to
beneficially own 25,365,893 shares of Common Stock, or 28.91% of the outstanding
shares of the Common Stock of the Company, and the WP Group could be deemed to
beneficially own 48,048,839 shares of Common Stock, or 54.77% of the outstanding
shares of the Common Stock of the Company. Prior to the consummation of the Pesa
Agreement and the Sepa Agreement, Sepa was deemed to control the Company by
virtue of, among other things, its direct and indirect, ownership of Common
Stock through Pesa.
3
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information as of July 13, 1995 with
respect to those persons or groups known to the Company who beneficially own
more than 5% of the Company's Common Stock and such information for the
Company's directors and officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ----------------------------------------------------------------- -------------------- -------------------
<S> <C> <C>
Pesa, Inc. ...................................................... 59,414,732 67.73%(1)
35 Pinelawn Rd., Suite 99E
Melville, NY 11747
Sepa Technologies Ltd., Co. ..................................... 14,000,000 15.96%(1)
c/o Dow, Lohnes & Albertson
One Ravinia Drive, Suite 1600
Atlanta, GA 30346-2108
CC Acquisition Company A, L.L.C. ................................ 44,000,000(2,3) 50.16%
c/o Camhy Karlinsky & Stein LLP
1740 Broadway, 16th Floor
New York, NY 10019-4315
CC Acquisition Company B, L.L.C. ................................ 29,414,732(3,4) 33.53%
c/o Camhy Karlinsky & Stein LLP
1740 Broadway, 16th Floor
New York, NY 10019-4315
Allan R. Tessler ................................................ 73,414,732(3,5) 83.69%
3490 Clubhouse Drive
Jackson Hole, Wyoming 83001
Michael Wellesley-Wesley ........................................ 73,414,732(3,6) 83.69%
Parrot House
Holtye
Cowden
Kent TN8 7ED
England
All Directors and Executive
Officers as a group............................................. 336,857(7,8,9) (less than 1%)
<FN>
- ------------------------
(1) Pesa is 100% owned by Pesa Electronics, S.A., a Spanish corporation. Pesa
Electronics, S.A. in turn is 100% owned by Sepa. Accordingly, Sepa
directly, and indirectly through Pesa, beneficially owns 73,414,732 shares
of the Common Stock of the Company, which represents approximately 84% of
the issued and outstanding shares of the Common Stock of the Company. Sepa
in turn is controlled by John A. Servizio, who is the Chairman and Chief
Executive Officer of Sepa and the Sole Director of Pesa Electronics, S.A.,
the President of Pesa and a director of the Company and as of May 10, 1995
the Chairman and Chief Executive Officer of the Company.
(2) Of such shares, 10,000,000 shares are held of record by CCACA as of May 26,
1995, 10,000,000 are held of record by CCACA and are being held under the
Pesa Escrow for delivery to CCACA at the Closing, 10,000,000 are held of
record by Pesa and are being held under the Pesa Escrow for delivery to
CCACA at Closing, 14,000,000 are held of record by Sepa of which 5,000,000
will be delivered to CCACA at the Closing and 9,000,000 would be delivered
to CCACA upon an exercise of a right of first refusal and to which CCACA
will be granted voting rights at the Closing as described in the Sepa
Agreement. See discussions captioned "Introduction" and "Stock Purchase
Agreements," above.
(3) If the WP Participation is consummated, CCACA could be deemed the
beneficial owner of 13,600,000 shares of Common Stock, constituting 15.50%
of the class, CCACB could be deemed
</TABLE>
4
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<TABLE>
<S> <C>
the beneficial owner of 11,765,893 shares of Common Stock, constituting
13.41% of the class, Allan R. Tessler and Michael Wellesley-Wesley could
each be deemed the beneficial owner of 25,365,893 shares of Common Stock,
constituting 28.91% of the class, and the WP Group could be deemed the
beneficial owner of 48,048,839 shares of Common Stock, constituting 54.77%
of the class.
(4) All of such shares are held of record by Pesa but will be transferred at
the Closing and delivered into escrow for delivery upon payment of the
purchase price thereof in accordance with the Pesa Agreement. See
discussions captioned "Introduction" and "Stock Purchase Agreements,"
above.
(5) Mr. Tessler is the President and sole manager of each of CCACA and CCACB.
Mr. Tessler disclaims beneficial ownership of such shares.
(6) Mr. Wellesley-Wesley is a Vice President of each of CCACA and CCACB. Mr.
Wellesley-Wesley disclaims beneficial ownership of such shares.
(7) Includes shares of the Common Stock of the Company underlying the Chyron
Corporation Common Stock Purchase Warrants, issued pursuant to the
Company's First Amended Joint Plan of Reorganization, dated October 28,
1991, filed by the Company with the U.S. Bankruptcy Court for the Eastern
District of New York (the "Plan of Reorganization"). Each such warrant
entitles the holder to purchase one share of the Common Stock of the
Company for $0.20 per share and expires on January 31, 1996.
(8) Includes shares of the Common Stock of the Company underlying the Chyron
Corporation Convertible Notes. The Convertible Notes were originally issued
by the Company to Pesa in the aggregate principal amount of $5,000,000
pursuant to the Plan of Reorganization. These Notes were convertible into
25,000,000 shares of the Common Stock of the Company and mature on January
31, 1996. As of January 1, 1994, all of the Convertible Notes had been
converted, except for the Notes in the aggregate principal amount of
$200,000, which are convertible into 1,000,000 shares and which Pesa in
1994 sold at their face value to certain past and current members of the
Company's management. The following is a list of each such person.
</TABLE>
<TABLE>
<CAPTION>
NOTES UNDERLYING
PRINCIPAL SHARES
----------- ----------
<S> <C> <C>
Alfred O.P. Leubert (former officer)................................. $ 100,000 500,000
Mark C. Gray......................................................... $ 17,000 85,000
Isaac Hersly......................................................... $ 20,000 100,000
John A. Peserina (former officer).................................... $ 13,000 65,000
Paul J. Rozzini...................................................... $ 8,000 40,000
W.T. (Tom) Beans (former officer).................................... $ 14,000 70,000
Aggregate Non-Executive Officers and Non-Director Employees.......... $ 28,000 140,000
</TABLE>
Mr. Leubert has since converted his Convertible Notes.
(9) Does not take into account shares of the Common Stock of the Company held by
Sepa or Pesa whose vote those directors and executive officers of the
Company who are also directors and officers of Sepa, Pesa Electronics, S.A.
or Pesa may have the power to direct.
5
<PAGE>
PRINCIPAL OCCUPATION AND STOCK OWNERSHIP OF
DIRECTORS AND NOMINEES FOR DIRECTORS
The Company anticipates that a special meeting of the Board of Directors
will be held on or about July 25, 1995 to effectuate, among other things, a
restructuring of the Board. At or immediately prior to such meeting, it is
anticipated that: (a) the Board will approve a resolution increasing the size of
the Board from seven members to nine members; (b) Adolfo Nunez Astray, Alfred
O.P. Leubert, and Miguel S. Moraga will resign as directors of the Company and
members of committees of the Board; and (c) Steven N. Hutchinson, Wesley W.
Lang, Eugene M. Weber, Alan J. Hirschfield, and Sheldon D. Camhy will be
appointed by the existing members of the Board as new directors. Set forth below
is a list of the current directors who will remain on the Board, together with
the nominees of CCACA. If any nominee listed in the table below should become
unavailable for any reason, which CCACA does not anticipate, the remaining
directors of the Board will vote for any substitute nominee or nominees who may
be selected by CCACA prior to or at the meeting or, if no substitute is selected
by CCACA prior to or at the meeting, for a motion to reduce the membership of
the Board to the number of nominees available.
<TABLE>
<CAPTION>
SHARES OF COMMON
YEAR FIRST PRINCIPAL OCCUPATION, OTHER STOCK BENEFICIALLY
NAME OF DIRECTOR ELECTED POSITIONS AND OFFICES WITH OWNED AS OF
OR NOMINEE AGE DIRECTOR THE COMPANY JULY 13, 1995
- -------------------------- --- --------------- ------------------------------------------ ------------------
<S> <C> <C> <C> <C>
Frederick D. Brown 78 1971 Director, Chairman of the Executive 19,746
Compensation Committee, Member of the
Audit Committee and Chairman of the
Special Transactions Advisory Committee
and Member of the Incentive Plan
Committee.
Robert E. Mulcahy 63 1987 Director, Chairman of the Audit Committee, 0
Member of the Executive Compensation
Committee, Member of the Special
Transactions Advisory Committee and
Member of the Incentive Plan Committee.
John A. Servizio 45 December 1991 Director, Member of the Executive 0
Compensation Committee and Chairman of
the Incentive Plan Committee.
Michael Wellesley-Wesley 43 May 26, 1995 Director. 73,414,732
Alan J. Hirschfield 59 (1) Director Nominee. 0
Sheldon D. Camhy 65 (1) Director Nominee. 0
Steven N. Hutchinson 44 (2) Director Nominee. 0(3)
Wesley W. Lang, Jr. 37 (2) Director Nominee. 0(3)
Eugene M. Weber 44 (2) Director Nominee. 0
<FN>
- ------------------------------
(1) Will not take office until the Closing of the Pesa Agreement and the Sepa
Agreement, which will occur not later than three business days after the
expiration of the 10-day period beginning on the later of (i) the date of
the filing of this Information Statement with the Securities and Exchange
Commission, or (ii) the date of the mailing of this Information Statement
to the Company's stockholders.
(2) Will not take office unless the WP Participation is consummated, which is
expected to occur simultaneous with the Closing.
(3) Messrs. Hutchinson and Lang are general partners of certain of the entities
included in the WP Group and could be deemed to be beneficial owners of
certain shares of Common Stock to be beneficially owned by such entities if
the WP Participation is consummated. See "Stock Purchase Agreements" above.
</TABLE>
FREDERICK D. BROWN -- Director, Chairman of the Executive Compensation
Committee, Member of the Audit Committee, Chairman of the Special Transactions
Advisory Committee and Member of the Incentive Plan Committee. Mr. Brown has
been a director of the Company since 1971 and, until his retirement in December
1989, was Corporate Senior Vice President of Day & Zimmermann, Inc., a
Philadelphia, Pennsylvania, engineering and construction firm.
6
<PAGE>
ROBERT E. MULCAHY -- Director, Chairman of the Audit Committee, Member of
the Executive Compensation Committee, Member of the Special Transactions
Advisory Committee and Member of the Incentive Plan Committee. Mr. Mulcahy has
been a director of the Company since 1987. From 1982 to the present time, Mr.
Mulcahy has been an independent management consultant. He has been President of
Counselors to Management, Inc., a New Jersey corporate counseling firm, since
1984, and was a Senior Associate with Corporate Director, Inc., a New York
corporate consulting firm. Mr. Mulcahy was President of Allied Chemical
Corporation (New Jersey) from 1975 to 1979 and was a director of that company
from 1975 to 1980. Currently, he is Chairman of the Board of Directors of
American Coin and Stamp Ventures, Inc.
JOHN A. SERVIZIO -- Director, Member of the Executive Compensation Committee
and Chairman of the Incentive Plan Committee. Mr. Servizio has been a director
of the Company since December 1991. Since June 1994, Mr. Servizio has been the
Chairman and Chief Executive Officer, and the controlling equity owner, of Sepa,
which directly, and indirectly through its subsidiary Pesa, controls
approximately 83% of the issued and outstanding shares of the Common Stock of
the Company. Since June 1994, Mr. Servizio has been the President, and since
October 1994 the Sole Director, of Pesa Electronica, S.A., the immediate parent
company of Pesa. Previously, Mr. Servizio had served since April 1988 as the
Chief Financial Officer of Pesa Electronica, S.A. In October 1994, Pesa
Electronica, S.A. filed for "suspencion de pagos", which is the Spanish
equivalent of a Chapter 11 reorganization under the U.S. federal bankruptcy
laws. Since December 1989, Mr. Servizio has served in various officer and
director capacities with Pesa and its wholly-owned U.S. subsidiaries. On May 16,
1995, Mr. Servizio became Chairman and Chief Executive Officer of the Company.
MICHAEL WELLESLEY-WESLEY -- Director. Mr. Wellesley-Wesley served as
Executive Vice-President -- International Development for Data Broadcasting
Company from July 1992 until June 1995. From 1990 until 1992 he was a part-time
consultant to Financial News Network, Inc. ("FNN"), where he was responsible for
all external financial relationships with banks, investment banks, creditors and
investors. Prior to that, he was a managing director of Stephen Rose & Partners
Ltd., a London-based investment banking firm, a position he held since 1980. Mr.
Wellesley-Wesley also served as a director of FNN from 1983 to June 1992.
ALAN J. HIRSCHFIELD -- Nominee. Mr. Hirschfield has been the Co-Chairman of
the Board and Co-Chief Executive Officer of Data Broadcasting Corporation since
June 1992. Prior thereto, he served as Managing Director of Wertheim Schroeder
and as a consultant to the entertainment and media industry. He formerly served
as Chief Executive Officer of Twentieth Century-Fox Film Corp. and Columbia
Pictures Entertainment, Inc. from 1980 to 1985 and 1973 to 1978, respectively.
Mr. Hirschfield also currently serves on the board of Cantel Industries, Inc.
Mr. Hirschfield and another individual were appointed to serve as a
restructuring team to address the financial problems of FNN, and in that
capacity, served as Co-Chief Executive Officers of FNN from October 1990 until
June 1992. Mr. Hirschfield currently serves as a director of the FNN Estate,
having been named to the board in June 1991. From October 1990 until September
1992, Mr. Hirschfield also served as Co-Chief Executive Officer of
Infotechnology, Inc. ("Infotech"), an integrated information technology and
communications concern. Mr. Hirschfield resigned his directorship of Infotech in
September 1992. FNN and Infotech each filed for reorganization under chapter 11
of the Bankruptcy Code in March 1991.
SHELDON D. CAMHY -- Nominee. Mr. Camhy has been a Partner in the law firm of
Camhy Karlinsky & Stein LLP since January 1991. Prior thereto, Mr. Camhy was a
partner in the law firm of Shea & Gould.
STEVEN N. HUTCHINSON -- Nominee. Mr. Hutchinson has been a Principal of
Weiss Peck & Greer LLC (Investment Management) since July 1993. He has also been
a director of Perrigo Company since June 1988; a director of Kenetech Company
since April 1985; and a director of Empire of Carolina, Inc. since March 1995.
Mr. Hutchinson was a vice president of the Hillman Company (Investment
Management) from September 1976 to June 1993.
7
<PAGE>
WESLEY W. LANG, JR. -- Nominee. Mr. Lang is a Principal of Weiss Peck &
Greer LLC (Investment Management), and has been associated with that firm since
1985. He has also been a director of Nu-West Industries, Inc. since May 1988 and
Durakon Industries, Inc. since June 1991.
EUGENE M. WEBER -- Nominee. Mr. Weber has been an Independent Consultant to
Westpool Investment Trust plc since July 1994. Mr. Webber was a partner of Weiss
Peck & Greer (Investment Management) from August 1987 to June 1994 and was
associated with that firm since 1983.
COMMITTEES OF THE BOARD OF DIRECTORS
AND MEETING ATTENDANCE
The Board of Directors held 11 meetings during fiscal year 1994. All of the
directors appointed at the time of such meetings attended each meeting, except
Mr. Mulcahy and Mr. Lance who attended 10 of the 11 meetings and Mr. Servizio
who attended 9 of the 11 meetings. The Board of Directors has appointed an
Executive Compensation Committee, an Audit Committee and an Incentive Plan
Committee and had appointed a Special Transactions Advisory Committee.
The Executive Compensation Committee is authorized to review, pass on and
make recommendations to the Board of Directors on all matters regarding the
remuneration of the Company's executive officers, including the administration
of the Company's compensation plans. The members of the Committee were Messrs.
Brown, Gray, Lance, Mulcahy and Servizio. The Committee held 7 meetings during
the fiscal year 1994. All directors who were members were present at all of
these meetings, except Mr. Lance and Mr. Mulcahy who attended 6 of the 7
meetings and Mr. Servizio who attended 5 of the 7 meetings.
The Audit Committee is responsible for making recommendations to the Board
of Directors as to the selection of the Company's independent auditor,
maintaining communications between the Board and the independent auditor,
reviewing the annual audit report submitted by the auditor and determining the
nature and extent of problems, if any, presented by such audit warranting
consideration by the Board. The Members of the Audit Committee were Messrs.
Brown and Mulcahy. The Committee held 1 meeting during fiscal year 1994. ll
directors who were members were present at this meeting.
The Special Transactions Advisory Committee was authorized to cconsider,
evaluate, analyze, advise upon and make recommendations to the Board with regard
to proposed material transactions between the Company and Sepa or any of its
subsidiaries or affiliates with regard to such other transactions that the
Board, in its sole discretion, might submit for the Committee's consideration.
The members of the Committee were Messrs. Brown and Mulcahy. The Committee held
4 meetings during fiscal year 1994. All directors who were members were present
at this meeting.
The Incentive Plan Committee administers the Chyron Corporation 1995
Long-Term Incentive Plan. The members of the Committee were Messrs. Brown,
Mulcahy and Servizio. No meetings have been held by the Committee to date.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Except for Mark C. Gray, President and Chief Operating Officer of the
Company, and Peter J. Lance, Director, Secretary and Vice President and Chief
Administrative Officer of the Company, no member of the Executive Compensation
Committee was a former or current executive officer or employee of the Company
or any of its subsidiaries during fiscal year 1994. John A. Servizio and Mr.
Lance are also executive officers and employees of Pesa (the immediately
controlling shareholder of the Company) and Pesa Electronica, S.A. (the
immediately controlling shareholder of Pesa). In October 1994, Mr. Lance
resigned his officer position with Pesa Electronica, S.A.; and in January 1995,
he resigned his officer positions with Pesa and its wholly-owned U.S.
subsidiaries. Mr. Servizio is also the chief executive officer and the
controlling equity owner of Sepa (the immediately controlling shareholder of
Pesa Electronica, S.A.). On May 16, 1995, Mr. Servizio became Chairman and Chief
Executive Officer of the Company without pay other than his normal director
fees.
8
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation awarded to
or earned by the Chief Executive Officer of the Company and the seven highest
paid executive officers of the Company for fiscal year 1994, as well as the
total compensation paid to each individual for the Company's previous two fiscal
years if employed by the Company as an executive officer at that time.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------------------------------
ANNUAL COMPENSATION OTHER RESTRICTED SECURITIES
-------------------------- ANNUAL STOCK UNDERLYING LTIP
NAME AND SALARY (1) BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS ALL OTHER
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- -------------------------------------- ----- ---------- ------ ------------ ---------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mark C. Gray 12/94 207,846 27,000
Chairman of the Board, President and
Chief Executive Officer
Antonio Diaz Borja 12/94 0 0 17,000(2)
Former Chairman of the Board and 12/93 0 0 20,000(2)
Chief Executive Officer (2) 12/92 0 0 16,000(2)
Isaac Hersly 12/94 189,600 36,000
Executive Vice President 12/93 158,400 30,000
12/92 159,285 15,000
Patricia A. Lampe 12/94 76,461 19,000
Treasurer and Chief Financial Officer
John A. Poserina 12/94 64,169 0 148,942(3)
Former Vice President, Treasurer, 12/93 113,000 15,730
Secretary and Chief Financial Officer 12/92 113,115 11,000
(3)
Paul J. Rozzini 12/94 113,000 13,750
Vice President Manufacturing 12/93 113,000 18,920
12/92 113,115 11,000
James F. Duca 12/94 33,160 6,705
Vice President Engineering
Paul M. Yarmolich 12/94 120,500 14,688 4,970(4)
Former Vice President Engineering (4) 12/93 76,566 13,630
Patrick A. Burns 12/94 96,348 4,688
Vice President and General
Manager of West Coast
Operations
W.T. (Tom) Beams 12/94 30,520 0 131,783(5)
Former President of CMX Division and 12/93 127,825 0
of Aurora Systems (5) 12/92 123,400 11,500
<FN>
- ------------------------------
(1) Includes any annual car allowance.
(2) Mr. Diaz Borja resigned his office and directorship in October 1994. His
only compensation was his director's fees.
(3) Mr. Poserina resigned his office in July 1994. Pursuant to the agreement
with the Company of even date, the Company paid to Mr. Poserina a lump-sum
amount of $98,942 in lieu of certain notice rights and agreed to pay him
$82,500 in monthly installments of $10,000 each (for a total of $50,000 for
fiscal year 1994).
(4) In September 1994, Mr. Yarmolich was re-assigned as Vice President of New
Business Development, which is not considered to be an executive office by
the Board of Directors. The amounts in the "All Other" column represents
reimbursement for moving expenses.
(5) Mr. Beams left the employ of the Company in April 1994. Pursuant to his
employment agreement, the Company paid him a lump-sum amount of $71,783 and
$79,000 in monthly installments of $10,000 each (for a total of $60,000 for
fiscal year 1994).
</TABLE>
9
<PAGE>
EMPLOYMENT AGREEMENTS
The Company currently has in effect employment agreements with the following
executive officers, which are summarized as follows:
<TABLE>
<CAPTION>
MAXIMUM
NAME TITLE BASE SALARY BONUS % EXPIRATION DATE
- --------------------- ------------------------------------------ ----------- ------------- -----------------------
<S> <C> <C> <C> <C>
Mark C. Gray President and COO $ 225,000 24% December 31, 1996
Peter J. Lance V.P. & Chief Admin. Officer $ 180,000 20% December 31, 1997
Isaac Hersly Executive Vice President $ 180,000 20% 90-Days Notice
Patricia A. Lampe Treasurer and CFO $ 95,000 20% December 31, 1996
Paul J. Rozzini Vice President Manufacturing $ 115,000 20% 90-Days Notice
James F. Duca Vice President Engineering $ 115,000 20% December 31, 1995
Patrick A. Burn V.P. & G.M. West Coast Op. $ 125,000 20% December 31, 1996
</TABLE>
As of May 16, 1995, John A. Servizio assumed, without pay other than his
director fees, the position of Chairman and Chief Executive Officer, and Mr.
Gray assumed the position of President and Chief Operating Officer.
The employment agreements provide that either the Company or the employee
has the right to terminate the agreement without cause at any time on ninety
days notice. If the Company were to so terminate the agreement without cause,
the Company must pay to the employee as severance the following percentage of
the employee's annual base salary in effect on the date of termination:
<TABLE>
<CAPTION>
PERCENT OF
NAME ANN. BASE SALARY
- --------------------- ----------------
<S> <C>
Mark C. Gray 100%
Peter J. Lance 170%-200%
Isaac Hersly 50%- 75%
Patricia A. Lampe 100%
Paul J. Rozzini 50%- 75%
James F. Duca 100%
Patrick A. Burns 100%
</TABLE>
The above severance payments are payable by the Company in twelve equal
monthly installments. The employment agreements also contain certain
restrictions on competition.
PENSION PLAN
The Company maintains a qualified non-contributory defined benefit pension
plan (the "Pension Plan") for all employees of the Company, except for those
employees who are covered under a collective bargaining agreement (there are
currently no employees covered by collective bargaining agreements). Under
certain circumstances, the Company's subsidiaries that are members of the
Company's controlled group of corporations may join the Pension Plan. As of
December 31, 1994, all of the Company's then subsidiaries had joined the Pension
Plan, and their employees are participants therein.
Under the Pension Plan, a participant retiring at normal retirement age
receives a monthly pension benefit equal to 25% of his or her final average
earnings up to the level of social security covered compensation plus 38% of
such earnings in excess of social security covered earnings. A participant's
average monthly earnings is his or her monthly compensation averaged during the
five consecutive years during the ten-year period prior to his or her
termination that produces the highest average monthly compensation.
10
<PAGE>
Participants in the Pension Plan vest according to the following schedule:
<TABLE>
<CAPTION>
YEARS OF SERVICE AMOUNT VESTED
- ---------------------------------------------------------- -----------------
<S> <C>
Less than 2............................................... 0%
2......................................................... 20%
3......................................................... 40%
4......................................................... 60%
5......................................................... 80%
6......................................................... 100%
</TABLE>
In addition, a participant who reaches age sixty-five, but who has less than
six years of participation in the Pension Plan, becomes fully vested when he or
she completes five years of participation in the Pension Plan.
The following current executive officers of the Company, and their credited
years of service as of January 1, 1995, are participants in the Pension Plan:
Mr. Gray, 1 years; Mr. Lance, 3 years; Mr. Hersly, 8 years; Ms. Lampe, 1 year;
Mr. Rozzini 19 years; Mr. Duca 0 years; and Mr. Burns 0 years.
The following table shows the aggregate annual benefits under the Pension
Plan as now in effect that would be currently payable to participants retiring
at age sixty-five on a single-life basis under various assumptions as to salary
and years of service. Benefits under the Pension Plan are payable in the form of
a monthly, lifetime annuity commencing on the later of normal retirement age or
the participant's date of retirement, or, at the participant's election, in a
lump sum or installment payments. The amounts shown reflect the level of social
security covered compensation for a participant reaching age sixty-five in 1995.
In addition, the participant is entitled to receive social security benefits.
The Employee Retirement Income Security Act of 1974 and the Internal Revenue
Code of 1986, as amended, limit the annual retirement benefit that may be paid
out of funds accumulated under a qualified pension plan. The current maximum
annual benefit payable under the Pension Plan is $120,000. This maximum is
proportionately reduced for years of plan participation less than ten. Effective
from January 1, 1994, Compensation in excess of $150,000 may not be taken into
account in the determination of benefits under the Pension Plan.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE AT RETIREMENT AT
AGE 65
HIGHEST CONSECUTIVE FIVE-YEAR AVERAGE COMPENSATION ------------------------------------------
DURING THE LAST TEN YEARS OF EMPLOYMENT 5 10 15 20
- ------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
$ 50,000............................................... $ 4,000 $ 8,000 $ 12,000 $ 16,000
$100,000............................................... $ 8,800 $ 17,500 $ 26,300 $ 35,000
$150,000............................................... $ 13,500 $ 27,000 $ 40,500 $ 54,000
</TABLE>
DIRECTORS' COMPENSATION
Directors of the Company who are also salaried officers or employees of the
Company do not receive special or additional compensation for serving on the
Board of Directors or any of its committees. Each director who is not also a
salaried officer or employee of the Company receives an annual fee of $5,000 for
serving on the Board of Directors and its committees and receives $1,000 for
each meeting of the Board of Directors and any of its committees that he
attends.
CHANGE IN CONTROL
As of January 1, 1994, Amper, S.A., a Spanish corporation, owned
approximately 98% of Pesa Electronica, S.A., a Spanish corporation, which in
turn owned 100% of Pesa, which in turn beneficially owned approximately 67.5% of
the issued and outstanding shares of the Common Stock of the Company, and which
constituted control of the Company. On June 24, 1994, Sepa acquired Pesa
Electronica, S.A. from Amper, S.A. On August 2, 1994, Sepa directly acquired
14,000,000 shares of the Common Stock of the Company for consideration totalling
$7,000,000. In October 1994, Pesa Electronica, S.A. filed for "suspencion de
pagos," which is the Spanish equivalent of a Chapter 11 reorganization under
U.S. federal bankruptcy laws.
11
<PAGE>
As of February 28, 1995, Sepa directly, and indirectly through Pesa,
controlled approximately 83% of the issued and outstanding shares of the Common
Stock of the Company. Ninety-eight percent of the equity of Sepa is owned by
John A. Servizio, who is the Chairman and Chief Executive Officer of Sepa, the
Sole Director of Pesa Electronica, S.A., the President of Pesa, Inc., a director
of the Company and, as of May 16, 1995, its Chairman and Chief Executive
Officer.
INTERESTED PARTY
John A. Servizio is a director of the Company, as of May 16, 1995, its
Chairman and Chief Executive Officer, and also a director and/or officer of
Sepa, Sepa's wholly-owned Spanish subsidiary Pesa Electronica, S.A.
("Electronica"), Electronica's wholly-owned Delaware subsidiary Pesa and Pesa's
wholly-owned U.S. subsidiaries. As discussed in the sections captioned "Voting
Securities and Principal Holders Thereof" and "Change in Control", Sepa
directly, and indirectly through Pesa, has been the controlling shareholder of
the Company, and Sepa in turn is controlled by Mr. Servizio. Similarly, Peter J.
Lance has been a director and executive officer of the Company and also held
several officer positions at Electronica, Pesa, and its U.S. subsidiaries.
Effective October 31, 1994 and January 31, 1995, Mr. Lance resigned his
positions at Electronica and at Pesa, and its U.S. subsidiaries, respectively.
On December 27, 1991, as amended March 12, 1992, the Company entered into a
Management Agreement (the "Management Agreement") with Electronica for the
provision by Electronica or a wholly-owned subsidiary thereof of certain
business and technical services to the Company, including the expertise of
certain employees of Electronica. In consideration of the services provided
under the Management Agreement, the Company agreed to pay Electronica an amount
equal to 3% of Consolidated Revenues (as defined in the Management Agreement).
On March 10, 1992, Electronica assigned the Management Agreement to Pesa, who as
of July 1, 1994 assigned the Management Agreement to Sepa. The Company
subsequently negotiated with Sepa an Amended and Restated Management Agreement,
reducing the management fee from 3% to 2.5% as of January 1, 1995 and extending
the expiration date to December 31, 1997. In addition, the Company exercised its
option to prepay the July 1, 1994 to December 31, 1995 management fee at a
discount of 25%. The Company anticipates that the combined benefit of the
foregoing will amount to savings in excess of $700,000 for the 18-month period
ending December 31, 1995. Total management fees paid to Pesa and Sepa during
fiscal year 1994, including the optional prepayment and amounts outstanding as
of December 31, 1994, were $2,905,000. In the event that the Closing occurs, the
management fee will be subject to $1.5 million annual limit.
During fiscal 1994 the Company provided without charge offices and
incidental office services to Pesa at the Company's corporate headquarters.
The Company shares certain trade show and advertising expense with
Electronica and its affiliates. Such services amounted to $303,000 for fiscal
year 1994 and were billed to Electronica under a usage based allocation.
John K. Percival, who was a director of the Company, is Chairman of the
investment banking firm of Percival, Hudgins & Company, Inc. which holds of
record a 2% equity interest in Sepa. Of this amount, PHC owns beneficially 1.2%
of Sepa. The remaining 0.8% of Sepa is held by PHC for the benefit of Resurgens
Capital Investments, Inc. Mr. Percival served as President and Chief Operating
Officer of Sepa until his resignation in December 1994. In January 1995, the
Special Transactions Advisory Committee of the Board of Directors of the Company
retained PHC to advise the Company regarding a possible transaction involving
Sepa and Pesa. Such advice may have included, but was not limited to,
consideration to be given to a sale or buy-out of the Company as well as other
alternative strategies. PHC's retainer agreement provided for the payment of
fees by the Company to PHC of up to $200,000, plus additional fees in the event
of the completion of certain specified transactions. On May 26, 1995, the
Committee terminated its activities in this regard and its relationship with
PHC.
12
<PAGE>
SECTION 16(A) REPORTING DELINQUENCIES
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who beneficially own more than 10%
of a registered class of the Company's equity securities, to file with the U.S.
Securities and Exchange Commission (the "SEC"), New York Stock Exchange and
Midwest Stock Exchange reports of ownership and changes in ownership of Common
Stock and other equity securities of the Company. Executive officers, directors
and greater than 10% beneficial owners are required by SEC regulation to furnish
the Company with copies of all Section 16(a) reports that they file.
Based solely upon a review of the copies of such reports furnished to the
Company or written representations that no other reports were required, the
Company believes that, during fiscal year 1994, all filing requirements
applicable to its executive officers, directors and greater than 10% beneficial
owners were met, except for the following late filings:
<TABLE>
<CAPTION>
NAME OF FILING PARTY SEC REPORT NO. DAYS LATE
- ---------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Amper, S.A.................................................................. Form 4 1
Pesa Electronica, S.A....................................................... Form 4 1
Pesa, Inc................................................................... Form 4 1
Fernando Camara Barroso..................................................... Form 3 21
Patrick A. Burns............................................................ Form 3 9
</TABLE>
CERTAIN LITIGATION
None.
CHYRON CORPORATION
Dated July 14, 1995
13
