SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission File Number 1-9014
CHYRON CORPORATION
(Exact name of registrant as specified in its charger)
New York 11-2117385
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
5 Hub Drive, Melville, New York 11747
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 845-2000
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, par value $.01 New York Stock Exchange
(Title of Class) (Name of exchange on which
registered)
Common Stock Purchase Warrants expiring January 31, 1996
Chicago Stock Exchange
(Name of exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter periods
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. ( )
The aggregate market value of voting stock held by non-affiliates of the
Company on March 14, 1997 was $68,754,901.
The number of shares outstanding of the issuer's common stock, par value
$.01 per share, on March 14, 1997 was 32,384,635.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by a check mark whether the Registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
YES X NO
DOCUMENTS INCORPORATED BY REFERENCE
Item 10 (Directors and Executive Officers of the Registrant), Item 11
(Executive Compensation), Item 12 (Security Ownership of Certain
Beneficial Owners and Management) and Item 13 (Certain Relationships and
Related Transactions) will be incorporated into the Company's Proxy
Statement to be filed within 120 days of December 31, 1996 and are
incorporated herein by reference.
Exhibit index is located on page 55
This document consists of 228 pages
PART I
ITEM 1. BUSINESS
General Information Regarding the Company
Chyron Corporation ("Chyron") was incorporated under the laws of the
State of New York on April 8, 1966 under the name The Computer Exchange,
Inc., which was changed to the present name on November 28, 1975. On
April 12, 1996, Chyron acquired Pro-Bel Limited ("Pro-Bel"; collectively
with Chyron, the "Company"). The Company's principal executive offices
are located at 5 Hub Drive, Melville, New York 11747 and its telephone
number is (516) 845-2000. Its executive offices in the United Kingdom
are located at Danehill, Lower Early, Reading, Berks RG6 4PB and its
telephone number is 44-1734-86-61-21.
On September 17, 1990, Chyron and its subsidiaries sought relief under
Chapter 11 of the United States Bankruptcy Code. On December 27, 1991,
Chyron emerged from bankruptcy. Pursuant to its plan of reorganization,
Chyron issued to its banks shares of Common Stock which represented 81%
of the voting power and beneficial ownership of all the issued and
outstanding Common Stock on a fully diluted basis. Such shares of Common
Stock were then purchased from the banks by Pesa, Inc. ("Pesa"). An
aggregate of 4,666,666 shares of Common Stock owned by Pesa were
eventually acquired by Sepa Technologies Ltd., Co. ("Sepa"), an affiliate
of Pesa.
In May 1995, CC Acquisition Company A, L.L.C., a Delaware limited
liability company ("CCA"), acquired 3,333,333 shares of Common Stock from
Pesa. In July 1995, control of Chyron was transferred through the sale
of an additional 18,138,238 shares of Common Stock by Pesa and Sepa to
(i) CC Acquisition Company B, L.L.C., a Delaware limited liability
company ("CCB"); (ii) various funds managed by Weiss, Peck & Greer,
L.L.C. ("Weiss, Peck & Greer"); and (iii) Westpool Investment Trust plc
("Westpool") (Weiss, Peck & Greer and Westpool are collectively referred
to as the "WPG/Westpool Investment Group"). In addition, Sepa and other
parties transferred the voting control over an aggregate of 3,000,000
shares of Common Stock to these entities. As of March 10, 1997, CCA and
CCB together beneficially own 8,455,297 shares of Common Stock and the
WPB/Westpool Investor Group beneficially own in the aggregate 15,774,432
shares.
The Company develops, manufactures, markets and supports a broad range
of equipment, software and systems that facilitate the production and
enhance the presentation of live and pre-recorded video, audio and other
data. The Company's products enable users to (i) create and manipulate
text, logos and other graphic images using special effects such as 3D
transforming, compositing and painting; (ii) manage, monitor and
distribute video, audio and other data signals; and (iii) control edit
processes and automate broadcast equipment. The worldwide market for
equipment, software and systems used in the production and presentation
of video and audio content encompasses major television networks, cable
television broadcasters, direct to home satellite program distributors,
production companies and post-production houses, as well as organizations
and individuals creating materials such as corporate and specialized
video and audio presentations.
Products
The Company offers a broad range of products that address the needs of
the video and audio production, post-production and distribution markets.
The Company's line of high performance graphics systems are used by many
of the world's leading broadcast stations to display new flashes,
election results, sports scores, stock market quotations, programming
notes and weather information. The Company's signal management systems
interconnect video, audio and data signals to and from equipment within
a studio's control room or edit suite, as well as to and from signal
transmission sites. The Company's line of control and automation systems
are used to automate the steps used in the management, editing and
distribution of video and audio content.
Graphic Systems
Graphics and character generators. Chyron's family of iNFiNiT! products
use a digital computer and electronic storage to permit operators to
create images capable of being broadcast either independently or
superimposed on other images. Images broadcast directly from the system
have included election results, stock market quotations, sports scores,
commercial advertising and promotional material. Superimposed images are
similarly used for a variety of purposes such as identifying speakers
during interviews or displaying statistics during sports telecasts.
The flagship iNFiNiT! is a dual-user graphics workstation with one to
three output channels, each with a dedicated key signal. MAX!> is a
signal-user graphics system with one or two separate video and key
channels. MAXINE! is a single channel/single-user character generator.
MAX!> and MAXINE! have similar feature sets and effective resolution to
the iNFiNiT!. In September 1996, the Company introduced WiNFiNiT!, an
optional PC-based graphical user interface which utilizes the Microsoft
Windows NT operating system.
Still store management systems. IMAGESTOR! offers real-time playback
of uncompressed video frames and instant access to thousands of one-line
or archived images. Live newscasters and broadcast trucks use IMAGESTOR!
for live video capture as well as for image storage retrieval for on-air
display. The IMAGESTOR! system allows on-line storage of 2,000 still
images with optional additional storage available. The library of stills
can be searched and sorted by criteria, keywords and other attributes.
Users can create a playlist of images for automatic playback during live
on-air operations and embed the selected still images with effects such
as cut, dissolve, wipe, push, reveal and hide. IMAGESTOR! is available
as a stand-alone workstation or a database file management software
program for use with Chyron's iNFiNiT! family of graphics systems.
Compact graphics and character generators. The Company's compact
character generators, sold under the CODI and PC-CODI names, provide
real-time text, titling and logo generation which are used for
broadcasting time, temperature, weather warnings, sports statistics,
scoreboards, news updates and financial information. CODI products may
operate through touch screens for real-time on-screen drawing. They can
work with standard computer platforms regardless of operating system or
system performance.
Electronic paint and animation systems and software. Chyron's Liberty
family of paint and animation tools are resolution-independent, non-
linear, digital image processing systems and software. Liberty products
are used to create, edit and composite special visual effects in an on-
line, real-time environment. Liberty products have been used for high-
end film applications and have created special effects for major feature
films, including Casino and Broken Arrow. Liberty products operate on
various Silicon Graphics workstations and support all popular file
formats. Liberty offers a menu of video graphic creation tools, such as
painting, compositing, morphing, titling, 3D transforming, layering,
coloring, cycle animation, rotoscoping and cell animation.
Signal Management Systems
Switching and routing systems. Under the Pro-Bel name, the Company
provides a complete range of control solutions for matrix systems which
process and distribute multimedia signals. The PROCION product offers
a range of IBM PC/Windows touch screen control systems which are easy to
use and configure. System 3 provides a push button control panel which
can utilize simple signal matrix solutions and multi-matrix installations
with integrated tie-line management. System 3 and PROCION can co-exist
for maximum flexibility.
The new XD series of digital router switchers are large-scale routing
systems that can produce high-performance signal distribution across a
wide spectrum of applications. The TM Series are compact digital routing
switchers that provide a cost-effective solution for users moving from
analog to digital distribution and for smaller scale routing solutions
such as remote broadcast vehicles. The HD series of routing switchers
includes matrix products for digital and analog video, digital and analog
audio and RS422 machine control.
Intercom/talkback. The Trilogy Commander 400 Series combines Digital
Signal Processing ("DSP") audio techniques with control technology to
produce a digital intercom/talkback system. The system is supplied with
IBM compatible PC-based editing and control panels to manage audio
crosspoints. Intercom systems are implemented in a wide range of
applications including television and radio broadcast facilities,
airports, hospitals, outside and remote broadcast trucks, post-production
suites and leisure complexes.
Control and Automation Systems
Master control, storage and station automation. Pro-Bel has developed
a suite of products which are designed to process video, audio and
related data signals, automate playout of the signals and manage media
signal storage devices in the master control and transmission suites.
MAPP is a Windows-based, video server management and control system.
MAPP provides facilities to record, track, cache and replay broadcast
material according to a user defined schedule. MAPP easily interfaces
with disk based video servers manufactured by many different vendors.
The COMPASS station automation system provides comprehensive station
automation capability to major broadcasters that have complex playlists.
Video tape cartridge machines, video servers and other devices are
typically interfaced by high speed data links which allow the system to
control the devices according to a playlist schedule. The automation
system monitors all functions to check for discrepancies such as time
errors, machines not available for control or manual intervention.
The Company's digital master control switcher TX-220 employs component
digital and AES/EBU digital audio signal processing. Features include
10 bit component digital video/audio processing with an analog option,
up to 4 AES/EBU levels, stand-alone operation with an upstream keyer,
multifunction plasma display, simple user friendly manual control and
full integration with the compass Automation System. The master control
switcher switches and combines video and audio content signals from
various devices, such as video tape machines, disk based video servers,
character generators and still storage systems, to produce seamless
program flow for distribution to the final program delivery channel.
Electronic editing control systems. The CMX OMNI family of edit
controllers are designed to control and operate edit suite equipment.
CMX OMNI systems are flexible, configurable and easy to operate. They
are capable of controlling over 200 types of edit suite devices developed
by other manufacturers, including video tape recorders, video disks,
production control switchers, digital video effects equipment, time base
correctors and audio equipment.
Marketing and Sales
The Company markets its products and systems to traditional broadcast,
production and post-production facilities, government agencies,
educational institutions and telecommunications and corporate customers.
In order to maintain and increase awareness of its products, the Company
displays at the major domestic and international trade shows of the
broadcast and computer graphics industries. In the United States, the
Company exhibits at the National Association of Broadcasters (NAB) and
ACM SIGGRAPH conventions. It also exhibits at the International
Broadcasters Conventions (IBC) in Europe, INTERBEE in Japan and
Broadcast-Asia in China. The Company uses direct-mail campaigns and
places advertisements in broadcast, post-production and computer industry
publications.
Sales of the Company's products in the United States and the United
Kingdom are made through Company direct sales personnel, dealers,
independent representatives, systems integrators and OEMs. Direct sales,
marketing and product specialists serving the domestic markets act as
links between the customer and the Company's development teams.
Sales of the Company's products outside of the United States and United
Kingdom are made through dealers and several representatives covering
specific territories. Some of the dealers have been granted exclusive
rights to sell certain products in specified territories. During 1996,
the Company opened a sales and support office in Hong Kong in order to
better service the growing market of Asia. In some territories, dealers
sell products from all of the Company's product categories; in other
territories, dealers handle only specific products.
Service, Support and Training
The Company offers comprehensive technical service, support and training
to its customers through 24 hour per day, seven days per week access to
trained service and support professionals.
Training courses are available through the Company and range in length
from a few days to a few weeks and consist of a mix of classroom
discussions and hands-on training. The Company offers training courses
for many of its products at its Melville (New York) headquarters and its
Reading (United Kingdom), Atlanta (Georgia) and Burbank (California)
centers. The Company also conducts on-site training. Installation
assistance, hardware and software, maintenance contracts and spare parts
are made available by Company. Support contracts and a responsive spare
parts supply service facilitate customer satisfaction. Service is
provided both domestically and internationally by the Company or its
appointed dealers and representatives. The Company also provides sales
and service support to its dealers from time to time. The Company
provides warranties on all of its products ranging from 90 days to five
years.
Research and Development
The Company's research and product development, conducted in Melville,
New York, Reading, United Kingdom and Santa Clara, California is focused
on the continued enhancement of its existing products and the development
of new ones.
Historically, the Company has oriented its efforts toward the development
of complete systems rather than of either hardware or software standing
alone. A strategic engineering group evaluates hardware and software
technologies.
During 1996, 1995 and 1994, the Company expensed approximately $5.3
million, $4.1 million and $4.2 million, respectively, for research and
development and amortization of capitalized software development costs
incurred in connection with the development of new products and the
modification and enhancement of existing products.
Manufacturing
The Company has final assembly and system integration operations located
in Melville and Reading. The Company primarily uses third-party vendors
to manufacture and supply all of the hardware components and sub-
assemblies utilized in the Company's graphics systems and relies upon a
combination of third-party vendors and internal manufacturing for
components and sub-assemblies utilized in the Company's signal management
systems. The Company designs many of its system components to its own
specifications, including metal and electronic parts and components,
circuit boards and certain subassemblies. It assembles such items and
standard parts, together with internally-developed software, to create
final products. The Company then performs testing and quality
inspections of each product.
Competition
The market for graphics imaging, editing and animation systems, signal
routing systems and media storage systems is highly competitive and is
characterized by rapid technological change and evolving industry
standards. Rapid obsolescence of products, frequent development of new
products and significant price erosion are all features of the industry
in which the Company operates. The Company anticipates increased
competition from both existing companies and new market entrants. The
Company is currently aware of several major and a number of smaller
competitors. In the graphics area, the Company believes its primary
competitors are Aston Electronic Designs Limited, Digital Graphix Inc.,
Dynatech Corporation, Quantel Inc. and Scitex Corporation Ltd. In the
signal management area, the Company believes its primary competitors are
Dynatech Corporation, Leitch Incorporated, Philips Electronics N.V., Sony
Corporation and Tektronix Inc. In the control and automation area, the
Company believes its primary competitors are Accom, Inc., Louth
Automation, Philips Electronics N.V., Sony Corporation and Tektronix,
Inc. Many of these companies have significantly greater financial,
technical, manufacturing and marketing resources than the Company. In
addition, certain product categories and market segments, on a region-by-
region basis, in which the Company does or may compete, are dominated by
certain vendors.
Backlog
The Company's backlog of orders at December 31, 1996 approximated $4
million. The Company believes these orders to be firm and expects to
fulfill the entire amount of this backlog in 1996.
Employees
As of December 31, 1996, the Company employed 405 persons on a full-time
basis, including 63 in sales and marketing, 159 in manufacturing and
testing, 39 in customer support, service and training, 50 in finance and
administration and 94 in research and development. None of these
employees is represented by a labor union.
Patents and Proprietary Rights
The Company's success depends upon its ability to protect its proprietary
software technology and operate without infringing the rights of others.
It relies on a combination of patent, trademark and trade secret laws to
establish and protect its proprietary rights in its technology.
The Company currently has seven patents. The names Chyron, Scribe,
Chyron Scribe, Chyron Scribe Junior, Chyron SuperScribe, iNFiNiT!, MAX!>,
MAXINE!, CODI, I2, Chyron Care, Intelligent Interface, Intelligent
Interface (I2), CMX, CMX AEGIS, CMX OMNI, Aurora, Liberty, PROCION and
PROCION INNOVATIVE CONTROL SOLUTIONS are registered trademarks of the
Company. The Company also has rights in trademarks and service marks
which are not federally registered. The Company does not have registered
copyrights on any of its intellectual property. The duration of patents
in the United States is 20 years from priority or 17 years from issuance.
As a result, the Company's existing patents will begin to expire
commencing in the year 1998.
Government Regulations
The United States Federal Communications Commission has issued
regulations relating to shielding requirements for electromagnetic
interface in electronic equipment. The Company's products are in
compliance with these regulations.
ITEM 2. FACILITIES
The executive offices and principal office of the Company and its
graphics business are located in Melville, New York pursuant to a lease
that expires on June 30, 2004. This facility consists of approximately
47,000 square feet and is used for manufacturing, research and
development, marketing and the executive offices. The Company also
leases approximately 15,000 square feet in Santa Clara, California for
research and development. This lease expires on October 31, 1997. In
the United Kingdom, the Company's executive office is located in Reading,
United Kingdom where it owns an approximately 19,000 square foot
facility. This facility is used for manufacturing, research and
development and marketing. The Company occupies additional facilities
in the United Kingdom in Reading and Andover, used primarily for research
and development and manufacturing, which total approximately 28,000
square feet pursuant to leases which expire from October 31, 1997 through
September 24, 2020. Currently, the Company is considering expanding its
Andover facility but has not made any lease commitments. The Company
currently utilizes 90% to 100% of the space of all of its facilities.
Management currently believes that, other than the Andover facility, each
facility is suitable for its existing operations and does not foresee the
need for any significant expansion of its current facilities.
ITEM 3. LITIGATION
The Company is a party to Percival Hudgins & Company, Inc. v. Chyron
Corporation v. John Percival, pending in the United States District
Court, North District of Georgia (Atlanta), Civil Action No. 1 95-CV-CAM.
This is a breach of contract action for an alleged success fee in
connection with the sale of Common Stock by Pesa and Sepa to the new
investment group. Plaintiff alleges that such transaction was subject
to the terms of its engagement letter with the Company. Plaintiff seeks
damages of approximately $600,000 together with counsel fees. The
Company has answered, denying all material allegations, and has asserted
a third party claim against plaintiff's principal, alleging that he, as
a director of the Company while his investment banking firm was engaged
by the Company, breached his fiduciary duties to the Company and is
liable for any amounts that might be awarded to plaintiff, together with
counsel fees. Plaintiff has recently amended the complaint to add a
claim for quantum meruit. Discovery is continuing.
The Company from time to time is involved in routine legal matters
incidental to its business. In the opinion of management, the ultimate
resolution of such matters will not have a material adverse effect on the
Company's financial position, results of operations or liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On January 24, 1997, at a Special Meeting of Shareholders, the Company's
shareholders' ratified a one-for-three reverse stock split of its common
stock which was effective February 10, 1997. 77,162,761 shares were
voted for the proposal, 2,876,490 shares were voted against the proposal
and 169,212 shares abstained.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDERS MATTERS
Principal Market
Chyron's common stock is traded on the New York Stock Exchange ("NYSE")
under the ticker symbol "CHY". The approximate number of holders of
record of the Company's common stock at December 31, 1996 was 8,100.
The following table sets forth the high and low reported sales price for
the common stock adjusted to reflect the reverse stock split.
Price Range of Common Stock
High Low
Year Ended December 31, 1996
Fourth Quarter............. $15.375 $ 8.25
Third Quarter.............. 19.875 12.00
Second Quarter............. 18.750 9.375
First Quarter.............. 10.125 6.375
Year Ended December 31, 1995
Fourth Quarter............. $8.625 $5.250
Third Quarter.............. 9.000 2.438
Second Quarter............. 3.000 1.500
First Quarter.............. 2.250 1.125
On March 14, 1997, the closing price of the Company's common stock as
reported on the NYSE was $6.50.
The Company has not declared or paid any cash dividend since November 27,
1989. The Company currently plans to retain its future earnings, if any,
for use in the operation and expansion of its business and does not
anticipate paying cash dividends on the common stock in the foreseeable
future. During the term of its loan agreement with Fleet Bank (formerly
NatWest Bank), the Company is prohibited from paying dividends in excess
of 25% of its net income for the then current fiscal year.
ITEM 6. SELECTED FINANCIAL DATA
(In thousands, except per share amounts)
Year Ended December 31,
1996(1) 1995 1994 1993 1992
Statement of Operations Data:
Net sales................. $82,608 $53,971 $42,762 $37,391 $29,715
Cost of products sold..... 39,941 22,746 18,912 16,816 12,512
Gross profit.............. 42,667 31,225 23,850 20,575 17,203
Operating expenses:
Selling, general and
administrative............ 22,349 17,066 14,301 13,452 11,300
Research and development.. 5,253 4,105 4,163 3,573 2,964
Management fee............ 2,911 1,139 800 891
West Coast restructuring
charge (recapture)........ (1,339) 12,716
Total operating expenses.. 27,602 22,743 32,319 17,825 15,155
Operating income (loss)... 15,065 8,482 (8,469) 2,750 2,048
Interest and other
expense, net.............. 1,666 536 525 714 445
Income (loss) before
provision for income
taxes..................... 13,399 7,946 (8,994) 2,036 1,063
Income tax/equivalent
provision................. 4,745 470 760 598
Net income (loss)......... $ 8,654 $ 7,476 $(8,994) $ 1,276 $ 1,005
Net income (loss) per
common share(2)........... $ 0.27 $ 0.25 $ (0.31) $ 0.05 $ 0.04
Weighted average number
of common and common
equivalent shares
outstanding(2)............ 32,327 30,382 28,962 25,295 23,514
December 31,
1996 1995 1994 1993 1992
Balance Sheet Data:
Cash and cash equivalents. $ 4,555 $ 5,012 $ 1,555 $ 213 $ 403
Working capital........... 41,867 28,221 12,103 13,256 11,692
Total assets.............. 91,403 44,332 28,644 38,516 35,623
Long-term obligations..... 16,324 4,911 4,829 200 3,000
Shareholders' equity...... 53,946 29,983 13,776 22,627 17,882
(1) Includes the operations of Pro-Bel since its acquisition by the
Company on April 12, 1996. The acquisition was accounted for as a
purchase. See Note 2 to the Consolidated Financial Statements.
(2) Adjusted to reflect the Reverse Stock Split which was ratified by the
Company's shareholders on January 24, 1997.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
From time to time, the Company may publish forward looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products, research and
development activities and similar matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. In order to comply with the terms of the safe harbor, the
Company notes that a variety of factors could cause the Company's actual
results to differ materially from the anticipated results or other
expectations expressed in the Company's forward-looking statements. The
risks and uncertainties that may affect the operations, performance,
development and results of the Company's business include the following:
product concentration in a mature market, dependence on the emerging
digital market, rapid technological changes, highly competitive
environment, new product introductions, seasonality, fluctuations in
quarterly operations results, expansion into new markets and the
Company's ability to implement successfully its acquisition and alliance
strategy.
Overview
The Company develops, manufactures, markets and supports a broad range
of equipment, software and systems that facilitate the production and
enhance the presentation of live and pre-recorded video, audio and other
data. The Company introduced the iNFiNiT!, its flagship product, in late
1990. Subsequently, the Company has introduced a broad range of graphics
products such as the MAX!> and MAXINE!, CODI, LIBERTY, WiNFiNiT! and
IMAGESTOR!. These products superimpose text, logos and other graphics
onto a primary video image or create an independent image to be televised
by itself. The Company expects that revenue from its current graphics
and character generator systems will continue to constitute a substantial
percentage of its net sales in the near future. The Company's Pro-Bel
signal management systems interconnect video, audio and data signals to
and from equipment within a studio's control room or edit suite, as well
as to and from signal transmission sites.
The Company's net sales have increased from $29.7 million in 1992 to
$82.6 million in 1996, while gross profit has increased from $17.2
million in 1992 to $42.7 million in 1996. Net income was $1.0 million
in 1992 and $8.7 million in 1996.
The Company was incorporated under the laws of the State of New York on
April 8, 1966. The Company filed for Chapter 11 protection in September
1990 and emerged from Chapter 11 in December 1991. In 1994, the Company
restructured its West Coast operations, resulting in a charge of
approximately $12.7 million. In 1995, a new investor group obtained
control, a new executive management team was put in place, a new Board
of Directors was elected and a new business strategy was adopted.
The Company's current business strategy includes the following key
elements: (i) maintain and enhance its leadership position in current
markets; (ii) provide upgrades to existing equipment; (iii) cross sell
products to its existing customers; (iv) address low-end and emerging
markets; (v) expand it global presence; (vi) pursue strategic
acquisitions and alliances; and (vii) utilize open platforms. The
Company intends to continue to serve its worldwide customer base by
introducing products which address the requirements to improve the
production and presentation of video, audio and other data. The Company
also intends to continue to upgrade its current high performance systems,
invest in the development of new options and enhancements for its
products and provide complete system solutions to its customers.
Acquisition of Pro-Bel
On April 12, 1996, the Company acquired Pro-Bel, located in Reading,
United Kingdom. Pro-Bel develops, manufactures and markets signal
management systems and control and automation systems. The aggregate
consideration of $19.1 million consisted of $6.9 million in cash, $5.3
million in two-year promissory notes and 1,048,735 restricted shares of
Common Stock valued at $6.9 million.
The acquisition of Pro-Bel was accounted for as a purchase. Accordingly,
the cost was allocated to the net tangible assets acquired based upon
their estimated fair values. The excess of cost over the estimated fair
value of the net tangible assets acquired amounted to $6.9 million, which
is being amortized over 12 years using the straight-line method.
Investment in RT-SET
On February 29, 1996, the Company purchased a 19% interest in Real Time
Synthesized Entertainment Technology, Ltd. ("RT-SET"), which develops,
markets and sells real time virtual studio set software and proprietary
communications hardware and is located in Israel. The Company purchased
shares of RT-SET Convertible Preferred Stock in exchange for 800,000
restricted shares of Common Stock. In addition, the Company was granted
certain call option rights which, if and when exercised, allows the
Company to purchase up to a 51% interest in RT-SET in exchange for the
issuance of additional shares of Common Stock. In accordance with the
purchase agreement, the 800,000 shares of Common Stock were to be held
in escrow and released in two tranches, subject to certain conditions.
One-third of such shares was released from escrow in June 1996 and the
remainder will be released upon a public offering of RT-SET's equity or
upon RT-SET achieving two consecutive years of profitability. Prior to
any public offering by RT-SET or achievement of the aforementioned
profitability, the Company has the right to recover the remaining two-
thirds of its shares held in escrow in exchange for its interest in RT-
SET. The transaction has been recorded as the purchase of a right to
acquire a 19% interest in RT-SET which was diluted to 17% as a result of
a subsequent investment by a third party. RT-SET shall retain the voting
rights with respect to the escrowed shares while such shares are held by
the escrow agent. The acquisition was recorded at the estimated fair
value of the restricted shares of Common Stock released from escrow.
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
Net Sales. Net sales increased 53.1% to $82.6 million in 1996 from $53.9
million in 1995. Over 85% of the $28.7 million increase was attributable
to the inclusion, since April 1996, of Pro-Bel's sales; Chyron's graphic
products showed modest growth. The Company's net sales consist of
product sales, upgrades and enhancements and rental income as well as
customer service revenue.
Gross Profit. Gross profit increased to $42.7 million in 1996 from $31.2
million in 1995. This increase was primarily attributable to the 53.1%
increase in net sales. Gross margin as a percentage of net sales
decreased to 51.6% in 1996 from 57.9% in 1995. This decrease was caused
primarily by the inclusion since April 1996 of net sales of Pro-Bel
products, which historically have had lower gross margins. The gross
margin for the Chyron product lines decreased slightly, primarily as a
result of the product mix for the year. Customer service costs are
included in selling, general and administrative expenses and are not
material.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 31.0% to $22.3 million in 1996 from
$17.1 million in 1995. As a percentage of net sales, selling, general
and administrative expenses decreased to 27.0% in 1996 from 31.6% in
1995. The increase in dollars was primarily due to the inclusion of Pro-
Bel's operations since April 1996 and the accounting for the acquisition
under the purchase method resulting in amortization of excess purchase
price over net tangible assets and increased depreciation, as well as
increased costs as a direct result of increased sales volume. The
decrease as a percentage of net sales was affected by the incurrence in
1995 of $443,000 of one-time legal and investment banking fees (incurred
with respect to the undertaking of the Special Transaction Committee of
the Board of Directors, which was appointed in connection with the
potential change in control of the Company) and $430,000 of severance
costs for former management.
Research and Development Expenses. Research and development expenses
increased 27.9% to $5.3 million in 1996 from $4.1 million in 1995. This
increase was primarily due to the inclusion of Pro-Bel's research and
development expenditures since April 1996. Research and development
expenses related to Chyron's product lines decreased in 1996 in part due
to an increase of approximately $800,000 in the amount of software
capitalized and an increased percentage of research and development
undertaken internally instead of by outside consultants.
Interest and Other Expense, Net. Interest and other expense, net,
increased 210.8% to $1,666,000 in 1996 from $536,000 in 1995. In
conjunction with the Pro-Bel acquisition, the Company entered into
various agreements with a bank, issued promissory notes (payable in
pounds sterling) to the shareholders of Pro-Bel and assumed Pro-Bel's
existing bank debt, all of which led to an increase of $866,000 in
interest expense for the year. Net foreign currency transaction losses
of $264,000 have been recognized in 1996 due to the change in the
exchange rate from date of acquisition of Pro-Bel to December 31, 1996.
Income Before Provision for Income Taxes. Income before provision for
income taxes increased 68.6% to $13.4 million in 1996 from $7.9 million
in 1995, primarily due to the improved operating income of Chyron coupled
with the addition of the operating income generated by Pro-Bel.
Income Taxes/Equivalent Provision. Income taxes/equivalent provision
increased to $4.7 million in 1996 from $470,000 in 1995, primarily
because in 1995 an income tax benefit of approximately $2.2 million was
realized as a result of the 1994 West Coast restructuring. The increase
was also due to increased income before income taxes in 1996.
Year Ended December 31, 1995 Compared to the Year Ended December 31, 1994
Net Sales. Net sales increased 26.2% to $54.0 million in 1995 from $42.8
million in 1994. This increase was primarily due to increased sales of
the Company's character generator lines. The iNFiNiT! product line
showed the largest dollar growth at $6.4 million, or approximately 41%,
with the MAX!> line showing the largest percentage growth at
approximately 65%, or $4.7 million. Increases in net sales also reflect
growth in the Company's MAXINE! product line, sales of which grew $2.4
million, or approximately 39%, over the prior year. The growth in sales
has been both domestically and abroad. These increases were partially
offset by the lack of sales from products discontinued in connection with
the West Coast restructuring.
Gross Profit. Gross profit increased 30.9% to $31.2 million in 1995 from
$23.9 million in 1994. This increase was primarily due to the 26.2%
increase in net sales. Gross margin as a percentage of net sales
increased to 57.9% in 1995 from 55.9% in 1994 mainly due to increased
manufacturing efficiencies and management's cost reduction efforts.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 19.3% to $17.1 million in 1995 from
$14.3 million in 1994. This increase was primarily due to (i) legal and
investment banking fees of $443,000, incurred with respect to the
undertakings of the Special Transaction Committee of the Board of
Directors, which had been appointed in connection with the potential
change in control of the Company, (ii) the accrual of $430,000 of
severance payments for former management and (iii) increases due to
increases in costs related to the 26.2% increase in net sales. These
increases were offset by cost cutting measures instituted by the Company
as part of the West Coast restructuring in 1994 resulting in a decrease
in selling, general and administrative expenses as a percentage of net
sales to 31.7% in 1995 from 33.4% in 1994.
Research and Development Expenses. Research and development expenses
decreased 1.4% to $4.1 million in 1995 from $4.2 million in 1994. This
decrease was primarily due to benefits recognized as part of the
Company's West Coast restructuring in the third quarter of 1994, which
eliminated costs related to the Company's unprofitable product lines.
Exclusive of 1994 costs related to unprofitable product lines, research
and development expenses increased by $359,000 in 1995. This increase
was primarily due to additional expenditures for new product development
to address emerging markets targeted by the Company as well as the
development of new features for the Company's existing products.
Research and development expenses include the amortization of software
development costs, which increased by $82,000 in 1995 due to the release
of new options in 1995 for the Company's character generator product
lines.
Management Fee. In December 1991, the Company entered into a management
agreement (the "Management Agreement") with an affiliate of Sepa to
provide business and technical services to the Company. This agreement
was subsequently transferred to Sepa. In December 1995, the Company
(under its new management) agreed to terminate the Management Agreement
upon payment to Sepa of $2.0 million. Pursuant to the original
Management Agreement, the Company would have paid $1.5 million in both
1996 and 1997.
West Coast Restructuring (Recapture). As of September 30, 1994, the
Company's West Coast operations, CMX and Aurora, reflected a continuing
trend of poor operating performance. Due to these disappointing results,
the lack of certain products in the high growth sector of the market and
the strategic decision by management to redirect its product lines to a
broader base market and to reengineer its research and development focus,
the Company initiated a plan to restructure the West Coast operations.
Consequently, the Company decided to eliminate unprofitable product lines
such as CMX 6000, Cinema, Gemini, LSI and the 3500 and 3600 series
product lines, reduce the West Coast workforce by 30% (or 12 employees),
write-down to estimated net realizable value certain assets directly
attributable to the initiative and focus, dispose of certain assets,
accrue losses for the restructuring period of October 1, 1994 through
March 31, 1995 and downsize the Company's Santa Clara, California
facility.
The result of these measures was a restructuring charge of $12.7 million
for the West Coast operations and subsequently a recapture of $1.3
million of such charge in 1995. The specific components of the
restructuring charge broken-out between asset write downs and cash
outlays were as follows (in thousands):
Asset write downs:
Write down of assets to estimated net
realizable value...................... $ 6,952
Write-off of software development costs. 1,991
Total non cash charges.................. 8,943
Cash outlays:
Accrued operating losses through date of
disposition........................... 2,500
Loss on lease commitment................ 700
Accrued severance for reduction in
workforce............................. 300
Other................................... 273
Total................................. $12,716
The cash outlays required by the restructuring were funded by the
Company's profitable product lines. Cash outlays estimated for the six
month restructuring period were $3.8 million, of which $1.0 million was
made by December 31, 1994. The loss on the lease was to be funded over
the remaining lease term of 31 months subsequent to the restructuring
period. In 1995, a sublease was obtained. The Company's graphics
division had been funding the operating losses of CMX and Aurora out of
its working capital since CMX and Aurora began their trend of
unprofitability.
Operating results as a result of the West Coast restructuring were
projected to benefit by a savings of over $2.0 million for 1995,
principally due to a reduction in annual salaries and employee benefits
of $750,000, a decrease in depreciation and amortization expense of
$200,000 per year, a reduction of overhead costs of approximately
$200,000 per year and a reduction in losses on unprofitable product lines
of approximately $850,000 per year. The Company believes such savings
have been substantially realized.
Interest and Other Expense, Net. Interest and other expense, net,
increased 2.1% to $536,000 in 1995 from $525,000 in 1994. This increase
was primarily due to an increase in the average prime rate of interest
in 1995 and additional interest expense related to the Company's capital
lease obligations entered into in December 1994. This increase was
offset by earnings on the Company's cash equivalents.
Income Before Provision for Income Taxes. Income before provision for
income taxes was $7.9 million for 1995, an improvement of $16.9 million
over the $9.0 million loss in the prior year. Net income for 1995
included a $2.0 million charge related to the termination of the
Company's Management Agreement with Sepa, which is further described in
Note 16 to the Consolidated Financial Statements, and a recapture of $1.3
million of the prior year's $12.7 million restructuring charge. For
details of 1995 activity related to the West Coast restructuring, see
Note 17 to the Consolidated Financial Statements. Exclusive of the
management fee charge in 1995 and amounts related to the West Coast
restructuring change in 1994 and 1995, income before provision for income
taxes increased $5.0 million due primarily to increases in net sales and
gross margins for 1995 coupled with increased efficiencies and cost
saving measures as well as the benefit of the West Coast restructuring
commencing in the third quarter of 1994.
Income Taxes/Equivalent Provision. A total income tax/equivalent
provision of $470,000, or 5.9%, was recorded in 1995 and included a tax
benefit of approximately $1.0 million which was recognized as a result
of the reduction in the valuation allowance provided on deferred tax
assets. The valuation allowance was reduced because management believed
that the Company would generate sufficient future taxable income from
ordinary and recurring operations to realize the deferred tax assets.
At December 31, 1995, the Company had recorded a valuation allowance of
approximately $5.4 million. At December 31, 1996, the valuation
allowance was released in its entirety.
Liquidity and Capital Resources
At December 31, 1996, the Company had cash on hand of $4.5 million,
working capital of $41.9 million and an unused borrowing commitment
available of $3.9 million.
To finance the acquisition of Pro-Bel, the Company incurred additional
debt of $7.2 million and used cash on hand of $6.9 million. In
connection with the acquisition of Pro-Bel, the Company issued promissory
notes to the shareholders of Pro-Bel for 3.5 million pounds sterling
($5.9 million, converted at the December 31, 1996 exchange rate) in
conjunction with the acquisition (see Note 2 to Consolidated Financial
Statements). The promissory notes are secured by an irrevocable letter
of credit from a bank. The amount of this irrevocable letter of credit
is included as an outstanding borrowing in the formula used to calculate
borrowing availability for the Company's facility with Fleet Bank
described below. Interest through April 15, 1997 is equal to LIBOR as
of April 15, 1996 (6.46%) and is payable quarterly. Interest through
April 15, 1998 is equal to LIBOR as of April 15, 1997. The notes are due
on or before April 15, 1998 and are subordinated to any obligations to
a bank or financial institution currently existing or subsequently
entered into. The notes can be prepaid without penalty subsequent to
November 1, 1996. See Note 10 to Consolidated Financial Statements.
Since the Pro-Bel acquisition, the Company's consolidated financial
statements include the Pro-Bel accounts, as adjusted for purchase
accounting. At the date of acquisition, inventory increased by $7.8
million, accounts receivable increased by $6.9 million and accounts
payable increased by $9.5 million which, in sum with other current assets
acquired and current liabilities assumed, increased working capital by
$6.8 million. Additionally, at the date of acquisition, property and
equipment increased by $8.8 million, excess of cost over net tangible
assets acquired of $6.9 million was recorded and $3.6 million of Pro-Bel
debt was assumed.
On March 28, 1996 and April 16, 1996, the Company entered into agreements
with Fleet Bank (formerly NatWest Bank) to obtain a revolving credit
facility of $10.0 million and a term loan of $8.0 million, respectively.
The entire facility is secured by certain of the Company's assets.
Borrowings are limited to amounts computed under a formula for eligible
accounts receivable and inventory. Additionally, an over-advance is
available above the borrowing formula in an amount not to exceed $3.0
million. Interest on the revolving credit facility is equal to adjusted
LIBOR plus 175 basis points or prime (8.25% at December 31, 1996) and is
payable monthly. The term loan is payable in quarterly installments of
$500,000, commencing June 1, 1996. Interest on the term loan is equal
to adjusted LIBOR plus 200 basis points or prime and is payable monthly.
See Note 10 to Consolidated Financial Statements.
Pro-Bel has a commercial mortgage term loan with Barclay's Bank Plc.
("Barclays"). The loan is secured by a building and property located
in the United Kingdom. Interest is equal to LIBOR (6% at December 31,
1996) plus 2%. The loan (including interest) is payable in quarterly
installments of 80,600 pounds sterling ($136,000, converted at the
December 31, 1996 exchange rate). See Note 10 to Consolidated Financial
Statements.
On February 1, 1996, Pro-Bel entered into an agreement with Barclays to
obtain a trade finance facility of 750,000 pounds sterling ($1,267,000,
converted at the December 31, 1996 exchange rate). The facility is
secured by Pro-Bel's accounts receivable. Interest is equal to the
bank's base rate plus 2% (8% at December 31, 1996) on advances against
accounts receivable in pounds sterling and equal to the Barclays currency
call loan rate plus 2% (8% at December 1, 1996) on advances against
foreign accounts receivable. Interest is payable quarterly, in arrears.
See Note 10 to Consolidated Financial Statements.
On February 1, 1996, Pro-Bel entered into an agreement with Barclays to
obtain an overdraft facility of 750,000 pounds sterling. Interest is
equal to the bank's base rate plus 2.5% (8.5% at December 31, 1996) and
is payable quarterly commencing in March 1996. The facility has a
sublimit for overdraft on Pro-Bel's wholly owned subsidiary, Trilogy
Broadcast Limited, of 160,000 pounds sterling ($270,000, converted at the
December 31, 1996 exchange rate). This facility is payable upon written
demand by the bank and any undrawn portion may be cancelled by the bank
at any time. See Note 10 to Consolidated Financial Statements.
In January 1997, Pro-Bel entered into an agreement with Barclays whereby
Barclays agreed to provide an overdraft facility of up to 3.0 million
pounds sterling through December 31, 1997 to Pro-Bel and its
subsidiaries. The overdraft facility provides for interest at 1.5% per
annum over the bank's base rate. Interest is payable quarterly, in
arrears. This facility replaces the trade finance facility of up to
750,000 pounds sterling and the overdraft facility of up to 750,000
pounds sterling in place at December 31, 1996. All monies under the
facility are repayable upon written demand and are secured by accounts
receivable. See Note 10 to Consolidated Financial Statements.
At December 31, 1996, the Company had operating lease commitments for
equipment and factory and office space totaling $12.7 million, of which
$1.0 million is payable within one year. See Note 10 to Consolidated
Financial Statements.
Impact of Inflation and Changing Prices
Although the Company cannot accurately determine the precise effect of
the inflation, the Company has experienced increased costs of materials,
supplies, salaries and benefits and increased general and administrative
expenses. The Company attempts to pass on increased costs and expenses
by developing more useful and cost effective products for its customers
that can be sold at more favorable profit margins.
REPORT OF INDEPENDENT AUDITORS
February 3, 1997
To the Board of Directors and
Shareholders of Chyron Corporation
In our opinion, the consolidated financial statements as of December 31,
1996 and 1995 and for each of the two years in the period ended December
31, 1996 listed in the index appearing under Item 14(a)(1) and (2) on
page 56 present fairly, in all material respects, the financial position
of Chyron Corporation and its subsidiaries at December 31, 1996 and 1995
and the results of their operations and their cash flows for each of the
two years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits of these statements in accordance with generally
accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management and
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 1, on January 24, 1997, the Company's shareholders
ratified a one-for-three reverse stock split. The consolidated financial
statements for the year ended December 31, 1994 have been restated to
reflect retroactive application of this reverse stock split. We have
audited the adjustments described in Note 1 that were applied to restate
the 1994 consolidated financial statements. In our opinion, such
adjustments are appropriate and have been properly applied to the 1994
consolidated financial statements.
PRICE WATERHOUSE LLP
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Chyron Corporation and Subsidiary
We have audited the accompanying consolidated statements of operations,
shareholders' equity, and cash flows for the year ended December 31, 1994
of Chyron Corporation and subsidiary. Our audit also included the
consolidated financial statement schedule listed in the Index at Item
14(a) for the year ended December 31, 1994. These financial statements
and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audit prior to the restatement discussed in Note
1.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated results of
operations and cash flows of Chyron Corporation and subsidiary for the
year ended December 31, 1994, in conformity with generally accepted
accounting principles. Also, in our opinion, the related consolidated
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
Ernst & Young, LLP
Melville, New York
February 17, 1995
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CHYRON CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands, except per share amounts)
December 31,
Assets 1996 1995
Current assets:
Cash and cash equivalents............. $ 4,555 $ 5,012
Accounts and notes receivable......... 25,237 13,967
Inventories........................... 23,502 11,645
Prepaid expenses...................... 865 578
Deferred tax asset.................... 6,015 6,457
Other................................. 2,826
Total current assets................ 63,000 37,659
Property and equipment................. 12,701 3,300
Excess of cost over net tangible
asset acquired........................ 6,439
Investment in RT-SET................... 2,161
Software development costs............. 2,176 1,716
Deferred tax asset..................... 4,709 1,403
Other.................................. 217 254
TOTAL ASSETS........................... $91,403 $44,332
Liabilities and Shareholders Equity
Current Liabilities:
Accounts payable and accrued expenses. $15,828 $ 8,120
Management fee payable................ 1,000
Reserve for West Coast restructuring.. 158
Current portion of long-term debt..... 5,080
Capital lease obligations............. 225 160
Total current liabilities........... 21,133 9,438
Long-term debt......................... 15,163 4,741
Capital lease obligations.............. 118 170
Other.................................. 1,043
Total liabilities.................... 37,457 14,349
Commitments and contingencies (See Note 15)
Shareholders' equity:
Preferred stock, par value without
designation;
Authorized - 1,000,000 shares;
Issued - none
Common stock, par value $.01;
Authorized - 150,000,000 shares;
Issued and outstanding, 32,384,635 and
30,023,798 shares at 1996 and 1995,
respectively.......................... 324 300
Additional paid-in capital............. 43,124 28,340
Retained earnings...................... 9,997 1,343
Cumulative translation adjustment...... 501
Total shareholders equity............ 53,946 29,983
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY................................. $91,403 $44,332
See Notes to Consolidated Financial Statements
<PAGE>
CHYRON CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Year Ended December 31,
1996 1995 1994
Net sales............................ $82,608 $53,971 $42,762
Cost of products sold................ 39,941 22,746 18,912
Gross profit......................... 42,667 31,225 23,850
Operating expenses:
Selling, general and administrative. 22,349 17,066 14,301
Research and development............ 5,253 4,105 4,163
Management fee...................... 2,911 1,139
West Coast restructuring charge
(recapture)......................... (1,339) 12,716
Total operating expenses............. 27,602 22,743 32,319
Operating income (loss).............. 15,065 8,482 (8,469)
Interest and other expense, net...... 1,666 536 525
Income (loss) before provision for
income taxes........................ 13,399 7,946 (8,994)
Income taxes/equivalent provision.... 4,745 470
Net income (loss).................... $ 8,654 $ 7,476 $(8,994)
Net income (loss) per common share... $ .27 $ .25 $ (.31)
Weighted average number of common
and common equivalent shares
outstanding......................... 32,327 30,382 28,962
See Notes to the Consolidated Financial Statements
CHYRON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
1996 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)..................... $8,654 $7,476 $(8,994)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
West Coast restructuring (recapture).. (1,339) 11,766
Depreciation and amortization......... 3,120 2,067 2,037
Utilization of deferred tax asset..... 2,335 354
Loss on abandonment of leasehold
improvements.......................... 350
Changes in operating assets and
liabilities:
Accounts and trade notes receivable... (3,505) (742) 567
Inventories........................... (3,303) (6,181) 2,879
Prepaid expenses...................... (117) 1,320 (1,184)
Other assets.......................... (464)
Accounts payable and accrued expenses. (2,865) 1,112 (1,913)
Management fee payable................ (1,000) 1,000
Reserve for West Coast restructuring.. (1,327)
Net cash provided by operating
activities............................ 2,855 3,740 5,508
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Pro-Bel and Investment
in RT-SET............................. (7,191)
Acquisition of property and equipment. (1,802) (710) (660)
Capitalized software development...... (1,268) (207) (1,383)
Other................................. 52 28 102
Net cash (used in) investing
activities............................(10,209) (889) (1,941)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of capital lease obligations. (262) (106)
Payments of revolving credit
agreement............................. (5,644) (4,500) (1,985)
Net proceeds from new credit facility. 11,976 4,741
Proceeds from exercise of common
stock purchase warrants, net.......... 239 471 43
Proceeds from exercise of stock
options............................... 552
Payments of Chapter 11 claims and
other reorganization items............ (283)
Net cash (used in) provided by
financing activities.................. 6,861 606 (2,225)
Effect of foreign currency rate
fluctuations on cash and cash
equivalents........................... 36
Change in cash and cash equivalents... (457) 3,457 1,342
Cash and cash equivalents at beginning
of year............................... 5,012 1,555 213
Cash and cash equivalents at end of
year.................................. $4,555 $5,012 $ 1,555
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid......................... $1,636 $ 555 $ 548
Income taxes paid..................... $2,920 $ 116 $ 71
See Notes to Consolidated Financial Statements
CHYRON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
Non-cash investing and financing activities:
On February 29, 1996, the Company effectively acquired an option to
acquire a 19% interest in RT-SET Ltd. in exchange for 800,000 shares of
Chyron common stock. See Note 3 to the Consolidated Financial
Statements.
On April 12, 1996, the Company acquired the issued and outstanding
shares of Pro-Bel. The consideration in addition to cash included
1,048,735 shares of Chyron common stock valued at $6,868,000 and notes
payable of $5,349,000 (3.5 million pounds sterling valued at the
exchange rate at the date of acquisition). See Note 2 to the
Consolidated Financial Statements.
CHYRON CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
Cumu-
Retained lative
Addi- Earnings Trans-
tional Accumu- lation
Paid-in lated Adjust-
Shares Amount Capital Deficit) ment
Balance at December 31, 1993. 28,871 $289 $19,477 $2,861
Net loss..................... (8,994)
Exercise of warrants......... 93 1 42
Conversion of subordinated
notes......................... 167 1 99
Balance at December 31, 1994.. 29,131 291 19,618 (6,133)
Net income.................... 7,476
Exercise of warrants.......... 726 7 464
Conversion of subordinated
notes......................... 167 2 98
Benefit of utilization of net
operating loss carryforward
under Fresh Start Reporting... 1,360
Income tax equivalent benefit
from reduction of deferred
tax asset valuation allowance. 6,800
Balance at December 31, 1995.. 30,024 300 28,340 1,343
Net income.................... 8,654
Exercise of warrants.......... 398 4 235
Exercise of stock options..... 114 1 551
Issuance of stock in
connection with acquisition of
Pro-Bel, Ltd.................. 1,049 11 6,857
Issuance of stock in
connection with investment in
RT-SET........................ 800 8 1,942
Cumulative translation
adjustment.................... $501
Income tax equivalent benefit
from reduction of deferred tax
asset valuation allowance..... 5,199
Balance at December 31, 1996.. 32,385 $324 $43,124 $9,997 $501
See Notes to Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Chyron Corporation and its wholly-owned subsidiaries("Chyron" or the
"Company") develops, manufactures, markets and supports a broad range
of equipment, software and systems that facilitate the production and
enhance the presentation of live and pre-recorded video, audio and other
data. Chyron's wholly-owned subsidiary, Pro-Bel Limited ("Pro-Bel"),
develops, manufactures and markets signal management systems and control
and automation systems.
Basis of Presentation
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. On April 12, 1996, the
Company acquired Pro-Bel and its subsidiaries (see Note 2). The
Company's other subsidiaries are inactive.
Restatement and Reclassification
On January 24, 1997, the Company's shareholders ratified a one-for-three
reverse stock split. Net income (loss) per share, weighted average
number of common and common equivalent shares outstanding, common stock
issued and outstanding, additional paid-in-capital and all other common
stock transactions presented in these consolidated financial statements
have been restated to reflect the one-for-three reverse stock split.
In addition, certain prior year amounts have been reclassified to
conform to the current year presentation.
Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues, costs and
expenses during the periods presented.
Cash and Cash Equivalents
Cash includes cash on deposit and amounts invested in a highly liquid
money market fund. Cash equivalents consist of short term investments
convertible into cash within three months or less. The carrying amount
of cash and cash equivalents approximates their fair value.
Inventories
Inventories are stated at the lower of cost (first-in, first-out basis)
or market. The need for inventory obsolescence provisions is evaluated
quarterly by the Company and, when appropriate, provisions for
technological obsolescence, non-profitability of related product lines
and excess quantities on hand are made.
Property, Equipment and Depreciation
Property and equipment are stated at cost. Depreciation and
amortization are provided on the straight line method over the following
estimated useful lives:
Buildings................. 35 years
Machinery and Equipment... 3-10 years
Furniture and Fixtures.... 5-10 years
Leasehold Improvements.... Shorter of the life of improvement
or remaining life of the lease
Revenue Recognition
Net sales, which include revenue derived from product sales and upgrades
as well as service revenue, are recorded upon shipment of product or
performance of service. Customer service costs are included in selling,
general and administrative expenses and are not material.
Income Taxes
In connection with the Company's emergence in 1991 from its
reorganization proceeding under Chapter 11 of the United States
Bankruptcy Code, the Company adopted "Fresh Start Reporting" in
accordance with AICPA Statement of Position No. 90-7, "Financial
Reporting by Entities in Reorganization under the Bankruptcy Code."
Fresh Start Reporting requires that the Company report an income tax
equivalent provision when there is book taxable income and a
pre-reorganization net operating loss carryforward. This requirement
applies despite the fact that the Company's pre-reorganization net
operating loss carryforward would eliminate (or reduce) the related
income tax payable. The current and future year benefit related to the
carryforward is not reflected in net income, but instead is recorded as
a direct increase to additional paid-in capital. The income tax
equivalent provision does not affect the Company's tax liability.
The Company's net deferred tax assets represent the tax benefit to be
derived from the pre- and post- reorganization net deductible temporary
differences.
Translation of Foreign Currencies
The functional currency for the Company's foreign operations is the
applicable local currency. The translation from the applicable foreign
currency to U.S. dollars is performed for asset and liability accounts
using period-end exchange rates and for revenue and expense accounts
using a weighted average exchange rate during the period. The gains or
losses resulting from such translation are recorded in the cumulative
translation adjustment account which is included in shareholders'
equity. Transaction gains or losses are included in interest and other
expenses.
Net Income (Loss) Per Share
Net income (loss) per share is based on the weighted average number of
common shares outstanding during the period plus, when dilutive,
additional shares issuable upon the assumed exercise of outstanding
common stock equivalents. Fully diluted net income (loss) per share is
not presented since such presentation would not be materially different
from primary net income (loss) per share.
Common Stock Equivalents
In December 1991, the Company issued to Pesa, Inc. ("Pesa"), a Delaware
corporation, and its then majority shareholder, $5 million of
Convertible Subordinated Notes ("Notes"). The Notes were convertible
into shares of common stock at a conversion price of $.60 per share.
As of December 31, 1995, all of the Notes have been so converted. See
Note 11.
In January 1992, shareholders of the Company, other than Pesa, received
one warrant for every two shares of common stock held when the Company
issued 1,931,851 Common Stock Purchase Warrants. Each warrant entitled
its holder to purchase one share of common stock at $.60 per share. As
of December 31, 1996, a total of 1,736,182 Common Stock Purchase
Warrants had been exercised. The remaining warrants expired on January
31, 1996.
During 1995 and 1996, respectively, the Company's Board of Directors
granted to certain employees 1,041,666 and 425,000 Incentive Stock
Options for the purchase of Chyron common stock and to non-employee
members of the Board of Directors 30,000 and 29,999 Non-Incentive Stock
Options for the purchase of Chyron common stock. The exercise price of
each stock option granted is the quoted closing market price at the date
of such grant. The options vest over three years and expire five years
from the date of grant. See Note 12.
Stock-Based Compensation Plans
The Company elected to continue following Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) in
accounting for its employee stock options, rather than adopt the
alternate method of accounting provided under Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation"
(SFAS 123). Under APB 25, the Company does not recognize compensation
expense on stock options granted to employees because the exercise price
of each option is equal to the market price of the underlying stock on
the respective date of grant. See Note 12.
2. ACQUISITION OF PRO-BEL LIMITED
On April 12, 1996, the Company acquired all of the issued and
outstanding capital stock of Pro-Bel Limited, located in Reading,
United Kingdom in exchange for $6.9 million in cash, 3.5 million British
pounds sterling ($5.3 million) in notes and 1,048,735 shares of
restricted Chyron common stock valued at $6.9 million.
The acquisition of Pro-Bel was accounted for as a purchase.
Accordingly, the cost of the acquisition was allocated to the net assets
acquired based upon their estimated fair values. The excess of cost
over the estimated fair value of net tangible assets acquired amounted
to $6,928,000, which is being amortized over 12 years using the straight
line method. Amortization in 1996 amounted to $489,000. The Company
evaluates whether changes have occurred that would require revision of
the remaining estimated useful life of the assigned excess of cost over
the value of net tangible assets acquired or its carrying amount. In
making such determinations, the Company evaluates undiscounted cash
flows of the underlying business which gave rise to such amount.
The following unaudited pro forma statements of operations include the
operating results of the Company and Pro-Bel for the years ended
December 31, 1996 and 1995, assuming the acquisition of Pro-Bel had been
made as of January 1, 1996 and 1995, respectively (in thousands except
per share amounts).
Pro Forma Statement of Operations
for the Year Ended December 31, 1996
(Unaudited)
Pro Forma
Adjustment
(a) Increase/
Pro-Bel Chyron (Decrease) Consolidated
Net sales................ $10,366 $82,608 $92,974
Cost of products sold.... 5,596 39,941 $784 (b) 46,321
Gross profit............. 4,770 42,667 (784) 46,653
Operating expenses:
Selling, general and
administrative......... 2,580 22,349 285 (c) 25,214
Research and development. 591 5,253 (50)(d) 5,794
Total operating expenses. 3,171 27,602 235 31,008
Operating income......... 1,599 15,065 (1,019) 15,645
Interest and other
expense, net........... 80 1,666 280 (e) 2,026
Income before provision
for income tax......... 1,519 13,399 (1,299) 13,619
Income/taxes equivalent
provision.............. 340 4,745 (99)(f) 4,986
Net income............... $1,179 $8,654 ($1,200) $8,633
Net income per common
share.................. $ .27 $ .27
Weighted average number
of common and common
equivalent shares
outstanding............ 32,327 32,623
<PAGE>
Pro Forma Statement of Operations
for the Year Ended December 31, 1995
(Unaudited)
Pro Forma
Adjustment
(g) Increase/
Pro-Bel Chyron (Decrease) Consolidated
Net sales................ $28,763 $53,971 $82,734
Cost of products sold.... 15,902 22,746 $698 (b) 39,346
Gross profit............. 12,861 31,225 (698) 43,388
Operating expenses:
Selling, general and
administrative......... 9,064 17,066 741 (c) 26,871
Research and development. 1,548 4,105 (167)(d) 5,486
Management fee........... 2,911 2,911
West Coast restructuring
(recapture)............ (1,339) (1,339)
Total operating expenses. 10,612 22,743 574 33,929
Operating income......... 2,249 8,482 (1,272) 9,459
Interest and other
expense, net........... 461 536 1,052 (e) 2,049
Income before provision
for income tax......... 1,788 7,946 (2,324) 7,410
Income taxes/equivalent
provision.............. 782 470 (373)(f) 879
Net income............... $1,006 $7,476 ($1,951) $6,531
Net income per common
share.................. $ .25 $ .21
Weighted average number
of common and common
equivalent shares
outstanding............ 30,382 31,431
Notes to Unaudited Pro Forma Consolidated Statement of Operations:
(a) Results of operations from January 1, 1996 through the date of
acquisition at the average exchange rate for the period.
(b) Reflects the increase in depreciation expense for the step up in
basis of property, plant and equipment acquired and the increase in cost
of products sold for the step up in basis of inventory acquired.
(c) Reflects the increase in depreciation expense for the step up in
basis of property, plant and equipment acquired and the amortization of
excess of cost over net tangible assets acquired.
(d) Reflects the decrease in research and development expense due to the
capitalization of certain of Pro-Bel's software development costs, net
of the amortization of such costs for the year.
(e) Reflect additional interest expense on indebtedness incurred in
connection with the acquisition of Pro-Bel.
(f) Reflects the estimated income tax effect on the acquisition
financing.
(g) Results of operations for the twelve months ended October 31, 1995,
as this was Pro-Bel's operating period prior to the acquisition by
Chyron, at the average exchange rate for the period.
These pro forma results have been prepared for comparative purposes only
and include adjustments as a result of applying purchase accounting and
conversion to generally accepted accounting principles in the United
States. The pro forma financial information is not necessarily
indicative of the operating results that would have occurred if the
acquisition had taken place on the aforementioned dates or of future
results of operations of the consolidated entities.
3. INVESTMENT IN RT-SET
On February 29, 1996, the Company effectively purchased an option to
acquire a 19% interest in Real Time Synthesized Entertainment
Technology, Ltd. ("RT-SET"), located in Tel Aviv, Israel. RT-SET
develops, markets and sells real time virtual studio set software and
proprietary communications hardware that operate on Silicon Graphics
systems. In form, Chyron purchased shares of RT-SET Convertible
Preferred Stock, which are convertible into RT-SET common stock, in
exchange for 800,000 shares of Chyron restricted common stock. In
accordance with the purchase agreement, the 800,000 of Chyron common
stock were to be held in escrow and released in tranches of one-third
and two-thirds, subject to certain conditions. During 1996, the first
of these conditions was met, which resulted in the release of 266,666
shares of Chyron restricted common stock to RT-SET. Upon the
satisfaction of the remaining conditions, the remaining 533,334 escrowed
shares will be released. If the conditions are not met or at Chyron's
option, the remaining shares of Chyron restricted common stock held in
escrow will be returned to the Company in exchange for the RT-SET
Convertible Preferred Stock held by the Company. Accordingly, the
transaction has been recorded as the purchase of a right to acquire a
19% interest in RT-SET. RT-SET retains the voting rights with respect
to the escrowed Chyron shares while such shares are held by the escrow
agent. The acquisition was recorded at the estimated fair value of the
Chyron restricted common stock released from escrow. In addition,
Chyron was granted certain call option rights which, if and when
exercised, will result in the Company owning up to a 51% interest in RT-
SET.
4. CONTROL OF REGISTRANT
On May 26, 1995, Pesa, Inc. ("Pesa") the former parent of the Company,
sold 3,333,333 shares of common stock of Chyron to CC Acquisition
Company A, a Delaware limited liability company ("CCACA"). On July 25,
1995, Pesa sold 16,471,571 shares to the entities listed below.
Additionally, on July 25, 1995, Sepa Technologies, Ltd., a Georgia
limited liability company ("Sepa"), and an affiliate of Pesa, sold
1,666,667 shares to the entities listed below.
The sales were made pursuant to two agreements entered into on May 26,
1995: (1) CCACA and CC Acquisition Company B, a Delaware limited
liability company ("CCACB"), and an affiliate of CCACA, entered into a
stock purchase agreement with Pesa (the "Pesa Agreement") pursuant to
which (i) CCACA acquired 3,333,333 shares and (ii) CCACA and CCACB
agreed to acquire an additional 16,471,571 shares and (2) CCACA entered
into a stock purchase agreement with Sepa (the "Sepa Agreement")
pursuant to which CCACA agreed to acquire 1,666,667 shares and the
voting rights and right of first refusal with respect to an additional
3,000,000 shares. CCACA and CCACB are collectively referred to herein
as CCAC.
On July 25, 1995, CCACA entered into an agreement (the "Leubert
Agreement") with Alfred O.P. Leubert Ltd., a New York corporation
("Leubert"), pursuant to which CCACA was granted a right of first
refusal to acquire 100,000 shares, which shares were acquired by Leubert
from Sepa and which reduced from 3,000,000 to 2,900,000 the number of
shares covered by the Company's right of first refusal as set forth in
the Sepa Agreement.
On July 25, 1995, CCACA and CCACB entered into an assignment and
assumption agreement (the "Assignment Agreement") by and among CCACA,
CCACB, WPG Corporate Development Associates IV, L.P., a Delaware limited
partnership ("CDA"), WPG Corporate Development Associates IV (Overseas),
L.P., a Cayman Islands exempt limited partnership ("CDAO"), WPG
Enterprise Fund II, L.P., a Delaware limited partnership ("WPGII"),
Weiss, Peck & Greer Venture Associates III, L.P., a Delaware limited
partnership ("WPGIII"), Westpool Investment Trust plc., a public limited
company organized under the laws of England ("WIT"), Lion Investments
Limited, a limited company organized under the laws of England ("Lion"),
and Charles M. Diker (such individual together with CDA, CDAO, WPGII,
WPGIII, WIT and Lion, the "WPG/Westpool Investor Group") and certain
other persons (such persons together with the WPG/Westpool Investor
Group, the "Assignees") pursuant to which (i) CCACA assigned to the
Assignees its rights under the Pesa Agreement to acquire 6,666,666
shares, (ii) CCACA assigned its rights under the Sepa Agreement to
acquire 1,666,667 shares, (iii) CCACA assigned its right of first
refusal to acquire 1,800,000 of the 3,000,000 shares as set forth in the
Sepa Agreement and the Leubert Agreement described above and (iv) CCACB
assigned its rights under the Pesa Agreement to acquire 5,882,946
shares.
The closing, as contemplated by the Pesa Agreement and the Sepa
Agreement, occurred on July 25, 1995. Consequently, at closing CCAC
beneficially owned in the aggregate 7,255,297 shares and the
WPG/Westpool Investor Group beneficially owned in the aggregate
13,968,629 shares. Beneficial ownership does not include 3,000,000
shares for which the voting rights have been assigned to CCAC and the
WPG/Westpool Investor Group.
As a consequence of the above transactions, the principal shareholders
as of July 25, 1995 were as follows:
Name of Owner Number of Shares Date of Acquisition
CCACA 3,333,333 May 26, 1995
CCACB 3,921,964 July 25, 1995
CDA 5,923,538 July 25, 1995
CDAO 1,428,373 July 25, 1995
WPGII 1,471,852 July 25, 1995
WPGIII 1,223,848 July 25, 1995
WIT 2,328,103 July 25, 1995
Lion 1,102,788 July 25, 1995
C.M. Diker 490,127 July 25, 1995
Others 247,645 July 25, 1995
Pesa was a 100% owned subsidiary of a Spanish Company, Pesa Electronica,
S.A. ("Electronica"), which in turn was 99% owned by a Spanish Company,
Amper, S.A. ("Amper"). On June 24, 1994, Amper sold all of its shares
of stock of Electronica to Sepa. On August 2, 1994, Sepa acquired
4,666,666 shares of Chyron common stock from certain foreign
shareholders. Consequently, Sepa directly and indirectly through Pesa
became the beneficial owner of 24,471,570 shares of Chyron common stock.
On October 5, 1994, Electronica filed for receivership in Spain
("Suspension de Pagos"). The proceedings are comparable to a Chapter
11 reorganization under the U.S. Bankruptcy laws.
5. ACCOUNTS AND NOTES RECEIVABLE
Trade accounts and notes receivable are stated net of an allowance for
doubtful accounts of $2,850,000 and $3,134,000 at December 31, 1996 and
1995, respectively. The provision for doubtful accounts amounted to
$nil, $466,000 and $729,000 for 1996, 1995, and 1994, respectively. The
carrying amounts of accounts and notes receivable approximate their fair
values.
The Company periodically evaluates the credit worthiness of its
customers and determines whether collateral (in the form of letters of
credit or liens on equipment sold) should be taken or whether reduced
credit limits are necessary. Credit losses have consistently been
within management's expectations.
Accounts and notes receivable are principally due from customers in, and
dealers serving, the broadcast video industry and non-broadcast display
markets. At December 31, 1996 and 1995, receivables included
approximately $12.5 million and $2.7 million, respectively, due from
foreign customers.
6. INVENTORIES
Inventories consist of the following (in thousands):
December 31,
1996 1995
Finished goods........ $12,879 $ 3,345
Work-in-process....... 5,271 5,250
Raw materials......... 5,352 3,050
$23,502 $11,645
7. PROPERTY AND EQUIPMENT
Property and equipment consist of the following (in thousands):
December 31,
1996 1995
Land..................... $ 878 $ 53
Building................. 1,794
Machinery and equipment.. 11,593 4,441
Furniture and fixtures... 2,386 1,501
Leasehold improvements... 715 299
17,366 6,294
Less: Accumulated
depreciation and
amortization............ 4,665 2,994
$12,701 $3,300
Machinery and equipment at December 31, 1996 and 1995 includes $818,000
and $473,000, respectively, of assets held under capital lease
obligations. Accumulated depreciation and amortization at December 31,
1996 and 1995 includes $381,000 and $278,000, respectively, attributable
to assets held under capital lease obligations. See Note 15.
Depreciation expense, which includes amortization of capital lease
assets, was $1,671,000, $1,054,000 and $1,106,000 in 1996, 1995 and
1994, respectively.
8. SOFTWARE DEVELOPMENT COSTS
Certain software development costs are capitalized and amortized over
their estimated economic life, ranging from 3 to 5 years, commencing
when each product is available for general release. The following
amounts were capitalized, amortized and written off (in thousands):
1996 1995 1994
Amounts capitalized........ $1,420 $207 $1,383
Less: Amortization
(included in Research and
Development expense)....... (960) (1,013) (931)
West Coast restructuring
write-down to net
realizable value........... (1,991)
Net (decrease) increase in
software development costs. $460 ($806) ($1,539)
9. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following (in
thousands):
December 31,
1996 1995
Accounts payable....... $ 7,500 $2,818
Compensation (including
pension liability)..... 3,644 3,136
Other accrued items.... 3,459 2,003
Income taxes payable... 1,225 163
$15,828 $8,120
The carrying amounts of accounts payable and accrued expenses
approximate their fair values.
10. LONG-TERM DEBT
Long term debt consists of the following (in thousands):
December 31,
1996 1995
Term loan, maturing April 16, 2000(a) $6,500
Revolving credit facility, maturing
March 28, 1999(a) 2,730
Revolving credit facility, maturing
April 27, 1997(b) $4,741
Commercial mortgage term loan,
maturing March 28, 2010(c) 2,097
Promissory notes, payable
on or before April 15, 1998(d) 5,917
Trade finance facility, maturing
December 31, 1996
replaced with debt maturing
December 31, 1997(e) 1,209
Overdraft facility, maturing
December 31, 1996
replaced with debt maturing
December 31, 1997(f) 1,790
20,243 4,741
Less amounts due in one year 5,080
$15,163 $4,741
(a) On March 28, 1996 and April 16, 1996, the Company entered into
agreements with a bank to obtain a revolving credit facility of $10
million and a term loan of $8 million, respectively. The entire
facility is secured by Chyron's accounts receivable and inventory and
the common stock of Pro-Bel. Borrowings are limited to amounts computed
under a formula for eligible accounts receivable and inventory.
Additionally, an over-advance is available above the borrowing formula
in an amount not to exceed $3 million. Interest on the revolving credit
facility is equal to adjusted LIBOR plus 175 basis points or prime
(8.25% at December 31, 1996) and is payable monthly. The term loan is
payable in quarterly installments of $500,000, commencing June 1, 1996.
Interest on the term loan is equal to adjusted LIBOR plus 200 basis
points or prime and is payable monthly. The Company must pay a
commitment fee equal to 1/4 of 1% per annum on the average daily unused
portion of the credit facility. The commitment fee is payable on the
last day of each quarter commencing June 30, 1996. This agreement
contains, among other provisions, requirements for maintaining defined
levels of net worth, leverage, capital expenditures, lease payments and
various financial ratios. The Company is prohibited by the agreement
from paying cash dividends in excess of 25% of its net income for the
then current fiscal year.
(b) At December 31, 1995, the Company had $4.7 million outstanding with
a financial institution under a secured revolving credit facility.
Interest was payable monthly at the prime rate (8.5% at December 31,
1995) plus 2% per annum. The facility was due to expire on April 27,
1997, but was replaced by the banking facility described in (a) above
in conjunction with the financing of the acquisition of Pro-Bel.
(c) Pro-Bel has a commercial mortgage term loan with a bank. The loan
is secured by a building and property located in the United Kingdom.
Interest is equal to LIBOR (6% at December 31, 1996) plus 2%. The loan
(including interest) is payable in quarterly installments of 80,600
pounds sterling ($136,000, converted at the December 31, 1996 exchange
rate).
(d) On April 12, 1996, the Company issued promissory notes to the
shareholders of Pro-Bel for 3.5 million pounds sterling ($5,919,000,
converted at the December 31, 1996 exchange rate) in conjunction with
the acquisition (See Note 2). The promissory notes are secured by an
irrevocable letter of credit from a bank. The amount of this
irrevocable letter of credit is included as an outstanding borrowing in
the formula used to calculate borrowing availability for the facilities
described in (a) above. Interest through April 15, 1997 is equal to
LIBOR as of April 15, 1996 (6.46%) and is payable quarterly. Interest
through April 15, 1998 is equal to LIBOR as of April 15, 1997. The
notes are due on or before April 15, 1998 and are subordinated to any
obligations to a bank or financial institution currently existing or
subsequently entered into. The notes can be prepaid without penalty
subsequent to November 1, 1996.
(e) On February 1, 1996, Pro-Bel entered into an agreement with a bank
to obtain a trade finance facility of 750,000 pounds sterling
($1,267,000, converted at the December 31, 1996 exchange rate). The
facility is secured by Pro-Bel's accounts receivable. Interest is equal
to the bank's base rate plus 2% (8% at December 31, 1996) on advances
against accounts receivable in pounds sterling and equal to the Barclays
Bank PLC currency call loan rate plus 2% (8% at December 31, 1996) on
advances against foreign accounts receivable. Interest is payable
quarterly, in arrears.
(f) On February 1, 1996, Pro-Bel entered into an agreement with a bank
to obtain an overdraft facility of 750,000 pounds sterling ($1,276,000
converted at the December 31, 1996 exchange rate). Interest is equal
to the bank's base rate plus 2.5% (8.5% at December 31, 1996) and is
payable quarterly commencing in March 1996. The facility has a sublimit
for overdraft on Pro-Bel's wholly owned subsidiary, Trilogy Broadcast
Limited, of 160,000 pounds sterling ($270,000, converted at the December
31, 1996 exchange rate). This facility is payable upon written demand
by the bank and any undrawn portion may be cancelled by the bank at any
time.
In January 1997, Pro-Bel entered into an agreement with Barclays Bank
PLC whereby Barclays agreed to provide an overdraft facility of up to
3.0 million pounds sterling through December 31, 1997 to Pro-Bel and its
subsidiaries. The overdraft facility provides for interest at 1.5% per
annum over the bank's base rate. Interest is payable quarterly, in
arrears. This facility replaces the trade finance facility of up to
750,000 pounds sterling and the overdraft facility of up to 750,000
pounds sterling in place at December 31, 1996. The maturity dates of
such facilities were extended by the lenders to coincide with the new
Barclays agreement. All monies under the facility are repayable upon
written demand and are secured by accounts receivable.
Aggregate maturities of long term debt in the next five years are as
follows (in thousands):
The carrying amounts of long-term debt instruments approximate their
fair values.
1997........ $5,080
1998........ 7,437
1999........ 4,826
2000........ 607
2001........ 115
Net interest expense was $1,402,000, $536,000 and $525,000 in 1996, 1995
and 1994.
11. CONVERTIBLE SUBORDINATED NOTES PAYABLE
In 1991, the Company issued to Pesa 4-year Convertible Subordinated
Notes in the principal amount of $5.0 million maturing on January 31,
1996 and bearing interest (payable annually in arrears) at the prime
rate, adjusted annually each December. The Notes were convertible into
8,333,333 shares of common stock of the Company at a conversion rate of
$.60 cents per share. As of December 31, 1996, all of the Notes had
been converted into shares of common stock of the Company.
12. LONG-TERM INCENTIVE PLAN
In May 1995, the Company's shareholders approved the Chyron Corporation
Long-Term Incentive Plan ("the Plan"). The Plan allows for a maximum
of 1,666,666 shares of common stock to be available with respect to the
grant of awards under the Plan; any or all of such common stock may be
granted for awards of Incentive Stock Options.
On July 25, 1995, November 21, 1995 and September 18, 1996 the Board of
Directors granted Incentive Stock Options for the purchase of 991,666,
50,000, and 425,000 shares, respectively, to certain employees; the
exercise price per option share is $4.875, $5.625, and $12.75,
respectively, the quoted closing market prices at the dates of grant.
The Incentive Stock Options granted on September 18, 1996 have been
cancelled and reissued as of March 7, 1997. Additionally, on July 31,
1995, November 21, 1995, February 22, 1996, July 31, 1996 and September
18, 1996, the non-employee members of the Board of Directors received
Non-Incentive Stock Options for the purchase of 26,666, 3,333, 6,666,
20,000 and 3,333 shares, respectively, at exercise prices of $5.625,
$5.625, $9.375, $16.125 and $12.75, respectively, the quoted closing
market prices at the dates of grant. Subsequent to the grant dates,
86,000 Incentive Stock Options were forfeited. The options to employees
vest over three years at 33 1/3% per annum and expire five years after
the grant date. Options granted to directors vest immediately.
If the Company had elected to recognize compensation expense based upon
the fair value at the grant date for awards under these plans consistent
with the methodology prescribed by SFAS 123, the Company's net income
and net income per share would be reduced to the pro forma amounts
indicated below:
1996 1995
Net Income (in thousands):
As reported $8,654 $7,476
Pro forma $7,560 $7,125
Earnings per common share:
As reported $.27 $.25
Pro forma $.23 $.24
These pro forma amounts may not be representative of future disclosures
since the estimated fair value of stock options is amortized to expense
over the vesting period for purposes of future pro forma disclosures,
and additional options may be granted in future years. The fair value
of these options was estimated at the date of grant using the Black-
Scholes option-pricing model with the following weighted average
assumptions for both 1996 and 1995: dividend yield of 0; expected
volatility of 50% and expected life of 4 years. The weighted average
risk free interest rates for 1996 and 1995 were 6.54% and 6.11%,
respectively. The weighted average fair values of options granted
during 1996 and 1995, for which the exercise price equaled the market
price on the grant dates, were $12.849 and $4.936 per option,
respectively.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions including the
expected price volatility. Because the Company's employees' stock
options have characteristics significantly different from those of
traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in managements' opinion,
the existing models do not necessarily provide a reliable single measure
of the fair value of employee stock options.
Transactions involving stock options are summarized as follows:
Weighted Average
Stock Options Exercise Price of
Outstanding Options Outstanding
Balance, January 1, 1995
Granted 984,999 $4.936
Exercised
Balance, December 31, 1995 984,999 4.936
Granted 454,999 7.436
Exercised (113,018) 7.652
Balance, December 31, 1996 $1,326,980 $7.652
The following table summarizes information concerning currently
outstanding and exercisable stock options:
Weighted
Outstanding Average Exercisable
Exercise at December Contractual at December
Price 31, 1996 Life 31, 1996
$ 4.875 795,314 3.6 years 265,104
5.625 76,667 3.8 years 43,334
9.375 6,666 4.2 years 6,666
16.125 20,000 4.6 years 20,000
12.750 428,334 4.8 years 3,333
13. INCOME TAXES
The provision for income taxes consists of the following (in thousands):
1996 1995 1994
Current:
Federal.................. $1,308 $ $
State.................... 629 50
Foreign.................. 473
Tax equivalent provision. 420
2,410 470
Deferred:
Federal.................. 2,664
State.................... (150)
Foreign.................. (39)
Tax equivalent provision
Release of valuation
reserve.................. (140)
2,335
Total...................... $4,745 $470 $
The effective income tax rate differed from the Federal statutory rate
as follows (in thousands):
1996 1995 1994
Amount % Amount % Amount %
Federal income tax
provision (benefit)
at statutory rate..... $4,689 35.0 $2,702 34.0 ($3,058) (34.0)
State income taxes,
net of federal tax
benefit............... 409 3.0 33 .4
Permanent differences. 36 .3
Benefit from post
reorganization
temporary differences
on tax equivalent
provision............. (140) (1.1) (1,351) (17.0)
Foreign income tax
benefit............... 8 .1
Benefit of lower tax
rates on U.S. Federal
Provision............. (121) (.9)
Effect of valuation
allowance of deferred
tax assets............ (150) (1.1) (940) (11.8) 3,058 34.0
Other, net............ 14 .1 26 .3
$4,745 35.4 $ 470 5.9 $
The Company has deferred tax assets and deferred tax liabilities as
presented in the table below. The net deferred tax assets were subject
to a valuation allowance, which was $nil and $5.4 million at December
31, 1996 and 1995, respectively. This valuation allowance is primarily
attributable to pre-Chapter 11 reorganization net operating loss
carryforwards and pre-Chapter 11 reorganization deductible temporary
differences. As a result of current and projected future profitability,
the allowance was partially reduced in 1995 and eliminated in 1996.
Deferred tax assets (deductible temporary differences) prior to the
allocation of the valuation allowance consisted of the following (in
thousands):
December 31,
1996 1995
Post-reorganization net operating
loss carryforward.............. $ 276 $ 280
Pre-reorganization net operating
loss carryforward.............. 4,631 7,250
Pre-reorganization deductible
temporary differences.......... 4,555 4,555
Restructuring reserve............ 55
Other............................ 2,030 2,000
Total deferred tax assets...... $11,492 $14,140
Deferred tax liabilities (taxable temporary differences) consisted of
the following (in thousands):
December 31,
1996 1995
Pre-reorganization taxable
temporary differences.......... $ 85 $ 85
Software development costs....... 683 585
Other............................ 210
Total deferred tax liabilities. $768 $880
At December 31, 1996, the Company had net operating loss carryforwards
("NOL") of approximately $15.0 million for tax purposes. Under U.S.
income tax rules, the utilization of the NOL is subject to annual
limitations as a result of the changes in control of the Company at
December 27, 1991 and July 25, 1995. However, despite these
restrictions, the Company expects to fully utilize all of its remaining
NOL prior to expiration.
14. BENEFIT PLANS
Chyron Corporation has a domestic defined benefit pension plan (the
"U.S. Pension Plan") covering substantially all U.S. employees meeting
minimum eligibility requirements. Benefits paid to retirees are based
upon age at retirement, years of credited service and average
compensation. Pension expense is actuarially determined using the
projected unit credit method. The Company's policy is to fund the
minimum contributions required under the Employees Retirement Income
Security Act. The assets held by the U.S. Pension Plan at December 31,
1996 include government securities, corporate bonds and mutual funds.
The net periodic pension cost and its components are as follows (in
thousands):
1996 1995 1994
Service cost...................... $414 $383 $437
Interest cost on projected benefit
obligation...................... 267 292 312
Actual return on plan assets...... (206) (227) (269)
Net amortization.................. (43) (15)
Net periodic pension cost......... $432 $433 $480
A reconciliation of the funded status of the U.S. Pension Plan to the
amounts included in the Company's balance sheet is as follows (in
thousands):
December 31,
1996 1995 1994
Accumulated pension benefit obligation:
Vested................................. $2,234 $2,265 $2,431
Non-vested............................. 29 79 63
Total.................................. $2,263 $2,344 $2,494
Projected benefit obligation........... $3,803 $4,138 $4,532
Plan assets at fair value.............. 2,709 2,609 3,352
projected benefit obligation in excess
of assets............................ 1,094 1,529 1,180
Less items not yet recognized in net
periodic pension cost:
Unrecognized net gain (loss) from past
experience and changes in
assumptions.......................... 841 49 (35)
Pension liability...................... $1,935 $1,578 $1,145
In each year presented, the expected long-term rate of return on U.S.
Pension Plan assets was 9%. The weighted average discount rates used
to determine the accumulated benefit obligation was 8.0% in 1996, 7.5%
in 1995 and 8.0% in 1994. The rate of compensation increase used was
5% for all years presented.
The Company's U.K. subsidiary, Pro-Bel, has a non-contributory defined
benefit pension plan (the "U.K. Pension Plan") covering all its
permanent employees. Contributions are determined on the basis of
valuations using the projected unit method. Pro-Bel's policy is to fund
minimum contributions required pursuant to the U.K. Rules and
Regulations. The assets held by the U.K. Pension Plan at December 31,
1996 include cash equivalents and free hold properties.
The net periodic pension cost of the U.K. Pension Plan for the period
since the acquisition of Pro-Bel (April 12, 1996) through December 31,
1996 and its components under the provisions of SFAS No. 87 are as
follows (in thousands):
Service cost-benefit earned during the period $303
Interest cost on projected benefit obligation 285
Actual return on plan assets (457)
Net amortization 0
Net periodic pension cost $131
A reconciliation of the funded status of the U.K. Pension Plan to the
amounts included in the Company's balance sheet as of December 31, 1996
is as follows (in thousands):
December 31,
1996
Accumulated pension benefit obligation:
Vested $4,867
Non-vested
Total $4,867
Projected benefit obligation $5,739
Plan assets at fair value 7,005
Plan assets at fair value in excess of
projected benefit obligation 1,266
Items not yet recognized in net
periodic pension cost:
Unrecognized net gain from past
experience and changes in assumptions 141
Pension asset $1,407
The expected long-term rate of return on the U.K. Pension Plan assets
was 9%. The weighted average discount rate used to determine the
accumulated benefit obligation was 8% and the rate of compensation
increase used was 5.50% for the period presented.
In 1994, Chyron Corporation adopted a 401(k) Plan exclusively for the
benefit of participants and their beneficiaries. All employees of the
Company are eligible to participate in the 401(k) Plan except non-
resident aliens and employees who are members of a union who bargain
separately for retirement benefits during negotiations. An employee may
elect to contribute a percentage of his or her current compensation to
the 401(k) Plan, subject to a maximum of 20% of compensation or the
Internal Revenue Service annual contribution limit ($9,500 in 1996 and
$9,240 in 1995), whichever is less. Total compensation that can be
considered for contribution purposes is limited to $150,000.
The Company can elect to make a contribution to the 401(k) Plan on
behalf of those participants who have made salary deferral
contributions. During 1996 and 1995, the Company contributed $51,000
and $29,000, respectively to the 401(k) Plan.
15. COMMITMENTS AND CONTINGENCIES
At December 31, 1996, the Company was obligated under operating and
capital leases covering facility space and equipment as follows (in
thousands):
Operating Capital
1997................ $ 1,030 $247
1998................ 890 85
1999................ 885 44
2000................ 880
2001................ 864
2002 and thereafter. 8,173
$12,722 $376
The operating leases contain provisions for maintenance and escalations
for real estate taxes. Total rent expense was $826,000, $496,000, and
$530,000 for 1996, 1995 and 1994, respectively. The cumulative imputed
interest in the capital lease obligation was $33,000 at December 31,
1996.
The Company is a party to Percival Hudgins & Company, Inc. v. Chyron
Corporation v. John Percival, pending in the United States District
Court, North District of Georgia (Atlanta). This is a breach of
contract action for an alleged success fee in connection with the sale
of common stock by Pesa and Sepa (See Note 4). Plaintiff alleges that
such transaction was subject to the terms of its engagement letter with
the Company. Plaintiff seeks damages of approximately $600,000 together
with counsel fees. The Company has answered, denying all material
allegations, and has asserted a third party claim against plaintiff's
principal, alleging that he, as a director of the Company while his
investment banking firm was engaged by the Company, breached his
fiduciary duties to the Company and is liable for any amounts that might
be awarded to plaintiff, together with counsel fees. Plaintiff has
recently amended the complaint to add a claim for quantum meruit.
Discovery is continuing.
The Company from time to time is involved in routine legal matters
incidental to its business. In the opinion of management, the ultimate
resolution of such matters will not have a material adverse effect on
the Company's financial position, results of operations or liquidity.
16. RELATED PARTY TRANSACTIONS
Sepa, prior to the change in control discussed in Note 4, was the
beneficial owner of 24,471,570 shares of Chyron common stock.
Consequent to such ownership, Sepa had an amended and restated
management agreement with Chyron whereby Chyron agreed to pay
management fees to Sepa at 2.5% of consolidated revenues through
December 31, 1997. The management fees under this agreement were
subject to an annual limitation of $1.5 million. In July 1994, Chyron
took advantage of an option to prepay the management fee at a 25%
discount from the aggregate estimated yearly fees for the period July
1, 1994 through December 31, 1995, resulting in estimated aggregate
total savings of $486,000 in fees for the eighteen month period ending
December 31, 1995.
In December 1995, Chyron and Sepa agreed to terminate the Management
Agreement upon payment to Sepa of $2 million, which resulted in
aggregate savings for the Company of $1 million for the two year period
ending December 31, 1997. The $2 million was paid in equal installments
in December 1995 and January 1996.
The Company shared certain trade show and facility costs with Pesa and
Electronica. Such services amounted to $30,000 and $303,000 for 1995
and 1994, respectively, and were billed to these related parties under
a usage based allocation.
A member of the Board of Directors of the Company is a partner of a law
firm that rendered various legal services to the Company for which the
Company incurred costs of $861,000 and $273,000 during 1996 and 1995,
respectively.
17. WEST COAST RESTRUCTURING
During the third quarter of 1994, as the result of continuing
significant operating losses by the Company's West Coast Operations and
their inability to meet revenue and operating targets, management
implemented a restructuring plan to eliminate a substantial number of
the CMX and Aurora product lines and consolidate certain remaining
products into the Company's Graphics Operations, with only certain
product engineering capabilities remaining on the West Coast. As a
result, the Company recorded a $12.7 million charge to operations during
the third quarter of 1994, resulting from headcount reductions,
consolidation costs, write-downs of assets related to discontinued
product lines and accrual of estimated operating losses anticipated
during the disposition period. For 1995, operating losses of $1,707,000
related to the discontinued product lines were charged against the
reserve for West Coast restructuring.
During August 1995, the Company entered into an agreement to sublease
a portion of the office space for the West Coast Operations. The
subleasing served to decrease future rent commitments and, as a result,
the Company reversed $356,000 of the original $12.7 million charge to
account for the decrease in projected rent expense.
Additionally, during 1995, the Company sold certain inventory that had
been fully reserved for in the original $12.7 million charge. The
Company realized a gain of $380,000 related to this inventory.
During December 1995, the Company recaptured $603,000 of the original
restructuring charge as a result of lower than anticipated costs related
to the disposition period. As of December 31, 1995, the amount of the
Reserve for West Coast Restructuring of $158,000 represented future rent
commitments through 1997.
A summary of activity for 1995 related to the West Coast Restructuring
is presented below (in thousands):
Reserve for West Coast
West Coast Restructuring
Restructuring Recapture
Balance at January 1, 1995
Current year operating loss $2,824 $ 0
Sublease agreement 1,707
Realization on asset write-down 356 356
Recapture 380
Balance at December 31, 1995 603 603
$ 158 $1,339
18. SEGMENT INFORMATION
Chyron's business is organized under a group concept that coordinates
product development, marketing, advertising, distribution and
procurement. The Company has a multi-product approach for filling
customer requirements for equipment and systems used in video or film
productions. These products include graphics and character generation
systems video and audio, signal management systems and electronic paint
and animation systems and software. Customers for the Company's
products include broadcasters, video production and post-production
companies, cable television distributors and operators, industrial
users, governments and governmental agencies and domestic and
international dealers serving the video production and display
industries for non-broadcast and broadcast markets. As a result, the
Company operates as one business segment.
The Company's operations are located primarily in the United States and
Europe. Foreign operations prior to 1996 and interarea sales were not
significant. Net sales, operating profit and identifiable assets by
geographic areas consist of the following (in thousands):
December 31,
1996 1996
Net Operating Identifiable
Sales Profit Assets
United States $55,446 $12,764 $52,988
Europe 24,281 1,611 38,375
Other 2,881 690 40
Total $82,608 $15,065 $91,403
During 1996, 1995 and 1994, net export sales from the United States were
approximately $9,580,000, $7,511,000 and $6,623,000, respectively.
During 1996, foreign exchange losses of $264,000 are included in other
expenses.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
During 1995, the Company dismissed Ernst & Young, LLP as its principal
accountants and retained Price Waterhouse LLP. On October 25, 1995, the
Company filed a Form 8-K related to the Change in the Registrant's
Certifying Public Accountants which is incorporated herein by reference.
PART III
Item 10 (Directors and Executive Officers of the Registrant), Item 11
(Executive Compensation), Item 12 (Security Ownership of Certain
Beneficial Owners and Management) and Item 13 (Certain Relationships and
Related Transactions) will be incorporated in the Company's Proxy
Statement to be filed within 90 days of December 31, 1996 and are
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a)(1) Financial Statements
The following Consolidated Financial Statements of Chyron Corporation
and subsidiaries are included in Part II, Item 8:
Report of Independent Auditors - Price Waterhouse, LLP - page 21
Report of Independent Auditors - Ernst & Young, LLP - page 22
Consolidated Balance Sheets at December 31, 1996 and 1995 - page 24
Consolidated Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994 - page 25
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994 - page 26
Consolidated Statements of Shareholder's Equity for the
Year Ended December 31, 1996, 1995 and 1994 - page 28
Notes to the Consolidated Financial Statements - page 29-53
(2) Financial Statement Schedules
The following Consolidated Financial Statement schedules of Chyron
Corporation and subsidiaries is included in Item 14(d):
Schedule II - Valuation and Qualifying Accounts for the Years
Ended December 31, 1996, 1995 and 1994 - page 64
All other schedules called for under Regulation S-X are not submitted
because they are not applicable or not required or because the required
information is not material or is not included in the Consolidated
Financial Statements or notes hereto.
(3) Financial Statement Exhibits
See list of exhibits to the Financial Statements in Section (c) below:
(b) Reports on Form 8-K
1. Form 8-K was filed on October 25, 1995 for the Change in the
Registrant's Certifying Public Accountant **********
2. Form 8-K was filed on April 26, 1996 for the acquisition of Pro-Bel,
Limited ***********
3. Form 8-K was filed on March 14, 1996 for the acquisition of RT-SET,
Limited ************
4. Form 8-K/A was filed on June 21, 1996 which amended the Form 8-K
filed on April 26, 1996 to include the financial exhibits related to the
acquisition of Pro-Bel Limited - *************
(c) Exhibits
2. Plan of acquisition, reorganization, arrangement, liquidation or
succession.
(a) First Amended Disclosure Statement pursuant to Section 1125
of the Bankruptcy Code, dated October 28, 1991 (with First Amended
Plan of Reorganization under Chapter 11 of the Bankruptcy Code
attached as Exhibit A thereto) - ***
3. Articles of Incorporation and By-Laws.
(a) Restated Certificate of Incorporation of Chyron Corporation - **
(b) Amended and Restated By-Laws of Chyron Corporation,
adopted February 17, 1995 - *********
(c) Amendment of Certificate of Incorporation of Chyron Corporation,
adopted January 24, 1997 - page 225
4.Instruments defining rights of security holders, including
debentures.
(a) Warrant Agreement, dated January 3, 1992, between Chyron
Corporation and American Stock Transfer & Trust Company, as
warrant agent, incorporating the form of warrant certificate as
Exhibit A thereto - **
(b) Convertible Note Purchase Agreement, dated as of December 27,
1991, between Chyron Corporation and Pesa, Inc., incorporating the
form of convertible note as Exhibit 1 thereto - ***
(c) Registration Rights Agreement, dated December 27, 1991,
between Chyron Corporation and Pesa, Inc. - ***
(d) Registration Rights Agreement dated July 25, 1995 by and between
Chyron Corporation and CC Acquisition Company A, L.L.C., CC Acquisition
Company B, L.L.C., WPG Corporate Development Associates, IV, L.P., WPG
Corporate Development Associates IV (Overseas), L.P., WPG Enterprise
Fund II, L.P. Weiss, Peck & Greer Venture Associates, III, L.P.,
Westpool Investment Trust PLC, Lion Investment Limited, Charles Diker,
Mint House Nominees Limited, Pine Street Ventures, L.L.C., Isaac Hersly,
Alan I. Annex, Ilan Kaufthal, Z Four Partners L.L.C. and A.J.L. Beare.
**************
10. Material Contracts.
(a) Assignment and Assumption, dated July 1, 1994, effective
July 1, 1994, of Management Agreement dated December 27,
1991 and Amended March 10, 1992, between Chyron Corporation
and Pesa, Inc. to Sepa Technologies Ltd., Co. - *********
(b) Amended and Restated Management Agreement, dated August 8,
1994, by and between Chyron Corporation and Sepa Technologies
Ltd., Co. - *********
(c) Distribution and License Agreement, dated September 22, 1994,
between Chyron Corporation and Comunicacion Integral Consultores,
S.L. - *********
(d) Termination Agreement, dated November 6, 1995, between
Chyron Corporation and Comunicacion Integral Consultores,
S.L. - **************
(e) Termination Agreement, dated December 12, 1995, between
Chyron Corporation and Sepa Technologies Ltd., Co. - **************
(f) Amendment, dated March 10, 1992, to Management Agreement
dated December 27, 1991, between Chyron Corporation and Pesa
Electronica, S.A. - *
(g) Assignment, dated March 10, 1992, of Management Agreement,
dated December 27, 1991, and Amendment March 10, 1992,
between Chyron Corporation and Pesa Electronica, S.A., to Pesa,
Inc. - *
(h) Amendment, dated January 31, 1994, effective December 28,
1993, to Management Agreement dated December 27, 1991 and
Amendment March 10, 1992 between Chyron Corporation and Pesa,
Inc. - ********
(i) Revolving Credit Agreement, dated December 27, 1991, between
Chyron Corporation and Extebank - **
(j) Management Agreement, dated as of December 27, 1991, between
Chyron Corporation and Pesa Electronica, S.A. - **
(k) Amendment, dated September 19, 1988, to Employment
Agreement, dated September 1, 1987, between Chyron Corporation
and Isaac Hersly (previously filed as Exhibit 8 to current report on
Form 10-Q dated November 6, 1987 and incorporated herein in its
entirety by reference thereto) - **
(l) Amendment, dated October 25, 1987, to Employment Agreement,
dated September 1, 1987, between Chyron Corporation and Isaac
Hersly, as amended - **
(m) Amendment, dated October 21, 1991, to Employment Agreement,
dated September 1, 1987, between Chyron Corporation and Isaac
Hersly, as amended - **
(n) Amendment, dated February 23, 1994, to Employment Agreement,
dated September 1, 1987, between Chyron Corporation and Isaac
Hersly, as amended - ********
(o) Resignation Agreement, dated July 12, 1994, between Chyron
Corporation and John A. Poserina - *******
(p) Amendment, dated September 19, 1988, to Employment
Agreement dated September 1, 1987, between Chyron Corporation
and John A. Poserina (previously filed as Exhibit 7 to current
report on Form 10-K dated November 6, 1987 and incorporated
herein in its entirety by reference hereto) - **
(q) Amendment, dated October 25, 1989, to Employment Agreement,
dated September 1, 1987, between Chyron Corporation and John A.
Poserina, as amended - **
(r) Amendment, dated October 21, 1991, to Employment Agreement,
dated September 1, 1987, between Chyron Corporation and John A.
Poserina, as amended - **
(s) Amendment, dated September 19, 1988, to Employment
Agreement, dated September 1, 1987, between Chyron Corporation
and Paul J. Rozzini (previously filed as Exhibit 10 to current
report on Form 10-K dated November 6, 1987 and incorporated
herein in its entirety by reference thereto) - **
(t) Amendment, dated October 25, 1989, to Employment Agreement,
dated September 1, 1987, between Chyron Corporation and Paul J.
Rozzini, as amended - **
(u) Amendment, dated October 21, 1991, to Employment Agreement,
dated September 1, 1987, between Chyron Corporation and Paul J.
Rozzini, as amended - **
(v) Employment Agreement, dated March 10, 1993, between Chyron
Corporation and Paul M. Yarmolich - *****
(w) Employment Agreement, dated December 24, 1993, between
Chyron Corporation and Mark C. Gray - ******
(x) Employment Agreement, dated March 31, 1994, between Chyron
Corporation and Patrick A. Burns - *********
(y) Employment Agreement, dated October 19, 1994, effective
November 1, 1994, between Chyron Corporation and Peter J.
Lance - *********
(z) Employment Agreement, dated February 8, 1995, between
Chyron Corporation and James F. Duca - *********
(aa) Employment Agreement, dated February 7, 1995, between
Chyron Corporation and Patricia Arundell Lampe - *********
(bb) Employment Agreement, dated July 26, 1995, between
Chyron Corporation and Michael Wellesley-Wesley - **************
(cc) Severance Agreement, dated October 25, 1995, between
Chyron Corporation and Peter J. Lance - **************
(dd) License Agreement between Softimage, Inc. and Chyron
Corporation and Aurora Systems dated February 23, 1993 - ********
(ee) Distribution Agreement between Softimage, Inc. and Chyron
Corporation and Aurora Systems dated February 23, 1993 - ********
(ff) Research and Development, Updated and Support Agreement
between Softimage, Inc. and Chyron Corporation and Aurora
Systems dated February 23, 1993 - ********
(gg) Loan Agreement between Chyron Corporation and NatWest Bank
N.A. (currently known as Fleet Bank), dated March 28, 1996 - page 67
(hh) Loan Agreement between Pro-Bel Limited and Barclays Bank, PLC
dated December 19, 1996 effective January 1997 - page 102
(ii) Indemnification Agreement between Chyron Corporation and Roi
Agneta dated November 19, 1996 - page 128
(jj) Indemnification Agreement between Chyron Corporation and
Sheldon Camhy dated November 19, 1996 - page 135
(kk) Indemnification Agreement between Chyron Corporation and James
Coppersmith dated November 19, 1996 - page 142
(ll) Indemnification Agreement between Chyron Corporation and
Daniel DeWolf dated November 19, 1996 - page 149
(oo) Indemnification Agreement between Chyron Corporation and
Charles M. Diker dated November 19, 1996 - page 156
(pp) Indemnification Agreement between Chyron Corporation and
Donald P. Greenberg dated November 19, 1996 - page 163
(qq) Indemnification Agreement between Chyron Corporation and
Ray Hartman dated November 19, 1996 - page 170
(rr) Indemnification Agreement between Chyron Corporation and
Roger Henderson dated November 19, 1996 - page 177
(ss) Indemnification Agreement between Chyron Corporation and
Isaac Hersly dated November 19, 1996 - page 184
(tt) Indemnification Agreement between Chyron Corporation and
Alan J. Hirschfield dated November 19, 1996 - page 191
(uu) Indemnification Agreement between Chyron Corporation and
Patricia Lampe dated November 19, 1996 - page 198
(vv) Indemnification Agreement between Chyron Corporation and
Wesley W. Lang, Jr. dated November 19, 1996 - page 205
(ww) Indemnification Agreement between Chyron Corporation and
Eugene M. Weber dated November 19, 1996 - page 212
(xx) Indemnification Agreement between Chyron Corporation and
Michael Wellesley-Wesley dated November 19, 1996 - page 219
*
Incorporated herein in its entirety by reference to the Transition
Report for the Period July 1, 1991 to December 31, 1991 on Form 10-K
dated March 30, 1992.
**
Incorporated herein in its entirety by reference to the Annual Report
for the Fiscal Year Ended June 30, 1991 on Form 10-K dated January 31,
1992.
***
Incorporated herein in its entirety by reference to the report on Form
8-K dated December 27, 1991.
****
Incorporated herein in its entirety by reference to the report on Form
8-K dated March 12, 1993.
*****
Incorporated herein in its entirety by reference to the report on Form
8-K dated May 10, 1993.
******
Incorporated herein in its entirety by reference to the report on Form
8-K dated January 19, 1994.
*******
Incorporated herein in its entirety by reference to the report on Form
8-K dated July 22, 1994.
********
Incorporated herein in its entirety by reference to the Annual Report
for the fiscal year ended December 31, 1993 on Form 10-K dated March 30,
1994.
*********
Incorporated herein in its entirety by reference to the Annual Report
for the fiscal year ended December 31, 1994 on Form 10-K dated March 24,
1995.
**********
Incorporated herein in its entirety by reference to the report on Form
8-K dated October 25, 1995.
***********
Incorporated herein in its entirety by reference to the report on Form
8-K dated April 26, 1996.
************
Incorporated herein in its entirety by reference to the report on Form
8-K dated March 14, 1996.
*************
Incorporated herein in its entirety by reference to the report on Form
8-K/A dated June 21, 1996.
**************
Incorporated herein in its entirety by reference to the Annual Report
for the fiscal year ended December 31, 1995 on Form 10-K dated March 14,
1996.
d) Financial Statement Schedule
Schedule II
CHYRON CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Column A Col B Col C Col D Col E
Balance
at Additions Balance
Begin- Changes to at
ning Costs End
of and Other Deduc- of
Description Period Expenses Accounts tions Period
Reserves and allowances
deducted from asset accounts:
YEAR ENDED DECEMBER 31, 1996
Uncollectible amounts....... $ 3,134 $ $ $ 284 $ 2,850
Inventory reserves.......... 12,233 192 12,041
Deferred tax assets......... 5,400 5,400 0
$20,767 $ $ $ 5,876 $14,891
YEAR ENDED DECEMBER 31, 1995
Uncollectible amounts....... $ 2,204 $ 745 $ 185 $ $ 3,134
Inventory reserves.......... 12,515 1,153 1,435 12,233
Deferred tax assets......... 14,500 9,100 5,400
$29,219 $1,898 $ 185 $10,535 $20,767
YEAR ENDED DECEMBER 31, 1994
Uncollectible amounts....... $ 2,624 $2,333 $ $ 2,753 $ 2,204
Inventory reserves.......... 10,293 5,300 430 3,508 12,515
Deferred tax assets......... 11,500 3,100 100 14,500
$24,417 $7,633 $3,530 $ 6,361 $29,219
UNDERTAKING
The Company undertakes to provide without charge to each shareholder
entitled to notice of and to vote at the Annual Meeting of Shareholders,
to be held May 14, 1997, at which directors are to be elected, upon the
written request of any such shareholder, a copy of the Company's Annual
Report on Form 10-K, for the year ended December 31, 1996, required to
be filed with the Securities and Exchange Commission, including the
financial statements and the schedules thereto. The Company does not
undertake to furnish without charge copies of all exhibits to its Form
10-K, but will furnish any exhibit upon the payment of twenty ($.20)
cents per page or a minimum charge of $5.00. Such written requests
should be directed to Ms. Judy Mauro, Director of Corporate
Communications, Chyron Corporation, 5 Hub Drive, Melville, New York
11747. Each such request must set forth a good faith representation
that as of March 26, 1997 the person making the request was a beneficial
owner of securities entitled to vote at the Annual Meeting of
Shareholders.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
CHYRON CORPORATION
/s/ Michael Wellesley-Wesley
Michael Wellesley-Wesley
Chairman of the Board of Directors
and Chief Executive officer
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities on the date indicated.
/s/ Sheldon Camhy Director March 19, 1997
(Sheldon Camhy)
/s/ S. James Coppersmith Director March 19, 1997
(S. James Coppersmith)
/s/ Charles Diker Director March 20, 1997
(Charles Diker)
/s/ Douglas Greenberg Director March 20, 1997
(Douglas Greenberg)
/s/ Raymond Hartman Director March 20, 1997
(Raymond Hartman)
/s/ Isaac Hersly Director March 20, 1997
(Isaac Hersly)
/s/ Alan Hirschfield Director March 20, 1997
(Alan Hirschfield)
/s/ Wesley Lang Director March 20, 1997
(Wesley Lang)
/s/ Eugene Weber Director March 20, 1997
(Eugene Weber)
/s/ Patricia Lampe Chief Financial
(Patricia Lampe) Officer March 20, 1997
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
Loan Agreement dated as of March 28, 1996 between CHYRON
CORPORATION, a New York corporation with its chief place of business
at 5 Hub Drive, Melville, New York 11747 (the "Borrower") and
NATWEST BANK N.A., a national banking association with an office at
100 Jericho Quadrangle, Jericho, New York 11753 (the "Bank").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used herein the following terms shall have
the following meanings:
"Accounts" shall mean those accounts arising out of the sales or
lease of goods or the rendition of services by the Borrower.
"Account Debtor" shall mean the person who is obligated on or under
an Account.
"Acquisition Documents" shall mean the agreement with the Borrower
for the sale and purchase of the entire issued share capital of Pro-
Bel and all exhibits annexed thereto.
"Adjusted Libor Rate" means with respect to an Eurodollar Loan
Interest Period, the rate per annum at which the U.S. dollar
deposits are offered by a Reference Bank (as selected by the Bank)
in the London interbank market for Eurodollars at approximately
11:00 a.m. (London time) two Business Days before the first day of
such Interest Period in an amount approximately equal to the
principal amount of the Eurodollar Loan to which such Interest
Period is to apply and for a period of time comparable to such
Interest Period divided by one minus the Eurodollar Reserve
Percentage.
"Affiliate" as applied to any Person, means any other Person
directly or indirectly through one or more intermediaries
controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including
with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as applied to any Persons, means
the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or
otherwise.
"Agreement" shall mean this Loan Agreement, as the same from time to
time may be amended, supplemented or modified.
"Borrowing Base" shall mean the sum of: (a) 80% of the Borrower's
Eligible Domestic Accounts Receivable from time to time outstanding
less reserves with respect to such Accounts which the Bank may deem
necessary in its sole discretion; (b) 80% of the Borrower's Eligible
Foreign Accounts Receivable from time to time outstanding less
reserves with respect to such Accounts which the Bank may deem
necessary in its sole discretion; and (c) the lesser of (i)
$3,750,000 or (ii) the sum of (v) 50% of the value of the Borrower's
Eligible Inventory (excluding Demo Inventory) from time to time on
hand and (z) 30% of the Borrower's Demo Inventory, minus the
principal amount outstanding under the Term Loan.
"Borrowing Base Certificate" shall mean a certificate substantially
in the form of Exhibit C hereto.
"Business Day" shall mean a day other than a Saturday, Sunday or
other day on which commercial banks in New York, New York are
required or permitted by law to remain closed.
"Capital Expenditures" shall mean for any period, the aggregate
amount of all payments made by any Person directly or indirectly for
the purpose of acquiring, constructing or maintaining fixed assets,
real property or equipment which, in accordance with GAAP, would be
added as a debit to the fixed asset account of such Person,
including, without limitation, all amounts paid or payable with
respect to Capitalized Lease Obligations and interest which are
required to be capitalized in accordance with GAAP.
"Capitalized Lease" shall mean any lease the obligations to pay rent
or other amounts under which constitute Capitalized Lease
Obligations.
"Capitalized Lease Obligations" shall mean as to any Person, the
obligations of such Person to pay rent or other amounts under a
lease of (or other agreement conveying the right to use) real and/or
personal property which obligations are required to be classified
and accounted for as a capital lease on a balance sheet of such
Person under GAAP and, for purposes of this Agreement, the amount of
such obligations shall be the capitalized amount thereof, determined
in accordance GAAP.
"Collateral" shall mean the collateral described in Section 9 of
this Agreement.
"Commitment" shall mean the obligation of the Bank to make Revolving
Credit Loans to the Borrower during the Commitment Period pursuant
to the terms hereof as such Commitment is described in Section 2.1
hereof and as subject to reduction in accordance with the terms
hereof.
"Commitment Letter" shall mean the letter agreement between the
Borrower and the Bank dated February 1, 1996.
"Commitment Period" shall mean the period from and including the
date hereof to and including the Termination Date or such earlier
date as the Commitment shall terminate as provided herein.
"Contractual Obligations" shall mean as to any Person, any provision
of any security issued by such Person or of any agreement,
instrument or undertaking to which such Person is a party or by
which it or any of its property is bound.
"Controlled" and "Control" shall mean any partnership, corporation
or other entity of which the Borrower, alone, or the Borrower and/or
one or more of its Subsidiaries, either has the power to direct the
management thereof or the power to direct at least a majority of the
voting interests.
"Default" shall mean any of the events specified in this Agreement
under "Events of Default", whether or not any requirement for the
giving of notice, the lapse of time, or both, has been satisfied.
"Demo Inventory" shall mean Eligible Inventory of the Borrower for
trial use by a customer of the located at a place other than the
Borrower's lease or owned Real Property.
"Dollars" and "$" shall mean dollars in lawful currency of the
United States of America.
"Domestic Tangible Net Worth" shall have the meaning ascribed in
Section 6.1(d).
"Eligible Domestic Accounts Receivable" shall mean those Accounts
arising in the ordinary course of business to Persons other than
Subsidiaries or Affiliates domiciled in the United States of America
which have been outstanding for not more than 120 days from invoice
date in which the Bank has a first priority security interest and
which are otherwise satisfactory to the Bank in its reasonable
discretion, provided, that, if fifty percent (50%) or more of the
Accounts due from an Account Debtor are deemed by the Bank to be
ineligible then all Accounts from such Account Debtor shall be
deemed ineligible.
"Eligible Foreign Accounts Receivable" shall mean those Accounts
arising in the ordinary course of business to Persons other than
Subsidiaries or Affiliates domiciled outside of the United States of
America which have been outstanding for not more than 120 days from
invoice date in which the Bank has a first priority security
interest, which are covered by insurance protecting the Bank against
political and commercial risks on terms reasonably acceptable to the
Bank and which are otherwise satisfactory to the Bank in its
reasonable discretion, provided, that, if fifty (50%) percent or
more of the Accounts due from an Account Debtor are deemed by the
Bank to be ineligible then all Accounts from such Account Debtor
shall be deemed ineligible.
"Eligible Inventory" shall mean all unencumbered inventory of work
in process and finished goods from time to time on hand satisfactory
to the Bank in its sole discretion in which the Bank has a first
priority security interest, valued at the lower of (a) cost, (b)
market value, or (c) the valuation consistent with that employed in
the preparation of the financial statements of the Borrower referred
to in this Agreement.
"Environmental Laws" shall mean any federal, state or local statute
or regulation relating to hazardous or toxic wastes or substances or
the removal thereof.
"Eurodollar Loans" shall mean Loans hereunder that bear interest for
the Interest Period applicable thereto at a rate of interest based
upon the Adjusted Libor Rate.
"Eurodollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve for
requirement for a member bank of the Federal Reserve System in New
York City with deposits exceeding one billion dollars in respect of
"Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the
interest rate on Eurodollar Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-
United States office of the Bank to United States residents). With
respect to increases in the Eurodollar Reserve Percentage, the
Adjusted Libor Rate shall be adjusted automatically on and as of the
effective date of any such increase.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Event of Default" shall mean any of the events specified in this
Agreement under "Events of Default", provided that any requirement
for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
"Fluctuating Rate Loans" shall mean Loans hereunder that bear
interest at a rate of interest based upon the Prime Rate.
"GAAP" shall mean generally accepted accounting principles applied
in a manner consistent with that employed in the preparation of the
financial statements described in Section 3.1.
"General Security Agreement" shall have the meaning assigned thereto
in Section 4.1(b) and any UCC-1 financing statements executed in
connection therewith.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or
other entity owned or controlled (through stock or capital ownership
or otherwise) by any of the foregoing.
"Guarantees" shall mean the guarantees to be executed by the
Guarantors on the Bank's standard form.
"Guarantors" shall mean, collectively, the entities required to
guarantee pursuant to Section 5.9 hereof.
"Indebtedness" shall mean, with respect to any Person, (a) all
obligations of such Person for borrowed money or with respect to
deposits or advances of any kind, (b) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments,
(c) all obligations of such Person for the deferred purchase price
of property or services, except current accounts payable arising in
the ordinary course of business and not overdue beyond such period
as is commercially reasonable for such Person's business, (d) all
obligations of such Person conditional sale or other title
retention agreements relating to property purchased by such Person,
(e) all payment obligations of such Person with respect to interest
rate of currency protection agreements, (f) all obligations of such
Persons as an account party under any letter of credit or in respect
of bankers' acceptances (g) all obligations of any third party
secured by property or assets of such Person (regardless of whether
or not such Person is liable for repayment of such obligations) and
(h) the redemption price of all redeemable preferred stock of such
Person, but only to the extent that such stock is redeemable at the
option of the holder or requires sinking fund or similar payments at
any time prior to the Termination Date.
"Installment Payment Date" shall mean any date on which all or any
portion of the principal amount of the Term Loan is due and payable.
"Interest Period" shall mean any period during which a Loan bears
interest at an Adjusted Libor Rate as elected by the Borrower in
accordance with the terms of this Agreement.
(a) If any Interest Period would otherwise end on a day which is not
a Business Day, that Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be
to extend such Interest Period into another calendar month, in which
event such Interest Period shall end on the immediately preceding
Business Day.
(b) No Interest Period shall extend beyond a stated Maturity Date.
(c) No portion of the term Loan shall be continued as or converted
into a Eurodollar Loan with an Interest Period which extends beyond
an Installment Payment Date if, after giving effect to the
continuation or conversion of such Eurodollar Loan, the amount
payable on any Installment Payment Date would exceed the sum of (i)
the aggregate principal amount of the outstanding portion of the
Term Loan constituting Eurodollar Loans with Interest Periods ending
prior to such Installment Payment Date and (ii) the aggregate
outstanding portion of the Term Loan constituting Fluctuating Rate
Loans.
"Letters of Credit" shall mean, collectively, all standby letters of
credit issued for the account of the Borrower pursuant to Section
2.2 hereof.
"Lien" shall mean any mortgage, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, or
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without
limitation, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any
financing statement under the Uniform Commercial Code or comparable
law of any jurisdiction).
"Loan" or "Loans" shall mean any loan made by the Bank to the
Borrower hereunder whether a Revolving Credit Loan or the Term Loan.
"Loan Documents" shall mean this Agreement, the Notes, the Security
Agreements, the Pledge Agreement and each document, agreement and
instrument executed in connection herewith or pursuant hereto
together with each document, agreement and instrument made by the
Borrower or any Guarantor with or in favor of or owing to the Bank
further evidencing or securing the Loans.
"Material Adverse Effect" shall mean (a) a materially adverse effect
on the business, asset, operations, prospects or condition,
financial or otherwise, of the Borrower and it s Subsidiaries taken
as a whole, (b) material impairment of the ability of the Borrower
or any Subsidiary to perform any of its obligations under any Loan
Document to which it is or will be a party or (c) material
impairment of the rights of or benefits available to the Bank under
any Loan Document.
"Maturity Date" shall mean the date that all or a portion of the
outstanding principal balance of a Loan is due and payable pursuant
to the terms hereof which shall include without limitation (i) with
respect to Revolving Credit Loans, the Termination Date, and (ii)
with respect to the Term Loan, each Installment Payment Date and the
final Maturity Date of the Term Loan.
"Non-Restricted Subsidiary" shall mean any Subsidiary other than a
Restricted Subsidiary.
"Notes" shall mean collectively the Revolving Credit Note referred
to in Section 2.3 hereof and the Term Note referred to in Section
2.9 hereof.
"Obligations" shall mean any and all sums owing under the Loan
Document and all other obligations, direct or contingent, joint,
several or independent, or the Borrower now or hereafter existing
due or to become due to, or held or to be held by the Bank, whether
created directly or acquired by assignment or otherwise.
"Over-Advance Amount" shall mean the additional amount of Revolving
Credit Loans made available to the Borrower above the Borrowing Base
provided such amount does not exceed $3,000,000 and shall not be
outstanding for more than 18 months.
"Patent Security Agreement" shall have the meaning assigned thereto
in Section 4.1(d) hereof.
"Person" shall mean any individual corporation, partnership, joint
venture, trust, unincorporated organization or any other juridical
entity, or a government or state or any agency or political
subdivision thereof.
"Plan" shall mean any plan of a type described in Section 4021(a) of
ERISA in respect of which the Borrower is an "employer" as defined
in Section 3(5) of ERISA.
"Pledge Agreement" shall have the meaning assigned thereto in
Section 4.2(c) hereof.
"Post Default Rate" shall mean any time a rate of interest equal to
4% per annum in excess of the rate that would then be applicable to
Fluctuating Rate Loans.
"Prime Rate" shall mean the rate of interest established from time
to time by the Bank as its "prime rate".
"Pro-Bel" shall mean Pro-Bel Limited, a corporation formed under the
laws of the United Kingdom.
"Real Property" shall mean any real property owned or leased by the
Borrower or any of its Subsidiaries or any Guarantor or any of its
Subsidiaries.
"Reference Bank" shall mean a bank appearing on the display
designated as page "LIBOR" on the Reuter Monitor Money Rates Service
(or such other page as may replace the LIBOR page on that service
for the purpose of displaying London interbank offered rates of
major banks); provided that if no such offered rate shall appear on
such display, "Reference Bank" shall mean a bank in the London
interbank market as reasonably selected by the Bank.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.
"Requirements of Law" shall mean as to any Person, the certificate
of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation,
or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of f its property or to which such Person or any of its property
is subject.
"Restricted Subsidiary" shall mean any subsidiary of the Borrower
incorporated under the laws of any state of the United States.
"Revolving Credit Loan" shall mean a Loan made pursuant to Section
2.3 hereof.
"Revolving Credit Note" shall mean the Note referred to in Section
2.2 hereof.
"Security Agreement" or "Security Agreements" shall mean,
collectively, the General Security Agreement, the Trademark Security
Agreement and the Patent Security Agreement and, the case of any
Guarantor, shall mean any agreement substantially in the same form
as the General Security Agreement.
"Subsidiary" or "Subsidiaries" of any Person shall mean any
corporation or corporations of which the Person alone, or the Person
and/or one or more of its Subsidiaries, owns, directly or
indirectly, at least a majority of the Securities having ordinary
voting power for the election of directors.
"Tangible Net Worth" shall mean the sum of capital surplus, earned
surplus and capital stock minus deferred charges, intangibles and
treasury stock, all determined in accordance with GAAP.
"Termination Date" shall mean March 28, 1999 or, if such date is not
a Business Day, the Business Day, next succeeding such date.
"Term Loan" shall mean the Loan made pursuant to Section 2.8 hereof.
"Term Note" shall mean the Note referred to in Section 2.9 hereof.
"Trademark Security Agreement" shall have the meaning assigned
thereto in Section 4.1(c) hereof.
1.2 Accounting Terms. As used herein and in any certificate or
other document made or delivered pursuant hereto, accounting terms
not specifically defined herein shall have the respective meanings
given to them under generally accepted accounting principles.
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENT AND
TERM NOTE.
2.1 Revolving Credit Commitment. Subject to the terms and
conditions hereof, the Bank agrees to extend credit to or on behalf
of the Borrower (a) by making revolving credit loans (the "Revolving
Credit Loans") from time to time during the Commitment Period and
(b) by issuing Letters of Credit for the account of the Company up
to an aggregate stated amount at any one time outstanding of (y)
Five Million and 00/100 ($5,000,000.00) Dollars in connection with
the acquisition of Pro-Bel and (z) Five Hundred Thousand 00/100
($500,000.00) Dollars for all other purposes, pursuant to Section
2.2 hereof during the Commitment Period, provided that at any time
the sum of the aggregate of the principal amount of the Revolving
Credit Loan and the Aggregate stated amount of the Letters of Credit
shall not exceed the lesser of (i) $10,000,000 or (ii) the sum of
(y) the Borrowing Base and (zz) the Over-Advanced Amount, as such
amounts may be reduced as provided in this Agreement (the
"Commitment"). During the Commitment Period the Borrower may use
the Commitment of (i) obtaining Revolving Credit Loans by borrowing,
paying, prepaying in whole or in part and reborrowing on a revolving
basis, all in accordance with the terms and conditions hereof and
(ii) for the issuance of Letters of Credit in accordance with the
provisions of Section 2.2 hereof.
2.2 Letters of Credit.
(a) Subject to the limitations of Section 2.1 hereof, the Borrower
may from time to time during the Commitment Period request the
issuance by the Bank of Letters of Credit. Each Letter of Credit
shall be issued by the Bank upon receipt and processing of the
Bank's normal letter of credit application provided that the Bank
need not issue any Letter of Credit that would extend beyond the
Termination Date. The Borrower shall pay the Bank, upon issuance of
the Letter of Credit, the Bank's standard letter of credit and
processing fees.
(b) Notwithstanding anything to the contrary herein, if any
restriction is imposed on the Bank (including without limitation any
change in or limitation upon letters of credit) which would prevent
the Bank from issuing Letters of Credit or maintaining its
obligation to issue Letters of Credit then the Bank may, by notice
to the Borrower in writing, terminate such obligations hereunder.
2.3 Revolving Credit Note. The Revolving Credit Loans made by the
Bank to the Borrower pursuant to Section 2.1 hereof shall be
evidenced by a promissory note of the Borrower substantially in the
form of Exhibit A hereto with appropriate insertions (the "Revolving
Credit Note"), payable to the order of the Bank and representing the
obligation of the Borrower to pay the lesser of (a) the amount of
the Commitment or, (b) the aggregate unpaid principal amount of all
Revolving Credit Loans made by the Bank to the Borrower, with
interest thereof as hereinafter prescribed. The Revolving Credit
Note shall (i) be dated the date of the first Revolving Credit Loan
evidenced thereby, (ii) be stated to mature on the Termination Date
and (iii) bear interest with respect to the unpaid principal balance
thereof from time to time outstanding at a rate per annum to be
elected by the Borrower in accordance with the notice provisions set
forth in Section 2.4 hereof, and in the case of Eurodollar Loans for
the Interest Period therein specified, equal to either (1) 1.75% in
excess of the Adjusted Libor Rate or (2) the Prime Rate (which
interest rate will change when and as the Prime Rate changes). In
all cases interest shall be computed on the basis of a 360-day year
for actual days elapsed and shall be payable as provided in this
Agreement. After any stated or accelerated maturity, the Revolving
Credit Note shall bear interest at the rate set forth in this
Agreement.
2.4 Procedure for Borrowings. The Borrower may borrow under the
Commitment during the Commitment Period on any Business Day by
giving the Bank irrevocable notice of a request for a Loan hereunder
(a) in the case of Eurodollar Loans three Business Days before a
proposed borrowing or continuation or conversation and (b) i n the
case of Fluctuating Rate Loans not less than one nor more than five
Business Days before a proposed borrowing or continuation or
conversation, setting forth (i) the amount of the Loan requested,
which shall not be less than $100,000, (ii) the requested borrowing
date or Interest Period commencement date, as the case may be, (iii)
whether the borrowing or interest Period is to be for a Eurodollar
Loan, Fluctuating Rate Loan or a combination thereof, and (iv) if
entirely or partially a Eurodollar Loan, the length of the Interest
Period therefore, which shall be one, two, three or six months. As
used in this Section 2.4, "conversion" shall mean the conversion
from one interest rate to another interest rate as more fully
described in this Agreement. Such notice hall be written
(including, without limitation, via facsimile transmission) and
shall be sufficient if received by 1 p.m. on the date on which such
notice is to be given. If any such request is sent by facsimile it
shall be confirmed in writing sent by the Borrower to the Bank
within two Business Days thereafter. Unless notification is
otherwise furnished by the Borrower to the Bank (in a manner
consistent with the requirements of this Section), Loans will be
made by credits to the Borrower's demand deposit account maintained
with the Bank. If the Borrower furnishes such notice but no
election is made as to the type of Loan or the Interest Period to be
applicable thereto, the Loan will automatically then be made as a
Fluctuating Rate Loan until such required information is furnished
pursuant to the terms hereof.
2.5 Commitment Fee. As additional compensation for the Commitment
on the Revolving basis provided for herein, the Borrower agrees to
pay the Bank a commitment fee for the Commitment Period at the rate
of 1/4 of 1% per annum on the average daily unused portion of the
Commitment hereunder. Such commitment fee shall be payable
quarterly, on the last day of each march, June, September and
December during the Commitment Period, commencing June 30, 1996, and
on the Termination Date. If the Borrower so fails to pay any such
amount to the Bank the obligations to make such payment shall bear
interest from such date not paid when due at the Post Default Rate.
The obligation to so pay interest shall not be construed so as to
waive the requirement to pay the commitment fees as hereinabove set
forth.
2.6 Regulatory Changes in Capital Requirements. If any existing or
future law, regulation or guideline or the interpretation thereof by
any court or administrative or governmental authority charge with
the administration thereof or compliance by the Bank with any
request or directive (whether or not having the force of law) of any
such authority, imposes, modifies, deems applicable or results in
the application of, any capital maintenance, capital ratio or
similar requirement against loan commitments made by the Bank (or
participation therein) or the Bank in anticipation of the
effectiveness of any capital maintenance, capital ratio or similar
requirement takes reasonable action to enable itself to comply
therewith, an the result thereof is to impose upon the Bank or
increase any capital requirement applicable as a result of the
making or maintenance of the Commitment or participation therein
(which imposition of or increase in capital requirements may be
determined by the Bank's reasonable allocation of the aggregate of
such capital impositions or increases) then, upon demand by the
Bank, the Borrower shall immediately pay to the Bank from time to
time as specified by the Bank additional commitment fees which shall
be sufficient to compensate the Bank for such impositions of or
increases in capital requirements, together with interest on each
such amount from the date demanded until payment in full thereof at
the Post Default Rate. A certificate setting forth in reasonable
detail the amounts necessary to compensate the Bank as a result of
an imposition of or increase in capital requirements submitted by
the Bank to the Borrower shall be conclusive, absent manifest error
or bad faith, as to the amount thereof. For purposes of this
Section, (a) in calculating the amount necessary to compensate the
Bank for any imposition of or increase in capital requirements, the
Bank shall be deemed to be entitled to a rate of return on capital
(after federal, state and local taxes) of fifteen per cent per
annum, and (b) all references to the "Bank" shall be deemed to
include any participant in the Commitment.
2.7 Termination or Reduction of Commitment. The Borrower shall have
the right, upon not less than three Business Days' irrevocable
written notice, to terminate the Commitment or, from time to time,
to reduce the amount of the Commitment, provided that (a) any such
reduction (i) shall be in the minimum amount of $100,000 or a
multiple thereof, (ii) shall reduce permanently the amount of the
Commitment then in effect, and (iii) shall be accompanied by
prepayment of the Revolving Credit Loans outstanding to the extent,
if any, that the Loans then outstanding exceed the amount of the
Commitment as then reduced, together with accrued interest on the
amount so prepaid to and including the dates of each such prepayment
and any amounts payable pursuant to Section 2.15 in connection
therewith and the payment of any unpaid commitment fee then accrued
hereunder, and (b) any such termination of the Commitment shall be
accompanied by prepayment in full of the Revolving Credit Loans
outstanding and together with accrued interest thereon to and
including the date of prepayment and any amounts payable pursuant to
Section 2.15 in connection therewith and the payment of any unpaid
commitment fee then accrued hereunder.
2.8 Term Loan. Subject to the terms and conditions hereof, the Bank
agrees to make a term loan to the Borrower (the "Term Loan") in the
principal amount of $8,000,000.
2.9 Term Note. The Term Loan made by the Bank to the Borrower
pursuant to Section 2.8 hereof shall be evidenced by a promissory
note of the Borrower substantially in the form of Exhibit B hereto
with appropriate insertions (the "Term Note") and dated the date of
the Term Loan. The principal amount of the Term Note shall be
payable in sixteen (16) consecutive quarterly installments of
$500,000 each payable on the first day of each calendar quarter
following the date of the making of the Term Loan and the final
installment equal to the then unpaid principal balance of the Term
Note together with all interest accrued and unpaid shall be paid in
full four years from the date of the making of the Term Loan. The
Term note shall bear interest on the unpaid principal amount thereof
from time to time outstanding at a rate per annum, to be elected
pursuant to the provisions of this Agreement equal to either (i)
2.0% in excess of the Adjusted Libor Rate or (ii) the prime Rate
(which interest rate shall change when and as the Prime Rate
changes). In all cases interest shall be computed on the basis of a
360 day year for actual days elapsed and shall be payable as
provided in this Agreement. After any stated or accelerated
maturity thereof, the Term Note shall bear interest at the rate set
forth in this Agreement.
2.10 Continuation and Conversion of Loans. The Borrower shall have
the right at any time on prior irrevocable written or telex notice
to the Bank as specified in this Agreement (i) to continue any Loan
into a subsequent Interest Period, (ii) to convert any Eurodollar
Loan into a Fluctuating Rate Loan and (iii) to convert any
Fluctuating Rate Loan into a Eurodollar Loan (specifying the
Interest Period to be applicable thereto), subject to the following:
(a) in the case of a conversion of less than all of the outstanding
Loans, the aggregate principal amount of Loans converted shall not
be less than $100,000 and shall be an integral multiple thereof;
(b) no Loan (other than a Fluctuating Rate Loan) shall be converted
at any time other than at the end of an Interest Period applicable
thereto; and
(c) any portion of a Loan maturing or required to be prepaid in less
than one month may not be converted into or continued as a
Eurodollar Loan.
In the event that the Borrower shall not give notice to continue any
Eurodollar Loan into a subsequent Interest Period or convert any
such Loan into a Loan of another type, on the last day of the
Interest Period thereof, such Loan (unless prepaid) shall
automatically be converted into a Fluctuating Rate Loan. The
Interest Period applicable to any Eurodollar Loan resulting from a
conversation or continuation shall be specified by the Borrower in
the irrevocable notice delivered by the Borrower pursuant to this
Agreement; provided, however, that, if such notice does not specify
either the type of Loan or the Interest Period to be applicable
thereto, the Loan shall automatically be converted into, or
continued as, as the case may be, a Fluctuating Rate Loan until such
required information is furnished pursuant to the terms hereof.
Notwithstanding anything to the contrary contained above, if an
Event of Default shall have occurred and is continuing, no
Eurodollar Loan may be construed into a subsequent Interest Period
and no Fluctuating Rate Loan may be converted into a Eurodollar
Loan.
2.11 Prepayment.
(a) Voluntary. The Borrower may prepay any Fluctuating Rate Loan in
whole or in part without premium or penalty; provided, however, that
each partial prepayment on account of any Fluctuating Rate Loan
shall be in an amount not less than $100,000. Except as provided
otherwise in Section 2.15 hereof, the Borrower may not prepay any
Eurodollar Loan prior to the last day of the Interest Period
therefor. Any amount prepaid on account of a Revolving Credit Loan
may be borrowed in accordance with the provisions of Section 2.1
hereof. Any partial prepayment of the Term Loan shall be applied to
the last maturing installments in inverse order or their respective
maturities.
(b) Mandatory. If, at any time, the aggregate outstanding principal
balance of Loans exceeds the Borrowing Base, within ten Business
Days of the first day there exists such excess the Borrower shall
make payment to the bank in an amount equal to such excess together
with any amounts payable pursuant to Section 2.15 in connection
therewith. Such payment shall be applied to reduce the aggregate
unpaid principal balance of Loans then outstanding. Any partial
prepayment of the Term Loan shall b e applied to the last maturing
installments in inverse order of their respective maturities.
Each prepayment shall be made together with payment of accrued
interest on the amount prepaid to an including the date of
prepayment.
2.12 Interest Payments; Manner of Payments; Rate After Default;
Schedule to Note.
(a) Interest accrued on each Loan shall be payable, without
application, on:
(i) the Maturing Date of such Loan (excluding any Installment
Payment Date unless interest would otherwise be payable on such
Installment Payment Date pursuant to subsections (ii) - (vi) below);
(ii) with respect to any portion of any Loan repaid or prepaid
pursuant to this Agreement, the date of such repayment or
prepayment, as the case may be;
(iii) with respect to that portion of the outstanding principal
amount of all Loans maintained as Fluctuating Rate Loans, the first
day of each month, commencing with the first such date following the
date of the making of such Loans;
(iv) with respect tot that portion of the outstanding principal
amount maintained as Eurodollar Loans, the last day of each
applicable Interest Period (and, if such Interest Period shall
exceed three months, o on the last day of each three-month period
occurring during such Interest Period), but in no event more
frequently than monthly;
(v) with respect to tht portion of the outstanding principal amount
converted into Fluctuating Rate Loans or Eurodollar Loans on a day
when interest would not otherwise have been payable pursuant to
Subsections (a) (iii) or (a) (iv), the date of such conversion.
(b) All payments (including prepayments) to be made by the Borrower
on account of principal or interest with respect to any Loan or on
account of fees or any other obligations of the Borrower to the Bank
hereunder shall be made to the Bank at the office of the Bank set
forth in Section 10.1 hereof or at such other place as the Bank may
from time to time designate in writing in lawful money of the United
States of America in immediately available funds. The Borrower
hereby authorizes and directs the Bank to charge any account of the
Borrower maintained at any office of the Bank for any such payments.
Subject to the provisions of subparagraph (a) in the definition of
Interest Period set forth in Section 1.1 hereof, if any payment to
be so made hereunder, or under either Note, becomes due and payable
on a day other than a Business Day, such payment shall be extended
to the next succeeding Business Day and, to the extent permitted by
applicable law, interest thereon shall be payable at the then
applicable rate during such extension.
(c) Upon the following an Event of Default, all Loans, and any and
all accrued and unpaid interest, fee or amount due hereunder, to the
extent permitted by applicable law, shall bear interest (payable on
demand, and in any event on the last day of each month, and computed
daily on the basis of a 360-day year for actual days elapsed) (i) in
the case of Fluctuating Rate Loans at the Post Default Rate until
paid and (ii) in the case of Eurodollar loans at a rate which shall
be the greater of the Post Default Rate or 4% per annum in excess of
the rate applicable to such Eurodollar Loan until the expiration of
the Interest Period applicable to such Loan, at which time the Loan
will automatically be converted into a Fluctuating Rate Loan and
until paid shall bear interest at the Post Default Rate. In no
event, however, shall interest payable hereunder be in excess of the
maximum rate of interest permitted under applicable law. The
obligation to so pay interest upon any obligation of the Borrower to
the Bank shall not be construed so as to waive the requirement for
payment on the same date that payment is to be made to the Bank as
set forth in this Agreement.
(d) The Borrower hereby expressly authorizes the Bank to record on
the schedule attached to the Revolving Credit Note the amount and
date of each Revolving Credit Loan, the rate of interest thereon,
the date and amount of each payment of principal and the unpaid
principal balance; provided, however, that the failure of the Bank
to make any such notation shall not in any manner affect the
obligation of the Borrower to repay any Loan in accordance with the
terms hereof. All such notations shall be presumed to be correct
absent manifest error.
2.13 Use of Proceeds. Proceeds of the Revolving Credit Loans shall
be used for working capital purposes and for acquisitions approved
by the Bank including the acquisition of Pro-Bel. Al or a portion
of the proceeds of the initial Revolving Credit loan shall be used
to repay in full all indebtedness owing to the CIT Group. Proceeds
of the Term Loan shall be used as partial payment of the acquisition
price of Pro-Bel and for working capital purposes.
2.14 Increased Costs. If the Bank reasonably determines that the
effect of any applicable law or government regulation, guideline or
order or the interpretation thereof by any Governmental Authority
charged with the administration thereof (such as, for example, a
change in official reserve requirements which the Bank is required
to maintain in respect of loans or deposits or other funds procured
for funding such loans) is to increase the cost to the Bank of
making or continuing Eurodollar Loans hereunder or to reduce the
amount of any payment of principal or interest receivable by the
Bank thereon, then the Borrower will pay to the Bank on demand such
additional amounts as the Bank may reasonable determined to be
required to compensate the Bank for such additional costs or
reduction. Any additional payment under this section will be
computed from the effective date at which such additional costs have
to be borne by the Bank. A certificate as to any additional amounts
payable pursuant to this Section setting forth the basis and method
of determining such amounts shall be conclusive, absent manifest
error, as to the determination by the Bank set forth therein if made
reasonable and in good faith. The Borrower shall pay any amounts so
certified to it by the Bank within 10 days of receipt of any such
certificate. For purposes of this Section, all references to the
"Bank" shall be deemed to include any participant in the Commitment
and/or Loans.
2.15 Indemnities. The Borrower hereby indemnifies the Bank against
an and all loss and reasonable expenses which the Bank may sustain
or incur as a consequence of any of the following:
(a) default in payment of the principal amount of any Eurodollar
Loan or any part thereof or interest accrued thereon, or any other
amount due in connection with the Loan Documents;
(b) the occurrence of any other Default under this Agreement;
(c) the failure of the Borrower to borrow a Eurodollar Loan after
sending notice of the amount and requested interest rate with
respect to the making of any such Loans;
(d) the receipt or recovery by the Bank of all or any part of a
Eurodollar Loan on any Installment Payment Date or prior to the
maturity or the last day of the Interest Period thereof (whether by
prepayment, acceleration or otherwise); or
(e) the conversation prior to the last day of an applicable Interest
Period, or a Eurodollar Loan into a Fluctuating Rate Loan.
Without limiting the effect of the foregoing, the amount to be paid
by the Borrower to the Bank in order to so indemnify the Bank for
any loss occasioned by any of the events described in the preceding
paragraph, and as liquidated damages therefor, shall be equal to the
excess, discounted to its present value as of the date paid to the
Bank, of (i) the amount of interest which otherwise would have
accrued on the principal amount so received, recovered, converted or
not borrowed during the period (the "Indemnity Period') commencing
with the date of such receipt, recovery, conversion, or failure to
borrow to the last day of the applicable Interest Period for such
Eurodollar Loan at the rate of interest applicable to such Loan (or
the rate of interest agreed to in the case of a failure to borrow)
provided for herein (prior to a Default) over (ii) the amount of
interest which would be earned by the Bank during the Indemnity
Period if it invested the principal amount so received, recovered,
converted or not borrowed at the rate per annum determined by the
Bank as the rate it would bid in the London interbank market for a
deposit of Eurodollar in an amount approximately equal to such
principal amount for a period of time comparable to the Indemnity
Period.
A certificate as to any additional amounts payable pursuant to this
Section setting forth the basis and method of determining such
amounts shall be conclusive, absent manifest error, as to the
determination by the Bank set forth therein if made reasonably and
in good faith. The Borrower shall pay any amounts so certified to
it by the Bank within 10 days of receipt of any such certificate.
For purposes of this Section, all references to the "Bank" shall be
deemed to include any participant in the Commitment and/or Loans.
2.16 Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the
commencement of any Interest Period for a Eurodollar Loan, the Bank
shall have determined (i) that dollar deposits in the amount of the
requested principal amount of such Eurodollar Loan are not generally
available in the London Interbank Market, (ii) that the rate at
which such dollar deposits are being offered will not adequately and
fairly reflect the cost to the Bank of making or maintaining such
Eurodollar Loan during such Interest Period, or (iii) that
reasonable means do not exist for ascertaining the Adjusted Libor
Rate, the Bank shall, as soon as practicable thereafter, give
written or telex notice of such determination to the Borrower. In
the event of any such determination, until the circumstances giving
rise to such notice no longer exist, no Eurodollar Loans will be
made hereunder. Each determination by the Bank hereunder shall be
conclusive absent manifest error.
2.17 Change in Legality.
(a) Notwithstanding anything to the contrary herein contained, if
any change in any law or regulation or in the interpretation thereof
by any governmental authority charge with the administration or
interpretation thereof shall make it unlawful for the Bank to make
or maintain any Eurodollar Loan, then, by written notice to the
Borrower, the Bank may:
(i) declare that Eurodollar Loans will not thereafter be made by the
Bank hereunder, whereupon the Borrower shall prohibited from the
requesting Eurodollar Loans from the Bank hereunder unless such
declaration is subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by it be
converted to Fluctuating Rate Loans, in which event (x) all such
Eurodollar Loans shall be automatically converted to Fluctuating
Rate Loans a of the effective date of such notice a provided in
paragraph (b) below and 9y) all payments and prepayments of
principal which would otherwise have been applied to repay the
converted Eurodollar Loans shall instead be applied to repay the
Fluctuating Rate Loans resulting from the conversion of such
Eurodollar Loans.
(b) For purposes of this Section, (i) a notice to the Borrower by
the Bank pursuant to paragraph (a) above shall be effective, if
lawful, on the last day of the then current Interest Period; in all
other cases, such notice shall be effective on the day of receipt of
the Borrower and (ii) all references to the "Bank" shall be deemed
to include any participants in the Commitment and/or the loans.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
In order to induce the Bank to enter into this Agreement and to make
the financial accommodations herein provided for, the Borrower
hereby covenants, represents and warrants to the Bank that:
3.1 Financial Condition. The consolidated balance sheet of the
Borrower and its consolidated Subsidiary as at December 31, 1994 and
the related consolidated statement of operations, shareholders'
equity and cash flows for the fiscal year ended on such date,
certified by Ernst & Young, LLP, copies of which certified
statements have heretofore been furnished to the Bank, are complete
and correct and present fairly the financial condition of the
Borrower and its consolidated Subsidiary as at such date, and the
results of its operations for the fiscal year then ended and the
interim financial statements of the Borrower and its consolidated
Subsidiary s at September 30, 1995 and the related consolidated
statements of operations, shareholders' equity and cash flows for
the fiscal quarter then ended on such date prepared by management of
the Borrower and certified as true and correct by the chief
financial officer of the Borrower, copies of which statements have
heretofore been furnished to the Bank, are complete and correct and
present fairly the financial condition of the Borrower and its
consolidated Subsidiary as at such date, and the results of its
operations for the fiscal quarter then ended. Such financial
statements, including schedules and notes thereto, have been
prepared in accordance with GAAP. neither the Borrower nor its
consolidated Subsidiary has any material contingent obligations,
contingent liabilities or liabilities for taxes, long-term leases or
unusual forward or long-term commitments, which are not reflected in
the foregoing certified statements or in the notes thereto. Since
the date of the aforementioned financial statements, there has been
no material adverse change in the business, operations, assets or
financial or other condition of the Borrower or its consolidated
Subsidiary.
3.2 Corporate Existence; Compliance with Law. Each of the active
Subsidiaries of the Borrower is indicated on Schedule A attached
hereto. The Borrower and each of its Subsidiaries (a) is duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, (b) has the corporate power
and authority and the legal right to own and operate its property,
and to conduct the business in which it is currently engaged, (c) is
duly qualified as a foreign corporation and in good standing under
the laws of each jurisdiction where its ownership or operation of
property or the conduct of its business require such qualification,
and (d) is in compliance with all Requirements of Law; except to the
extent that the failure to so qualify as a foreign corporation as
required by clause (c) of this Section or to comply with all
Requirements of Law as required by clause (d) of this Section could
not, in the aggregate, have a material adverse effect on the
business, operations, property or financial or other condition of
any such Person, and could not materially adversely affect the
ability of the Borrower or any Guarantor to perform its obligations
under any Loan Document to which it is a party.
3.3 Corporate Power; Authorization; Enforceable Obligations. The
Borrower has the corporate power and authority and the legal right
to make, execute, deliver and perform its obligations under the Loan
Documents to which it is a party and to borrow hereunder and has
taken all necessary corporate action to authorize the borrowings on
the terms and conditions of the Loan Documents and to authorize the
execution, delivery and performance of the Loan Documents. No
consent or authorization of, filing with, or other act by or in
respect of any other Person (including stockholders and creditors of
the Borrower) or any Governmental Authority, is required in
connection with the borrowings hereunder or with the execution,
connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of the Loan
Documents. The Loan Documents will be duly executed the delivery on
behalf of the Borrower and, the executed and delivered, will each
constitute a legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally.
3.4 Power, Authorization, Enforceable Obligations of Guarantors.
Each Guarantor, if any, has the power and authority and the legal
right to make, deliver and perform its Guarantee and Security
Agreement and the transactions contemplated thereby and has taken
all necessary corporate action to authorize the execution, delivery
and performance of its Guarantee and Security Agreement. No consent
or authorization of, filing with, or other act by or in respect of
any other Person (including stockholders and creditors of the
Guarantors) or any Governmental Authority is required in connection
with the execution, delivery, performance, validity or
enforceability of such Guarantee or Security Agreement. Each
Guarantee and each Security Agreement have been duly executed and
delivered by the respective parties thereto, and each such document
constitutes a legal, valid and binding obligation of the respective
Guarantor enforceable against such Guarantor in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor's rights generally.
3.5 No Legal Bar. The execution, delivery and performance of the
Loan Documents and the Borrowings hereunder and the use of the
proceeds thereof by the Borrower and the execution, delivery and
performance of the Guarantees and Security Agreements by the
Guarantors, if any, will not violate any Requirements of Law or any
Contractual Obligation of the Borrower or the Guarantors, and will
not result in, or require, the creation or imposition of any Lien on
any of its properties or revenues pursuant to any Requirements of
Law or Contractual Obligation except those in favor of the Bank
provided herein.
3.6 No Material Litigation. No litigation, investigation or
proceedings of or before any arbitrator or Governmental Authority is
pending by or against the Borrower or any Subsidiary or against any
of their properties or revenues with respect to the Loan Documents
or any of the transactions contemplated hereby or thereby, which
would have a Material Adverse Effect.
3.7 No Default. Neither the Borrower no any Subsidiary is in default
under or with respect to any Contractual Obligation in any respect
which could have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.
3.8 No Burdensome Restrictions. No Contractual Obligation of the
Borrower or any Subsidiary and no Requirement of Law would have a
Material Adverse Effect.
3.9 Taxes. The Borrower and its Subsidiaries have filed or caused
to be filed all tax returns which to the knowledge of the Borrower
are required to filed, and have paid all taxes shown to be due and
payable on said returns or on any assessments made against them or
any of their property except such taxes, if any, as are being
contested in good faith and by property proceedings and as to which
adequate reserves have been maintained.
3.10 Federal Regulations. The Borrower is not engaged nor will it
engage, principally or as one of its important activities, in the
business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" within the respective meanings of each
of the quoted terms under Regulation U of the Board of Governors of
the Federal Reserve System as now and from time to time hereafter in
effect. No part of the proceeds of any Loans hereunder will be used
for "purchasing" or "carrying" "margin stock" as so defined or for
any purpose which violates, or which would be inconsistent with the
provisions of the Regulations of such Board of Governors.
3.11 Environmental Matters.
(a) To the knowledge of the Borrower, none of the Real Property
contains, or has previously contained, any hazardous or toxic waste
or substances or undergrounds storage tanks except in compliance
with all applicable Environmental Laws.
(b) The Borrower's and each Subsidiary's use of the Real Property is
in compliance with all applicable Environmental Laws affecting such
Real Property, and, to the knowledge of the Borrower and each
Subsidiary, there are no environmental conditions which could
interfere with the continued use of the Real Property.
(c) Neither the Borrower nor any of its Subsidiaries has received
any notice of violations or advisory action by regulatory agencies
regarding environmental control matters or permit compliance which
would have a Material Adverse Effect.
(d) To the knowledge of the Borrower and each Subsidiary, hazardous
waste has not been transferred from any of the Real Property to any
other locations which is not in compliance with all applicable
Environmental Laws or permit requirements.
(e) With respect to the Real Property, to the knowledge of the
Borrower, there are no proceedings, governmental administrative
actions or judicial proceedings pending or, to the best knowledge of
the Borrower, contemplated under any federal, state or local law
regulating the discharge of hazardous or toxic materials or
substances into the environment, to which the Borrower or any of its
Subsidiaries is named as a party.
3.12 Representations and Warranties Related to the Acquisition
Documents.
Upon the making of the Term Loan, the Borrower represents and
warrants to the Bank that:
(a) The Borrower has delivered to the Bank a complete and correct
copy of the Acquisition Documents.
(b) Each of the representations and warranties given by the
Borrower in the Acquisition documents is true and correct in all
material respects as of the date of the making of the Term Loan.
SECTION 4. CONDITIONS PRECEDENT.
4.1 Conditions to Initial Revolving Credit Loan. The obligation of
the Bank to make the initial Revolving Credit Loan to the Borrower
hereunder is subject to the satisfaction of the following conditions
precedent:
(a) Revolving Credit Note. The Bank shall have received the
Revolving Credit Note conforming to the requirements hereof and duly
executed by the Borrower.
(b) General Security Agreement. The Bank shall have received a
general security agreement (the "General Security Agreement") duly
executed by the Borrower together with
- UCC-1 financing statements
- security agreement questionnaire
- UCC-11 searches
- UCC-3 termination statements from the CIT Group
- insurance certificate naming the Bank as loss payee
- an assignment to the Bank of the Ex-Im Bank insurance policy
(c) Trademark Security Agreement. The Bank shall have received a
trademark collateral security agreement (the "Trademark Security
Agreement") duly executed by the Borrower together with a trademark
registration form and same shall have been submitted for filing with
the U.S. Commissioner of Patents and Trademarks together with
- trademark searches
- evidence of termination of any security interests in the
trademarks
(d) Patent Security Agreement. The Bank shall have received a
patent collateral security agreement (the "patent Security
Agreement") duly executed by the Borrower together with a patent
registration form and same shall have been submitted for filing with
the U.S. Commissioner of Patents and Trademarks together with
- patents searches
- evidence of termination of any security interests in the patents
(e) Landlord Waivers. The Bank shall have received executed
landlord waivers from all landlords of premises leased by the
Borrower where equipment or inventory of the Borrower is located.
(f) Borrowing Base Certificate. The Bank shall have received and
satisfactorily reviewed a Borrowing Base Certificate as set forth in
Section 5.2 (c) hereof.
(g) Legal Opinion. The Bank shall have received a favorable opinion
of counsel to the Borrower substantially in the form of Exhibit D
hereto. Such opinion shall also cover such other matter incident to
the transactions contemplated by this Agreement as the Bank shall
reasonable require.
(h) Certified Copies and Other Documents: The Bank shall have
received such certificates and other documents relating to the
Borrower with respect to the matters herein contemplated as the Bank
may request, including but not limited to:
(1) Certificate of good standing from the New York Secretary of
State and certificates of authority to do business from each other
jurisdiction in which the Borrower conducts business;
(2) Certificate of incorporation certified by the New York Secretary
of State;
(3) An Officers' Certificate dated the date of this Agreement
certifying, (x) true and correct copies of the by-laws of the
Borrower as in effect on the date of adoption of the resolutions
referred to in (y) of this subsection (3), (y) true and correct
copies of the resolutions adopted by the board of directors of the
Borrower (i) authorizing the borrowings from the Bank hereunder, the
execution and delivery by the Borrower of the Loan Documents to
which it is a party and the performance by the Borrower of its
obligations under the Loan Documents and the granting of the lien
and security interest contemplated thereby, (ii) approving forms in
substantially execution form of the Loan Documents, and (iii)
authorizing officers of the Borrowers to execute and deliver the
Loan Documents and any related documents, and (z) the incumbency and
specimen of the officers of the Borrower executing any documents
delivered to the Bank by the Borrower in connection with the Loans.
(i) Field Audit. The Bank shall have conducted a field audit of the
Borrower's assets which shall be satisfactory in all respects to the
Bank.
(j) Commitment Letter. The Borrower shall have satisfied all the
terms and conditions of the Commitment Letter.
(k) Fees. There shall have been delivered to the Bank evidence of
payment of the Bank's commitment fee in the amount of $75,000 and of
the Bank's attorney's fees and disbursements.
(l) Additional Matters. All other documents and legal matters in
connection with the transactions contemplated by this Agreement
shall be satisfactory in form and substance to the Bank and its
counsel.
4.2 Conditions on the Term Loan. The obligation of the Bank to make
the Term Loan to the Borrower hereunder is subject to the
satisfaction of the following conditions precedent:
(a) Section 4.1 Conditions. Each of the conditions set forth in
Section 4.1 shall have b been satisfied.
(b) Term Note. The Bank shall have received the Term note
conforming to the requirements hereof and duly executed by the
Borrower.
(c) Pledge Agreement. The Bank shall have received a pledge
agreement (the "Pledge Agreement") duly executed by the Borrower
pledging all of the shares of stock of Pro-Bel together with
- the original share certificates of Pro-Bel
- Form U-1
- Stock powers
(d) Borrowing Base Certificate. The Bank shall have received a
Borrowing Base Certificate as set forth in Section 5.2(c) hereof:
(e) Legal Opinion. The Bank shall have received a favorable opinion
of counsel to the Borrower substantially in the form of Exhibit D
hereto as it pertains to the Term Loan. Such transactions
contemplated by this Agreement as the Bank shall reasonably require.
(f) Certified Copies and Other Documents. The Bank shall have
received such certificates and other documents relating to Pro-Bel
with respect to the matters herein contemplated as the Bank may
request, including, but not limited to:
(1)certificate of good standing (or equivalent) from the applicable
United Kingdom authority; (2) certificate of incorporation (or
equivalent) certified by the applicable United Kingdom authority;
(3) an Officers' Certificate dated the date of Agreement certifying,
true and correct copies of the by-laws of Pro-Bel as in effect on
the date of this Agreement; (4) an opinion of counsel to pro-Bel as
to its corporate existence.
(g) Pro-Bel Acquisition Documents. The Bank shall have received
executed copies of the Acquisition Documents which shall be
satisfactory in all respects to the Bank.
(h) Pro-Bel Financial Statements. The Bank shall have received
audited financial statements of Pro-Bel for fiscal years 1993-1995.
4.3 Conditions to All Loans. The obligation of the Bank to make any
Loan (including the initial Revolving Credit Loan and the Term Loan)
to be made by it hereunder is subject to the satisfaction of the
following conditions precedent.
(a) Representation and Warranties. The representations and
warranties made by the Borrower herein or which are contained in by
the Borrower or any Subsidiary at any time under or
in connection herewith, shall be correct in all material respects on
and as of the borrowing date for such extension of credit as if made
on and as of such date.
(b) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on the date an extension of
credit is to be made or after giving effect to the extension of
credit to be made on such date.
(c) Compliance with Borrowing Base. After taking into account the
Loan or extension of credit to be made, all outstanding extensions
of credit together with the requested extension of credit shall not
exceed the Borrowing Base, except to the extent of the Over-Advance
Amount.
Each borrowing by the Borrower hereunder shall constitute a
representation and warranty by the Borrower as of the date of each
such borrowing that the conditions in clauses (a), (b), and (c) of
this Section have been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS.
The Borrower hereby agrees that, so long as the Commitment remains
in effect, any Note remains unpaid, or any other amount is owing to
the Bank hereunder, the Borrower will and will cause each Subsidiary
to and, with respect to Sections 5.1, 5.3, 5.4, 5.5, 5.7, 5.8, and
5.10, each Non-Restricted Subsidiary to:
5.1 Corporate Existence and Qualification. Take the necessary steps
to preserve its corporate existence and its right to conduct
business in all states in which the failure to so preserve its
corporate existence or right to conduct business could have a
Material Adverse Effect.
5.2 Financial Information and Compliance Certificates.
(a) Keep its books of account in accordance with good accounting
practices and furnish to the Bank;
(1) As soon as available, but not more than one hundred twenty (120)
days after the closing of each fiscal year, the consolidated
financial statements of the Borrower and its consolidated
subsidiaries, including a consolidated balance sheet with related
consolidated statements of income, retained earnings and cash flows
for such fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, all prepared in accordance
with GGAP consistently applied and certified by Price Waterhouse,
CPAs or another firm of independent certified public accountants
reasonably to the a Bank.
(2) As soon s available, but not more than forty-five 945) days
after the close of the first three fiscal quarters of each fiscal
year, the consolidated financial statements of the Borrower and its
consolidated subsidiaries including consolidated balance sheet with
related consolidated statements of income, related earnings and cash
flows as at the end of such quarter, all prepared in accordance with
GAAP consistently applied and prepared by management and certified
as true and correct by the chief financial officer of the Borrower.
(3) As soon as available, but not more than one hundred twenty (120)
days after the closing of each fiscal year, the consolidating
financial statements of the Borrower and its consolidated
subsidiaries, including a consolidating balance sheet with related
consolidating statements of income, retained earnings and cash flows
for such fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, all prepared in accordance
with GAAP consistently applied and prepared by Price Waterhouse,
CPAs or another firm of independent certified public accountants
reasonable acceptable to the Bank.
(4) As soon as available, but not more than forty-five (45) days
after the close of the first three fiscal quarters of each fiscal
year, the consolidating financial statements of the Borrower and its
consolidated subsidiaries including a consolidating balance sheet
with related consolidating statement of income, retained earnings
and cash flows as at the end of such quarter, all prepared in
accordance with GAAP consistently applied and prepared by management
and certified as true and correct by the chief financial officer of
the Borrower.
(5) With reasonable promptness, such other data as may be reasonably
requested by the Bank including, but not limited to copies of the
annual reports, regular periodic and special reports, schedules or
other material which the Borrower may not or hereafter be required
to file with or deliver to any securities exchange or the Securities
and Exchange Commission or any domestic or non-domestic regulatory
body and will, during regular business hours and upon reasonable
notice, permit the Bank by or through any of its officers, agents,
employees, attorneys, or accountants to inspect and make extracts
from such Borrower's books and records.
(b) At the same time as it delivers the financial statements called
for by Section 5.2(a), deliver a certificate of the chief financial
officer of the Borrower evidencing a computation of compliance with
the provisions of Section 6 hereof and stating that in each case
except as disclosed in such certificate, the person making such
certificate has no knowledge of any Default or Event or Default.
(c) Deliver to the Bank an accounts receivable aging schedule
reflecting aging of receivables from invoice date accompanied by a
Borrowing Base Certificate indicating computation of the Borrowing
Base promptly upon request of the Bank and monthly (not later than
20 days after the last day of each month) covering the period ending
the last day of the immediately preceding month.
(d) Within 5 days of any officer of the Borrower obtaining knowledge
of any Default, if such Default is then continuing, Borrower shall
furnish to the Bank a certificate of the chief financial officer of
the Borrower setting forth the details thereof and the action which
the Borrower is taken or proposes to take with respect thereto.
5.3 Insurance. Maintain insurance with responsible and reputable
insurance companies or associations in such amounts and covering
such risks as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas
in which the Borrower operates and naming the Bank as an additional
insured and loss payee thereon as its interest may appear and
maintain an Export Credit Insurance Policy from Em-Im Bank in
amounts and coverage acceptable to the Bank and name the Bank as
assignee thereunder.
5.4 Preservation of Properties; Compliance with Law. Maintain and
preserve all of its properties which hare used or which hare useful
in the judgment of the Borrower in the conduct of its business in
good working order and condition, ordinary wear and tear excepted;
comply with all Requirements of Law except where contested in good
faith and by proper proceedings if appropriate reserves are
maintained with respect thereto.
5.5 Taxes. Duly pay and discharge all taxes or other claims which
might become a lien upon any of its property except to the extent
that any thereof are being in good faith appropriately contested
with adequate reserves provided therefore.
5.6 Maintain Operating Accounts. Maintain all of its primary
operating accounts with the Bank.
5.7 Notice of Litigation. Promptly notify the Bank in writing of
any litigation, legal proceeding or dispute, other than disputes in
the ordinary course of business or, whether or not in the ordinary
course of business, involving amounts in excess of Three Hundred
Fifty Thousand and 00/100 ($350,000.00) Dollars, affecting the
Borrower or any Subsidiary whether or not fully covered by
insurance, and regardless of the subject matter thereof (excluding,
however, any actions relating to workers' compensation claims or
negligence claims relating to use of motor vehicles, if fully
covered by insurance, subject to deductibles).
5.8 Indemnity (Environmental Matters). Indemnify the Bank against
any liability, loss, cost, damage, or expense (including, without
limitation, reasonable attorney's fees) arising from (i) the
imposition or recording of a lien by any local, state, or federal
government or governmental agency or authority pursuant to any
Environmental Laws; (ii) claims of any private parties regarding
violations of Environmental Laws; and (iii) costs and expenses
(including, without limitation, reasonable attorneys' fee and fees
incidental to the securing of repayment of such costs and expenses)
incurred by the Borrower, any Subsidiary or the Bank in connection
with compliance by the Borrower, any Subsidiary or the Bank with any
statute, regulation or order issued pursuant to any Environmental
Laws by any local state or federal government or governmental agency
or authority.
5.9 New Subsidiaries: Cause any Restricted Subsidiary of the
Borrower formed after the date of this Agreement to become a
guarantor of all debts and obligations of the Borrower under this
Agreement and grant a security interest o the Bank in all of its
personal property to secure such guarantee pursuant to a security
agreement on the Bank's landlord form and cause such Restricted
Subsidiary to execute an agreement, in form satisfactory to the
Bank, subjecting it to the affirmative and negative covenants
contained in this Agreement.
5.10 Books and Records; Field Audit: Keep proper books of record
and account in accordance with GAAP and permit the Bank or its duly
authorized agents to examine the books and records of the Borrower,
such authorization to include, without limitation, the annual field
audit, test or examination of any or all of the assets of the
Borrower at the Borrower's expense (and, if more frequently than
annually, at the Bank's expense).
SECTION 6. FINANCIAL COVENANTS.
6.1 The Borrower hereby agrees that, so long as the Commitment
remains in effect, any Note remains outstanding and unpaid, or any
other amount is owing to the Bank hereunder, the Borrower and its
Restricted Subsidiaries on a consolidated basis will:
(a) Current Ratio. Maintain at all times during the periods set
forth below a ratio of current assets to current liabilities in a
portion not less than that designated opposite each such period:
Period Minimum
From Through Current Ratio
Date hereof - 12/30/97 1.4 to 1.0
12/31/97 and at all times thereafter 2.0 to 1.0
(current assets and current liabilities to be determined in
accordance with GAAP; provided, however, that solely for purposes of
calculating compliance with this covenant, principal amounts
outstanding under the Revolving Credit Loans and the Term Loan shall
be considered current liabilities).
(b) Minimum Quick Ratio. Maintain at all times during the periods
designated below a ratio of cash, cash equivalents and accounts
receivable to current liabilities in a proportion not less than that
designated opposite each such period:
Period Minimum
From Through Quick Ratio
Date hereof - 12/30/97 .85 to 1.0
12/31/97 and at all times thereafter 1.25 to 1.0
(current liabilities to be determined in accordance with GAAP;
provided, however, that solely for purposes of calculating
compliance with this covenant, principal amounts outstanding under
the Revolving Credit Loans and the Term Loan shall be considered
current liabilities).
(c) Minimum Debt Service Coverage Ratio. Maintain as at the last
day of each fiscal year a ratio of the sum of earnings before
interest and taxes plus depreciation and amortization for such
fiscal year divided by the sum of interest expense plus the current
portion of long term debt at such time plus capital expenditures and
additions to capitalized software development costs made in such
fiscal year of at least 2.0 to 1.0 ("long term debt" means
indebtedness for borrowed money which by its terms matures more than
12 months after the date incurred or if maturing sooner, the
maturity thereof may be extended at the option of the debtor beyond
such 12 month period).
(d) Domestic Tangible Net Worth. Maintain at all times during
fiscal year 1996 Domestic Tangible Net Worth of at least
$19,400,000, to increase by at least $2,000,000 at each fiscal year
end thereafter above the level attained as at the close of the
immediately preceding fiscal year (solely for purposes of
calculating compliance with this covenant, Domestic Tangible net
Worth shall be net of (i) any increases in common stock and
additional paid in capital resulting from or due to the acquisition
of any Person or joint venture with any Person or any similar
arrangement), (ii) any increase in common stock and additional paid
in capital due to a public offering and (iii) the accounting effect
of the consolidation of the liabilities or assets attributable to
the acquisition of or investment in any non-Restricted Subsidiaries.
(e) Leverage Ratio. Maintain at all times during the periods
designated below a ratio of total liabilities to Domestic Tangible
Net Worth in a proportion not more than that designated opposite
each such period:
Period Maximum
From Through Leverage Ratio
Date hereof - 12/30/97 1.5 to 1.0
12/31/97 and at all times thereafter 1.0 to 1.0
(total liabilities to be determined in accordance with GAAP).
6.2 The Borrower hereby agrees that, so long as the Commitment
remains in effect, any Note remains outstanding and unpaid, or any
other amount is owing to the Bank hereunder, the Borrower and its
consolidated Subsidiaries will maintain at all times during fiscal
year 1996 Tangible Net Worth on a consolidated basis of at least
$19,400,000, to increase by at least $2,000,000 in each fiscal year
thereafter above the level attained as at the closed of the
immediately preceding fiscal year (solely for purposes of
calculating compliance with this covenant, Tangible Net Worth shall
be net of (i) any increases in common stock and additional paid in
capital resulting from or due to the acquisition of any Person or
joint venture with an Person or any similar arrangement) and (ii)
the intangible attributable to the acquisition of the stock or Pro-
Bel.
SECTION 7. NEGATIVE COVENANTS.
The Borrower hereby agrees that, so long as the Commitment remains
in effect, any Note remains outstanding and unpaid, or any other
amount is owing to the Bank hereunder it will not, now will it
permit any of its Restricted Subsidiaries to and with respect to
Sections 7.2, 7.6, 7.7, 7.8, 7.9, 7.10, 7.2, 7.13 and 7.14, any of
its Non-Restricted Subsidiaries to:
7.1 Indebtedness for Borrowed Money. Incur, or permit to exist,
any Indebtedness for borrowed money except (i) Indebtedness incurred
pursuant to borrowings hereunder and under any other loans made by
the Bank in its discretion to the Borrower or any Subsidiary, (ii)
Indebtedness existing on the date hereof and reflected in the
financial statements referred to in Section 3.1 hereof and (iii)
purchase money Indebtedness incurred in the acquisition of fixed
assets within the limitations of Section 7.8 hereof.
7.2 Mergers, Acquisitions and Sales of Assets. Enter into any
merger or consolidation or liquidate, windup or dissolve itself or
sell, transfer or lease or otherwise dispose of al or substantially
all of its assets (other than sales of inventory and obsolescent
equipment in the ordinary course of business) or acquire by purchase
or otherwise the business or asset of, or stock of, another business
entity; except that any Subsidiary may merge into or consolidate
with any other Subsidiary which is wholly-owned by the Borrower and
any Subsidiary which his wholly-owned by the Borrower may merge with
or consolidate into the Borrower provided that the Borrower is the
surviving corporation.
7.3 Loans; Investments. Lend or advance money, credit or property
to or invest in (by capital contribution, loan, purchase or
otherwise) any firm, corporation, or other Person except (i)
investments in United States Government obligations, certificates of
deposit of any banking institution with combined capital and surplus
of at least $200,000,000, (ii) accounts receivable arising out of
sales of inventory in the ordinary course of business, (iii)
commercial paper of a domestic issuer rated at least "A-1" by
Standard & Poor's Rating Group or "P-1" by Moody's Investors
Service, Inc., (iv) investments in a Subsidiary and (v) in addition
to all other permitted investments and loans, investments in or
loans to any other Person, provided that the aggregate amount of
such investments., loans and guaranties permitted by Section 7.5
(ii) hereof, do not exceed in the aggregate Five Hundred Thousand
and 00/100 ($500,000.00) Dollars at any one time outstanding.
7.4 Liens. Create, assume or permit to exist, any Liens on any of
its property or assets now owned or hereafter acquired except (i)
Liens in favor of the Bank; (ii) other Liens incidental to the
conduct of its business or the ownership of its property and assets
which were not incurred in connection with the borrowing of money or
the obtaining of advances or credit and which do not materially
impair the use thereof in the operation of its business; (iii) Liens
for taxes or other governmental charges which are not delinquent or
which are being contested in good faith and for which a reserve
shall have been established in accordance with GAAP; and (iv)
purchase money Liens granted to secure the unpaid purchase price of
any fixed assets purchased within the limitations of Section 7.8
hereof.
7.5 Contingent Liabilities. Assume, endorse, be or become liable
for or guarantee the obligations of an Person except (i) the
endorsement of negotiable instruments for deposit or collection in
the ordinary course of business and (ii) guaranties of obligations
which when aggregated with the loans and investments permitted by
Section 7.3(v) hereof do not exceed Five Hundred Thousand and 00/100
($500,000.00) Dollars at any one time outstanding.
7.6 Dividends. Declare or pay any dividends on its capital stock
(other than dividends payable solely in shares of its own common
stock), or purchase, redeem, retire or otherwise acquire any of its
capital stock at any time outstanding, except (i) any Subsidiary
wholly owned by the Borrower may declare and pay dividends to the
Borrower and (ii) provided no Event of Default has occurred and is
continuing thereunder, the Borrower may do any of the foregoing in
any fiscal year not exceeding, i on the aggregate, twenty five (25%)
percent of the Borrower's net income in such fiscal year.
7.7 Sales of Receivables; Sale - Leasebacks. Sell, discount or
otherwise dispose of notes, accounts receivable or other obligations
owing to the Borrower, with or without recourse, except for the
purpose of collection in the ordinary course of business; or sell
any asset pursuant to an arrangement to thereafter lease such asset
from the purchase thereof.
7.8 Capital Expenditures; Capitalized Leases. Expend in the
aggregate for the Borrower and all Subsidiaries in excess of Three
Million and 00/100 ($3,000,000.00) Dollars in any fiscal year for
Capital Expenditures including payments made on account of
Capitalized Leases. For purposes of the foregoing, Capital
Expenditures shall include payments made on accounts of any deferred
purchase price or on account of any indebtedness incurred to finance
any such purchase price.
7.9 Lease Payments. Expend in the aggregate for the Borrower and
all Subsidiaries in excess of Seven Hundred Fifty Thousand and
00/100 ($750,000.00) Dollars in any fiscal year for the lease,
rental or hire of real or personal property pursuant to any rental
agreement therefore, whether an operating lease, capitalized lease
or otherwise.
7.10 Nature of Business. Materially alter the nature of its
business.
7.11 Stock of Subsidiaries. Sell or otherwise dispose of any
Subsidiary (except in connection with a merger or consolidation of
subsidiary into the Borrower or another Subsidiary) or permit a
Subsidiary to issue any additional shares of its capital stock
except pro rata to its stockholders.
7.12 ERISA. (i) Terminate any Plan so as to result in any material
liability to the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (the "PBGC"), (ii)
engage in or permit any person to engage in any "prohibited
transaction" (as defined in Section 406 or ERISA or Section 4975 of
the Internal Revenue Code of 1954, as amended) involving any Plan
which would subject a Borrower to any material tax, penalty or other
liability, iii) incur or suffer to exist any material "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived, involving any Plan, or (iv) allow or suffer to exist
any event or condition, which presents a material risk of incurring
a material liability to the PBGC by reason of termination of any
Plan.
7.13 Accounting Changes. Make, or permit any Subsidiary to make
any change in their account treatment or financial reporting
practices except as required or permitted by GAAP in effect from
time to time.
7.14 Transactions with Affiliates. Except as otherwise
specifically set forth in this Agreement, directly or indirectly
purchase, acquire or lease any property from, or sell, transfer or
lease any property to, or enter into any other transaction, with any
Affiliate except in the ordinary course of business and at prices
and on terms not less favorable to it than those which would have
been obtained in an arm's-length transaction with a non-affiliated
third party.
SECTION 8. EVENTS OF DEFAULT.
Upon the occurrence and during the continuance of any of the
following events (each an Event of Default):
(a) Borrower shall fail to pay any interest on any of the Notes
within ten days of the due date therefore, or principal of any of
the Notes when due, or shall fail to pay any other amount payable
hereunder within ten days after written notice or the Borrower or
any Guarantor shall default under any other Loan Document after the
giving of notice or expiration of grace periods, if any, under such
Loan Document; or
(b) Any representation or warranty made or deemed made by the
Borrower herein or which his contained in any certificate, document
or financial or other statement furnished at any time under or in
connection with this Agreement shall prove to have been false in any
material respect on or as of the date made or deemed made; or
(c) Borrower shall default in the observance or performance of any
covenant or provision contained in Section 5, 6 or 7 hereof; or
(d) Borrower shall default in the observance or performance of any
other provision contained in this Agreement and such default shall
continue unremedied for a period of 30 days after written notice
thereof is given to the Borrower by the Bank; provided that if the
default is of such nature that it cannot reasonably be cured within
such 30 day period, no default shall be deemed to have occurred
hereunder so long as the Borrower commences to cure such default
within such 30 day period and thereafter diligently and
expeditiously proceeds to cure same, provided that no extension
shall be for a period beyond 60 days; or
(e) The Borrower or any Subsidiary shall (i) default in any payment
of any indebtedness for borrowed money in excess of Two Hundred
Thousand and 00/100 $200,000.00) Dollars (other than the Notes)
beyond the period of grace, if any, provided in the instrument or
agreement under which such indebtedness was created; or (ii) default
beyond the period of grace, if any, in the observance or performance
of any other agreement or condition relating to any such
indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto or any other event shall occur or
condition exist, in each case the effect of which default or other
event or condition is to cause or permit the holder or holders of
such indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause such indebtedness to become due prior to its
stated maturity; or
(f) (i) The Borrower or any Subsidiary shall commence any case,
proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its
assets, or the Borrower or any Subsidiary shall make a general
assignment of the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any Subsidiary any case,
proceeding or other action of a nature referred to in clause (i)
above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 75 days; or (iii) there
shall be commenced against the Borrower or any Subsidiary any case,
proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or
any substantial part of its assets which result in the entry of an
order for any such relief which shall have been vacated, discharged,
or stayed or bonded pending appear within 20 days from the entry
thereof; or (iv) the Borrower or any Subsidiary shall take any
action in furtherance of, or indicating its consent to, approval of,
or acquiescence in, any of the acts set forth in clause (i), (ii) or
(iii) of this Section 8(f); or (v) the Borrower or any Subsidiary
shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(g) (i) the Borrower or any Subsidiary shall engage in any
"prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code) involving any Plan, (ii) any "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether or
not waived, shall exist with respect to any Plan, (iii) a Report
Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Plan, which Reportable Event or
institution of proceedings is, in the reasonable option of the Bank,
likely to result in the termination of such Plan for purposes of
Title iV of ERISA, and, in the case of a Reportable Event, the
continuance of such Reportable Event unremedied for 20 days after
notice of such Reportable Event pursuant to Section 4043(a), (c) or
(d) of ERISA is given or the continuance of such proceedings for 20
days after commencement thereof, as the case may be, (iv) any Plan
shall terminate for purposes of Title IV of ERISA, and in each case
in clauses (i) through (iv) above, such event or condition could
subject the Borrower to any tax, penalty or other liabilities in the
aggregate material in relation to the business, operations or
property of the Borrower; or
(h) the rendition by any court of a final judgement in excess of
Two Hundred Thousand and 00/100 ($200,000.00) Dollars against the
Borrower or any Subsidiary which shall not be satisfactorily stayed,
discharged, vacated or set aside within 75 days of the making
thereof; or the attachment of any material property of the Borrower
or any Subsidiary which has not been released or provided for to the
reasonable satisfaction of the Bank within 75 days after the making
thereof; or
(i) any Guarantee or Security Agreement of any Guarantor shall
cease to be in full force and effect; or
(j) any of the Liens created and granted pursuant to the Security
Agreements or the Pledge Agreement shall fail to be valid, first,
perfected Liens subject to nor prior to equal Lien except as
permitted by this Agreement.
Then, in any such event, any or all of the following actions may be
taken: (i) the Bank may, at its option, declare the Commitment to be
terminated forthwith, whereupon the Commitment and all obligations
of the Bank to make Loans to the Borrower shall immediately
terminate; (ii) the Bank may, at its option, declare the Loans
hereunder (with accrued interest thereon) and all other amounts
owing under this Agreement and the Notes to be due and payable and
the same, and all interest accrued thereon, shall forthwith become
due and payable without presentment, demand, protest or notice of
any kind, all of which are hereby waived, anything contained herein
or in any instrument evidencing the Loans to the contrary
notwithstanding.
SECTION 9. COLLATERAL SECURITY
9.1 General Loan and Collateral Agreement. As collateral security
for the payment of the Obligations, the Borrower hereby grants to
the Bank a lien on and security interest in any and all deposits or
other sums at any time credited by or due from the Bank to the
Borrower, whether in regular or special depository accounts or
otherwise, and any and all monies, securities and other property of
the Borrower, and the proceeds thereof, now or hereafter held or
received by or in transit to the Bank from or for the Borrower,
whether for safekeeping, custody, pledge, transmission, collection
or otherwise, and any such deposits, sums, monies, securities and
other property, may at any time after the occurrence of any Event of
Default be set-off, appropriated and applied by the Bank against any
of the Obligations whether or not such Obligations are then due or
are secured by any collateral, or, if they are so secured, whether
or not such collateral held by the Bank is considered to be
adequate.
9.2 Additional Collateral Security. In addition to the collateral
described in Section 9.1 hereof, payment of the Obligation is also
secured by a first priority security interest in (i) all personal
property including trademarks and patents of the Borrower whether
now owned or hereafter acquired, and (ii) after the making of the
Term Loan, all outstanding shares of stock of Pro-Bel, as provided,
respectively, in the Security Agreements and Pledge Agreement
executed and delivered by the Borrower to the Bank.
SECTION 10. MISCELLANEOUS.
10.1 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing unless
otherwise expressly provided herein and shall be deemed to have been
duly given or made when delivered by hand, or by telegram or
telecopy, or when deposited in the mail addressed as follows, or to
such address as may be hereafter notified in writing by the
respective parties hereto and any future holders of any Note:
The Borrower:
Chyron Corporation
5 Hub Drive
Melville, New York 11747
with a courtesy copy (which copy shall not constitute notice)
to:
Camhy, Karlinsky & Stein LLP
1740 Broadway
New York, New York 10019-4315
Attn: Daniel DeWolf, Esq.
The Bank:
NatWest Bank N.A.
100 Jericho Quadrangle
Jericho, New York 11753
Attn: Alice B. Adelberg
Vice President
10.2 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Bank, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right.
10.3 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any Loan
Document shall survive the execution and delivery of this Agreement
and the Notes.
10.4 Payment of Expenses; Examination.
(a) The Borrower agrees to pay or reimburse the Bank for all its
reasonable costs and expenses (including, without limitation, the
reasonable fees and expenses of attorneys for the Bank) incurred in
connection with (i) the enforcement or preservation of any rights
under any Loan Document or any other instrument or agreement entered
into in connection herewith or therewith including, without
limitation, the reasonable fees and disbursements of attorneys for
the Bank; (ii) any claim or action threatened, made or brought
against the Bank arising out of or relating to any extent to any
Loan Document or any instrument or agreement entered into in
connection with the transactions contemplated hereby or thereby;
(iii) the perfection of any security interest in the Collateral or
in the maintenance of the Collateral; (iv) any amendment or
modification of any Loan Document; (v) the payment of any tax,
assessment, recording fee or similar charge; (vi) any waiver of any
right of the Bank under any Loan Document and (vii) the reasonable
fees and disbursements of any counsel to the Bank incurred from time
to time in connection with the transactions contemplated by this
Agreement. The Borrower agrees to reimburse the Bank for any
payments made to the CIT Group/Credit Finance Inc. ("CIT") pursuant
to the indemnity letter of the Bank to CIT dated March 28, 1996.
(b) The Borrower agrees that at any time and from time to time upon
reasonable notice and during regular business hours the Bank may
conduct, at the Borrower's expense, an examination of the Borrower's
books and records (provided, if more frequently than annually, at
the Bank's expense). The obligations set forth in this Section 10.4
shall be in addition to any other obligations or liabilities of the
Borrower to the Bank hereunder or at common law or otherwise. The
provisions of this Section 10.4 shall survive the payment of the
Notes and the termination of this Agreement.
10.5 WAIVER OF JURY TRIAL, SET-OFF AND COUNTERCLAIM. THE BORROWER
AND THE BANK IN ANY LITIGATION (WHETHER OR NOT ARISING OUT OF OR
RELATING TO THIS AGREEMENT) IN WHICH THEY SHALL BE ADVERSE PARTIES
WAIVE THE RIGHT OF TRIAL BY JURY AND THE BORROWER WAIVES THE RIGHT
TO INTERPOSE ANY SET-OFF OR COUNTERCLAIM OF ANY KIND OR DESCRIPTION
IN ANY SUCH LITIGATION.
10.6 WAIVER OF AUTOMATIC STAY. THE BORROWER AGREES THAT, IN THE
EVENT THAT THE BORROWER, ANY GUARANTOR OR ANY OF THE PERSONS OR
PARTIES CONSTITUTING THE BORROWER OR ANY GUARANTOR SHALL (i) FILE
WITH ANY BANKRUPTCY COURT OF COMPETENT JURISDICTION OR BE THE
SUBJECT OF ANY PETITION UNDER TITLE 11 OF THE U.S. CODE, AS AMENDED
("BANKRUPTCY CODE"), (ii) BE THE SUBJECT OF ANY ORDER FOR RELIEF
ISSUED UNDER THE BANKRUPTCY CODE, (iii) FILE OR E THE SUBJECT OF ANY
PETITION SEEKING ANY REORGANIZATION, ARRANGEMENT, COMPOSITION,
READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY
PRESENT OR FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO
BANKRUPTCY, INSOLVENCY, OR OTHER RELIEF FOR DEBTORS, (iv) HAVE
SOUGHT OR CONSENTED TO OR ACQUIESCED IN THE APPOINTMENT OF ANY
TRUSTEE, RECEIVER, CONSERVATOR, OR LIQUIDATOR, OR (v) BE THE SUBJECT
OF ANY ORDER, JUDGEMENT, OR DECREE ENTERED BY ANY COURT OF COMPETENT
JURISDICTION APPROVING A PETITION FILED AGAINST SUCH PARTY FOR ANY
REORGANIZATION, ARRANGEMENT, COMPOSITION, READJUSTMENT, LIQUIDATION,
DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL
OR STATE ACT OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR RELIEF
FOR DEBTORS, THE BANK SHALL THEREUPON BE ENTITLED AND THE BORROWER
IRREVOCABLY CONSENTS TO IMMEDIATE AND UNCONDITIONAL RELIEF FROM ANY
AUTOMATIC STAY IMPOSED BY SECTION 362 OF THE BANKRUPTCY CODE, OR
OTHERWISE, ON OR AGAINST THE EXERCISE OF THE RIGHTS AND REMEDIES
OTHERWISE AVAILABLE TO THE BANK AS PROVIDED FOR HEREIN, IN ANY NOTE,
OTHER LOAN DOCUMENTS DELIVERED IN CONNECTION HEREWITH AND AS
OTHERWISE PROVIDED BY LAW, AND THE BORROWER HEREBY IRREVOCABLY
WAIVES ANY RIGHT TO OBJECT TO SUCH RELIEF AND WILL NOT CONTEST ANY
MOTION BY THE BANK SEEKING RELIEF FROM THE AUTOMATIC STAY AND THE
BORROWER WILL COOPERATE WITH THE BANK, IN ANY MANNER REQUESTED BY
THE BANK, IN ITS EFFORTS TO OBTAIN RELIEF FROM ANY SUCH STAY OR
OTHER PROHIBITION.
10.7 LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY (i) THE
BORROWER, ANY GUARANTOR, ANY SUBSIDIARY, OR ANY OTHER PERSON AGAINST
THE BANK OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES,
ATTORNEYS OR AGENTS OF THE BANK (ii) THE BANK AGAINST THE BORROWER,
ANY GUARANTOR, ANY SUBSIDIARY OR THE AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OF ANY OF THE FOREGOING,
FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR, TO THE
FULLEST EXTENT PERMITTED BY LAW, FOR ANY PUNITIVE DAMAGES IN RESPECT
OF ANY CLAIM OR CAUSE OF ACTION (WHETHER BASED ON CONTRACT, TORT,
STATUTORY LIABILITY, OR ANY OTHER GROUND) BASED ON, ARISING OUT OF
OR RELATED TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION THEREWITH, AND THE BORROWER (FOR ITSELF AND ON BEHALF OF
EACH GUARANTOR AND EACH SUBSIDIARY) AND THE BANK HEREBY WAIVE,
RELEASE AND AGREE NEVER TO SUE UPON ANY CLAIM FOR ANY SUCH DAMAGES,
WHETHER SUCH CLAIM NOW EXISTS OR HEREAFTER ARISING AND WHETHER OR
NOT IT IS NOW KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
10.8 Modification and Waiver. No modification of waiver of, or
with respect to any provision of this Agreement or any document or
instrument delivered in connection therewith shall be effective
unless and until it shall be in writing and signed by the Bank, and
then such modification or waiver shall be effective only in the
specific instance and for the purpose for which given. No notice to
or demand on the Borrower in any case shall, of itself, entitle to
it any other or further notice or demand in similar or other
circumstances.
10.9 Successor and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Borrower, the Bank, all future
holders of the Notes and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its
rights under this Agreement without the prior written consent of the
Bank. The term "Bank" as used herein shall be deemed to include the
Bank and its successors, endorsees, and assigns.
10.10 Governing Law; Consent to Jurisdiction. This Agreement and
the other Loan Documents and any documents and instruments delivered
in connection hereunder and thereunder shall be governed by, and
construed and interpreted in accordance with, the law of the state
of New York and the Borrower consents to the jurisdiction of the
courts of the State of New York in any action brought to enforce any
rights of the Bank under this Agreement and any document or
instrument related hereto.
10.11 Entire Agreement. This Agreement and any other agreement,
documents and instruments executed and delivered pursuant to or in
connection with the Obligations contain the entire agreement between
the parties relating to the subject matter hereof and thereof. The
Borrower expressly acknowledges that the Bank has not made and the
Borrower is not relying on any oral representations, agreements or
commitments of the Bank or any officer, employee, agent or
representative thereof.
10.12 Interest Adjustment. Notwithstanding anything to the
contrary contained in this Agreement or any Note, the rate of
interest payable on either Note shall never exceed the maximum rate
of interest permitted under applicable law. If at any time the rate
of interest otherwise prescribed herein shall exceed such maximum
rate, and such prescribed rate is thereafter below such maximum
rate, the prescribed rate shall be e increased to the maximum rate
for such period of time as is required so that the total amount of
interest received by the Bank is that which would have been received
by the Bank except for the operation of the first sentence of this
Section 10.12.
10.13 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto and
hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in Jericho, New York by their proper
and duly authorized officer as of the day and year first above
written.
CHYRON CORPORATION
By: /s/ Patricia A. Lampe
Chief Financial Officer
NATWEST BANK N.A.
By: /s/ William Ewing
Vice President
<PAGE>
BARC LAYS BANK PLC
Oxford Corporate Banking Centre
P.O. Box 858, Oxford OX1 3YP
PRIVATE AND CONFIDENTIAL
The Directors Your Ref:
H/JEF/SH
Pro-Bel Limited Our Ref: 01865
442139
Triology Broadcast Limited Fax No.: 01865
442570
Pro-Bel Software Limited
Xebec Electronic Production Services Ltd. 19th December
1996
Danehill, Lower Early
Reading RG6 4PB
Dear Sirs
We are please to advise you that Barclays Bank PLC ("the Bank") has
agreed to provide an overdraft facility ("the Overdraft") of up to
3,000,000 pounds sterling gross (Three million pounds sterling
gross) and of up to $3,000,0000 pounds sterling (Three million
pounds sterling net) until 31st December 1997 to Pro-Bel Limited
("the Parent") and its subsidiary named below (the Parent and such
subsidiaries are referred to individually as a "borrower" and
collectively as the "Borrowers").
The Bank is also prepared to provide the Borrower with:
Ancillary facilities by way of negotiation of sterling/foreign
currency cheques and Bills of Exchange payable abroad, Company
Barclaycard, Bankers Automatic Clearing Services (BACS), Branch
Originated BACS Services (BOBS) and Spot and Forward Exchange
Transactions (known collectively a the "ancillaries") Utilisation
under the Ancillaries shall be in accordance with Schedule B.
The Schedules attached hereto from part of the terms and conditions
of this letter.
Following the completion of the acceptance formalities detailed
below the Overdraft will be available for drawing by the Borrowers,
subject to the following terms and conditions:
1. The Overdraft
The Overdraft will be available by way of a Composite Accounting
System ("CAS") in accordance with a Composite Accounting Agreement
made between the Parent and its subsidiaries named below an the
Bank, (subject to the sub limits detailed below - at the Oxford City
Office branch of the Bank ("the Branch") with interest charged at a
rate of 1.5% per annum over the Bank's Base Rate current from time
to time. Interest, together with other charges will be debited to
the Borrowers' current accounts at the Branch quarterly in arrears
in March, June, September and
December each year, or at such other times as may be determined by
the Bank, and such interest will be calculated on the basis of
actual days elapsed over a 365 day year.
Sub Limits
Trilogy Broadcast Limited 300,000 pounds
sterling
Pro-Bel Software Limited 200,000 pounds
sterling
Xebec Electronic Production Services Limited 50,000 pounds
sterling
Options Available Within and Utilization of the Facility
The Facility may be utilized by way of the following options and in
accordance with the provisions of the Schedules related thereto:
Sterling Overdraft the terms and conditions of which are contained
in the Bank's Facility
Letter of even date, and/or
Foreign Currency Overdraft (see Schedule A)
Within the Facility the aggregate of the liabilities due, owing or
incurred thereunder shall not at any time exceed 3,000,000 until 31
December 1997 or its currency equivalent.
2. Availability
All monies owing under the Facility are repayable upon written
demand by the Bank and/or any undrawn portion of the Facility may be
cancelled by the Bank, at any time. Following demand and/or
cancellation, no further utilisation may be made under the Facility.
The Bank may at any time after such demand and/or cancellation call
for payment of full cash cover for all liabilities outstanding under
the Ancillary Facilities.
The Borrower shall indemnify the Bank on demand against any loss,
liability or expense which the Bank may reasonably sustain or incur
as a consequence of making such demand or as a consequence of non-
performance by the Borrower of any obligation under this letter.
Any monies not paid following a demand under this clause shall
continue to bear interest in respect of any outstanding interest
period, and in respect of the Sterling Overdraft and the Foreign
Currency Overdraft as calculated in the respective Schedules.
The amounts of any payments made by the Bank on behalf of the
Borrower under the Ancillary Facilities, will, except for those
amounts where cash cover has been made by the Borrower as provided
for above, continue to bear interest at 1.5% per annum over the
Bank's Base Rate current from time to time until payment is made.
Interest shall, if unpaid, be compounded in the Bank's usual
charging dates. Interest will continue to be charged and compounded
on this basis after as well as before demand or Judgement.
The Bank reserves the right, at any time following a demand under
this clause, to purchase with Sterling any currency necessary to
convert any amounts outstanding under the Facility, together with
interest accrued thereon, to Sterling, whereupon the Borrow shall
then become liable to pay the
Bank forthwith the relevant Sterling amounts, together with all
costs and expenses incurred by the Bank. Interest will continue to
be charged as detailed above.
In the absence of demand or cancellation by the Bank, the Facility
is available for utilisation until 31 December 1997. However, the
Bank will be pleased to discuss the Borrower's future requirements
shortly before that date.
3. Security and/or Guarantee(s)
The Borrower's obligations hereunder will be secured by any security
which is now held, or hereafter may be held, by the Bank to secure
all moneys and liabilities which shall from time to time be due,
owing or incurred to the Bank by the Borrower, whether actually or
contingently.
Specifically, in addition to the security currently held the Bank
will be provided with:
a) Cross Guarantee and Debenture from Xebec Electronic Production
Services Limited.
b) Assignment of current NCM Policies.
c) Acknowledgement in a form to be agreed from Chyron Corporation of
the agreed arrangement relating to reductions in the outstanding
inter company loan from that organisation.
The Bank reserves the right to require all subsidiary companies to
be taken into the CAS arrangement.
4. Information
The Parent undertakes to provide the Bank with:
a) copies of its audited consolidated Profit and Loss account and
Balance Sheet as soon as they are available and not later than 180
days from the end of each accounting reference period together with
any other information which the Bank may reasonably request from
time to time.
b) Monthly management accounts in a form acceptable to the Bank.
Such reports to be received by the Bank within 30 days of the
relevant month end.
c) Debenture monitoring Form 862 to be received by the Bank within
30 days of the relevant month end.
d) Schedule, in a format to be agreed detailing an overseas debtor
aged analysis together with appropriate buyer limits as established
by NCM.
The Bank reserves the right to arrange for an independent review of
the sales ledger at the Companies' reasonable expense. The Bank
will not seek these reviews at intervals of less than six months.
5. Change of Circumstances
In the event of any change in applicable law or regulation or the
existing requirements of, or any new requirements being imposed by,
the Bank of England or other regulatory authority the results of
which, in the sole opinion of the Bank, is to increase the cost to
it of funding, maintaining or making available the Overdraft (or any
undrawn amount thereof) or to reduce the effective return to the
Bank, then the Borrowers shall pay to the Bank such sum as may be
certified by the Bank to the Borrowers as shall compensate the Bank
for such increased cost or such reduction.
6. Authority of Parent to agree changes to the Composition of the
Borrowers and to the limit and terms applicable to the Overdraft.
By countersigning this letter, each Borrower (other than the parent)
irrevocably authorises the Parent (which is hereby appointed the
agent of the Borrowers for such purposes) from time to time (i) to
agree with the Bank in writing to add any further subsidiary or
subsidiaries as a Borrower or Borrowers, and/or (ii) to remove any
subsidiary as a Borrower, and/or (iii) to make such changes to the
limit and sub limits and other terms applicable to the Overdraft as
the Parent may deem appropriate, and/or (iv) to sign any document
and perform any act on behalf of the Borrowers (or any of them)
required to effect or implement any of the foregoing.
Each change so agreed by the Parent shall be binding on each
Borrower and the terms of this letter will continue in full force
and effect, save as expressly amended thereby.
7. Fees
A fee of 15,000 pounds sterling will be payable by the Borrowers to
the Bank in respect of the facility.
Legal and Valuation Costs
Any legal valuation fees and expenses and other out of pocket
expenses (including VAT) incurred by the Bank in connection with the
negotiation and granting of the Facility will be reimbursed by the
Borrower on demand by the Bank.
All fees will e ebited to the Current Account of Pro-Bel Limited.
8. Set-Off
Any sum of money at any time standing to the credit of the Borrower
with the Bank in any currency upon any account or otherwise (whether
or not any such account is held in the Borrower's name) r provided
to the Bank cash cover for any outstanding liabilities under the
Ancillary Facilities, may be applied by y the Bank at any time
(without notice to the Borrower) in or towards the discharge of any
money or liabilities now or hereafter due, owing or incurred to the
Bank by the Borrower hereunder (whether presently payable or not).
9. Currency Indemnity
If for any reason, any amount payable to the Bank is received or
recovered in a currency other than the contractual currency in which
it is due, then, to the extent that the amount actually received or
recovered by the Bank (when converted by the Bank into the
contractual currency at the applicable rate of exchange) falls short
of the amount due in the contractual currency, the Borrower shall,
as a separate and independent obligation, reimburse the Bank on
demand (on a full indemnity basis) for the amount of such shortfall.
10. Applicable Law
This letter shall be governed by and construed and take effect in
accordance with English Law.
11. Acceptance
Prior to the Overdraft being utilised, the Parent shall provide the
Branch with the following:
a) the enclosed duplicate of this letter duly signed on each
Borrower's behalf together with a CAS Agreement and CAS Guarantees,
and
b) a certificate true copy of a Resolution of each Borrower's Board
of Directors:
i) accepting the Overdraft on the terms and conditions stated herein
and approving the terms of the CAS Agreement and the CAS Guarantee
to be given by it,
ii) authorising a specified person, or persons, to sign and return
to the Bank the duplicate of this letter,
iii) authorising the Bank to accept instructions and confirmations
in connection with the operation of the Overdraft signed in
accordance with the Bank's signing mandate current from time to
time,
iv) appointing the Parent to act as agent of he Borrowers for the
purposes contemplated in Clause 6 above.
This offer will remain available for a period of one month from the
date of this letter after which it will lapse if not accepted.
Yours faithfully
for and on behalf of
BARCLAYS BANK PLC
/s/ J.A. Bullen
J.A. BULLEN
SENIOR CORPORATE MANAGER
Accepted on the terms and conditions stated herein pursuant to a
resolution of the Board of Directors (a certified true copy of which
is attached hereto).
For and on behalf of PRO BEL LIMITED
Director
Secretary/Director
Accepted on the terms and conditions stated herein pursuant to a
Resolution of the Board of Directors (a certified true copy of which
is attached hereto)
For and on behalf of Trilogy Broadcast Limited
Director
Secretary/Director
Accepted on the terms and conditions stated herein pursuant to a
Resolution of the Board of Directors (a certified true copy of which
is attached hereto)
For and on behalf of Pro-Bel Software Limited
Director
Secretary/Director
Accepted on the terms and conditions stated herein pursuant to a
Resolution of the Board of Directors (a certified true copy of which
is attached hereto)
For and on behalf of Xebec Electronic Production Services Limited
Director
Secretary/Director
SCHE DULE A
Foreign Currency Overdraft
The Foreign Currency Overdraft will be made available in any currency
(other than sterling) as previously agreed by and arranged with the
Bank, and which currency is freely transferable and available to the
Bank in the normal course of business.
The Foreign Currency Overdraft will be available on the Borrower's
foreign currency account at Reading International Services Branch with
interest charged at 1.5% per annum over the Bank's call loan rate
current from time to time. Interest together with other charges will
be debited to the Borrower's Foreign Currency Account at the Reading
International Services Branch quarterly in arrears in March, June,
September and December each year or at such other times as may be
determined by the Bank, and such interest will be calculated on the
basis of actual days elapsed over a 360 day a year.
SCHEDULE B
ANCILLARY FACILITIES
Negotiation of Sterling/Foreign Currency Cheques and Bills of Exchange
payable Abroad up to 50,000 Pounds Sterling
The Bank will purchase, with recourse, suitable foreign currency and
sterling cheques payable abroad and/or approved foreign currency or
sterling bills of exchange payable abroad. The suitability of those
cheques and bills of exchange which the Bank is prepared to purchase
is entirely at the discretion of the Bank, and is subject to the
Uniform Rules for the Collection of Commercial Paper (1978 Revision).
Pricing will be decided on a case by case basis.
A Spot & Forward Exchange Transaction Limit Up To 200,000 Pounds
Sterling
The SFET Facility covers the maximum liability of the Borrower to the
Bank outstanding at any time under contracts of not more t than twelve
months' duration for the forward purchase or sale of foreign
currencies, but excludes purchases or sales where the Bank is required
irrevocably to pay away funds prior to receiving firm confirmation of
incoming cover.
When wishing to utilise the SFET facility the Borrower should telephone
the Oxford City Office Branch of the Bank on (01865) 442156. All
payment and delivery instructions are to e advised to and processed by
the Branch and confirmed by letter at the earliest opportunity.
BOBS up to 200,000 pounds sterling
BACS up to 250,000 pounds sterling
To allow the Borrower(s) to make salary and/or credit payments
electronically.
Company Barclaycard up to 100,000 pounds sterling
To be used in accordance with the terms and conditions of use, current
from time to time, as detailed in the Agreement executed by the
Borrower(s).
<PAGE>
PRO-BEL LIMITED
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS HELD ON
20 December 1996 at Danehill Lower Earley
Present: Roger Henderson Michael Knight Graham Pitman
Ray Hartman David Steal Graham Roe
Derek Over Roger Stanwell
There was produced to the meeting a Facility Letter date 19th December
1996 from Barclays Bank PLC ("the Bank"), Oxford City Office (Old Bank)
to the Company setting out the terms and conditions upon which the Bank
is prepared to lend to the Company the sum of 3,000,000 pounds sterling
until 31 December 1996 by way of a on demand overdraft facilities.
IT WAS RESOLVED
1. That the terms and conditions of the overdraft as set out in the
said Facility Letter be and they are hereby approved and accepted.
2. That Roger Henderson and Ray Hartman be and is hereby authorised
to sign on behalf of the Company the copy of the said Facility Letter
to indicate acceptance of the terms and conditions.
3. That the Bank be and is hereby authorised to act in all matters
relating to the overdraft upon instructions from the Company signed in
accordance with the Bank's Mandate for the Company's Account with the
Bank, current from time to time.
I hereby certify the above to be a true extract from the Minutes of a
Meeting of the Board of Directors held on the date shown above.
/s/ Roger Henderson
For and on behalf of
PRO-BEL LIMITED
XEBEC ELECTRONIC PRODUCTION SERVICES LIMITED
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS HELD ON
20 December 1996 at Danehill Lower Earley
Present: Ray Hartman
Graham Pitman
There was produced to the meeting a Facility Letter date 19th December
1996 from Barclays Bank PLC ("the Bank"), Oxford City Office (Old Bank)
to the Company setting out the terms and conditions upon which the Bank
is prepared to lend to the Company the sum of 3,000,000 pounds sterling
until 31 December 1996 by way of a on demand overdraft facilities.
IT WAS RESOLVED
1. That the terms and conditions of the overdraft as set out in the
said Facility Letter be and they are hereby approved and accepted.
2. That Roger Henderson and Graham Pitman be and is hereby
authorised to sign on behalf of the Company the copy of the said
Facility Letter to indicate acceptance of the terms and conditions.
3. That the Bank be and is hereby authorised to act in all matters
relating to the overdraft upon instructions from the Company signed in
accordance with the Bank's Mandate for the Company's Account with the
Bank, current from time to time.
I hereby certify the above to be a true extract from the Minutes of a
Meeting of the Board of Directors held on the date shown above.
/s/ Raymond Hartman
For and on behalf of
XEBEC ELECTRONIC PRODUCTION SERVICES LIMITED
<PAGE>
TRILOGY BROADCAST LIMITED
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS HELD ON
20 December 1996 at Danehill Lower Earley
Present: Ray Hartman Phil White
Graham Pitman Tim Hardisty
Roger Stanwell
There was produced to the meeting a Facility Letter date 19th December
1996 from Barclays Bank PLC ("the Bank"), Oxford City Office (Old Bank)
to the Company setting out the terms and conditions upon which the Bank
is prepared to lend to the Company the sum of 3,000,000 pounds sterling
until 31 December 1996 by way of a on demand overdraft facilities.
IT WAS RESOLVED
1. That the terms and conditions of the overdraft as set out in the
said Facility Letter be and they are hereby approved and accepted.
2. That Raymond Hartman and Graham Pitman be and is hereby
authorised to sign on behalf of the Company the copy of the said
Facility Letter to indicate acceptance of the terms and conditions.
3. That the Bank be and is hereby authorised to act in all matters
relating to the overdraft upon instructions from the Company signed in
accordance with the Bank's Mandate for the Company's Account with the
Bank, current from time to time.
I hereby certify the above to be a true extract from the Minutes of a
Meeting of the Board of Directors held on the date shown above.
/s/ Raymond Hartman
For and on behalf of
TRILOGY BROADCAST LIMITED
<PAGE>
PRO-BEL SOFTWARE LIMITED
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS HELD ON
20 December 1996 at Danehill Lower Earley
Present: Ray Hartman Roger Meet
Derek Owen Matca Butler
Roger Henderson Neil Maycock
There was produced to the meeting a Facility Letter date 19th December
1996 from Barclays Bank PLC ("the Bank"), Oxford City Office (Old Bank)
to the Company setting out the terms and conditions upon which the Bank
is prepared to lend to the Company the sum of 3,000,000 pounds sterling
until 31 December 1996 by way of a on demand overdraft facilities.
IT WAS RESOLVED
1. That the terms and conditions of the overdraft as set out in the
said Facility Letter be and they are hereby approved and accepted.
2. That Raymond Hartman and Roger Henderson be and is hereby
authorised to sign on behalf of the Company the copy of the said
Facility Letter to indicate acceptance of the terms and conditions.
3. That the Bank be and is hereby authorised to act in all matters
relating to the overdraft upon instructions from the Company signed in
accordance with the Bank's Mandate for the Company's Account with the
Bank, current from time to time.
I hereby certify the above to be a true extract from the Minutes of a
Meeting of the Board of Directors held on the date shown above.
/s/ Raymond Hartman
For and on behalf of
TRILOGY BROADCAST LIMITED
BARCLAYS BANK PLC
Oxford Corporate Banking Centre
P.O. Box 858, Oxford OX1 3YP
PRIVATE AND CONFIDENTIAL
The Directors Your Ref:
H/JEF/SH
Pro-Bel Limited Our Ref: 01865 442139
Triology Broadcast Limited Fax No.: 01865
442570
Pro-Bel Software Limited
Xebec Electronic Production Services Ltd. 19th December
1996
Danehill, Lower Early
Reading RG6 4PB
Dear Sirs
BANK FACILITY - PARENTAL COMPANY LOAN
I write to confirm the arrangement we have discussed with Mike Knight,
Financial Director relating to parental company Loan from Chyron Inc.
Pro-Bel Limited's Cash Flow Forecast for 1997 linked to the level of
Bank support we now propose suggest that Pro-Bel will be in a position
to effect a reduction of some 1 million pounds sterling in its Loan
from Chyron Corporation during the period at the rate of 250,000 pounds
sterling per quarter commencing the 31st March 1997.
In recognising that the Bank facility will be utilised for the above
purpose we seek your confirmation and that of Chyron Corporation that
these payments will not be made if cumulative cash or trading
performance is 15% worse than forecast on a cumulative basis measured
quarterly throughout the year unless the Bank consents to the
arrangement beforehand.
We should be grateful if you would confirm the agreement of both Pro-
bel Limited and Chyron Corporation to this arrangement by having
representatives of both parties sign and return to us a copy of this
letter.
Yours sincerely
/s/ J.A. Bullen
J.A. BULLEN
SENIOR CORPORATE MANAGER
BARCLAYS MERCANTILE
Mr. M Knight
Finance Director
Pro-Bel Limited
Danehill
Lower Earley
Reading
Bershire
RG6 4PB
20 December 1996
Dear Mr. Knight,
Re: LEASE PURCHASE FACILITY OFFER
We are pleased to confirm our willingness to offer Lease Purchase
facilities in respect of various items of plan & machinery and computer
equipment.
This offer is made subject to the following conditions;
1. A maximum advance of 750,000 pounds sterling
2. A maximum lease term of 60 months in respect of surface mount
machinery and telephone
system only. All other assets to be subject to a maximum term of
36 months.
3. A minimum deposit equivalent to 10% of the capital cost (+ full VAT
where applicable)
4. Ongoing sight and satisfaction with quarterly management accounts.
5. Sight and satisfaction with 1996 audited accounts by 30 June 1997
6. Cross guarantees of all Pro-Bel Ltd subsidiary companies
7. All suppliers to be bona fide
8. These facilities are available for drawdown until 31 December 1997
In addition an agency purchase facility has been approved which I hope
will be of great benefit. This facility is designed to simplify
utilisation of the lease purchase facility and is especially beneficial
when there are a number of suppliers. The agency will allow Pro-Bel
to acquire assets (acting as our agents) thus controlling expenditure
and then to seek reimbursement from Barclays Mercantile under an hire
purchase agreement. In order to enact the agency I would be grateful
if you would sign the document attached and return it together with a
signed copy of this offer letter.
Our willingness to provide these facilities is upon the condition that,
in our opinion, there is no adverse change in your financial
circumstances before we purchase the equipment.
This offer is valid for a period of fourteen days from today;
nevertheless we reserve the right to revise our terms should monetary,
economic or taxation conditions change before we purchase the
equipment.
We welcome the opportunity to be of service to you. Please signify
your acceptance of the above terms by signing and returning the
enclosed additional copy of this letter.
Yours sincerely,
/s/ David Bye
David Bye
Branch Manager
For and on behalf of
Roger Henderson
Pro-Bel Ltd.
Authorised to sign
BARCLAYS BANK PLC
Oxford Corporate Banking Centre
P.O. Box 858, Oxford OX1 3YP
PRIVATE AND CONFIDENTIAL
The Directors Your Ref:
H/JEF/SH
Pro-Bel Limited Our Ref: 01865 442139
Triology Broadcast Limited Fax No.: 01865
442570
Pro-Bel Software Limited
Xebec Electronic Production Services Ltd. 19th December
1996
Danehill, Lower Early
Reading RG6 4PB
Dear Sirs
Barclays Bank PLC (the "Bank") is pleased to offer to provide a Bonds,
Guarantees and/or Indemnities facility (the "Facility") of up to
300,000 pounds sterling (three hundred pounds sterling) or its currency
equivalent ("Facility Amount") to Pro-Bel Limited (the "Borrower")
subject to the terms and conditions set out below.
1. Interpretation
For the purpose of this Facility Letter:
a) "Indemnities" means the counter-indemnities from time to time held
by the Bank in relation to the Obligations and, unless the context
otherwise requires, includes each or any of them;
b) "Obligations" means the Bonds, Guarantees and/or Indemnities issued
by the Bank (or its correspondents) under the Facility and, unless the
context otherwise requires, includes each or any of them;
c) "Sterling Equivalent" means, in relation to an amount denominated
in foreign currency, the amount of Sterling which would be purchased
with such foreign currency amount at the Bank's spot rate for the
purchase of Sterling with such foreign currency on the date of which
conversion is required;
d) "Utilised Amount" means, on the date on which the calculation is
required, the maximum amount of all liabilities due, owing or incurred,
whether actually or contingently and whether presently payable or not,
by the Bank under or in connection with the Obligations including where
Obligations are denominated in foreign currencies the Sterling
Equivalent of the relevant liabilities of the Bank in relation to such
Obligations.
2. Utilisation
The Bank agrees to issue Obligations in Sterling and/or foreign
currencies when requested by the Borrower, provided that:
a) No Obligation may be issued if, as a result, the Utilised Amount
would exceed the Facility Amount;
b) No Obligation may be issued until the acceptance formalities
detailed in clause 8 have been completed;
c) No Obligation may be issued after 31 December 1997
d) The terms of the relevant Obligation have been approved by the
Bank;
e) The Borrower has provided all information in connection with the
relevant Obligation required by the Bank;
f) The Borrower has agreed to pay the fees required by the Bank in
relation to the relevant Obligation;
g) An Obligation will not be issued until the Bank has satisfied
itself that it holds an Indemnity in respect of such Obligation or, as
the case may be, such Obligation is covered by an existing Indemnity.
3. Availability
(a) The Bank may, in its sole discretion at any time:
(i) cancel its commitment to issue any further Obligation (if
unissued); and/or
(ii) demand from the Borrower the payment of all amounts (if any)
outstanding under this Facility Letter whereupon the same shall be
immediately due and payable; and/or
(iii) require the Borrower on demand to deposit and maintain with the
Bank an amount in Sterling sufficient to cover the Utilised Amount and
require the Borrower to give security over the money so deposited
(together with interest accruing thereon) in form and substance
satisfactory to the Bank to secure the Borrower's liabilities to the
Bank under this Facility Letter and/or the Indemnities.
(b) Any sum of money at any time standing to the credit of the
Borrower with the Bank in any currency upon any account or otherwise
may be applied by the Bank, at any time after exercising the Bank's
right under clause 3 (a) above (without notice to the Borrower), in or
towards the payment or discharge of any indebtedness now or
subsequently owing to the Bank by the Borrower hereunder and/or under
the Indemnities and the Bank may use any such money to purchase any
currency or currencies required to effect such application.
4. Security and/or Guarantee(s)
The Borrower's obligations hereunder will be secured by any security
which is now held, or hereafter may be held, by the Bank to secure all
moneys and liabilities which shall from item to time be due, owing or
incurred to the Bank by the borrower, whether actually or contingently.
5. Fees
All facilities are to be charged in accordance with published tariff.
6. Information
The Parent undertakes to provide the Bank with copies of its audited
consolidated Profit and Loss account and Balance Sheet as soon as they
are available and not later than 180 days from the end of each
accounting reference period together with any other information which
the Bank may reasonably request from time to time.
7. Governing Law
This Facility Letter shall be governed by and construed in accordance
with English law.
8. Acceptance
The Facility will become available to the Borrower for drawing only
upon receipt by the Bank not later than the close of business on 1st
March 1997 (or such later date as the Bank may agree) of the following
in form and substance satisfactory to the Bank:
a) the enclosed duplicate of this letter duly signed on the Borrower's
behalf as evidence ofacceptance of the terms and conditions stated
therein,
b) a certified true copy of a resolution of the Borrower's Board of
Directors:
(i) accepting the Facility and this offer on the terms and conditions
stated herein;
(ii) authorising a specified person, or persons, to countersign and
return to the Bank the enclosed duplicate of this Facility Letter; and
(iii) specifying the names of those officers of the Borrower whose
instruction (jointly or alone) the Bank is authorised to accept in all
matters concerning the Facility and this offer once accepted and
confirmed specimens of the signatures of those officers referred to in
(ii) and herein, if not already known to the Bank; and
Yours faithfully
for & on behalf of
Barclays Bank PLC
/s/ JA Bullen
JA BULLEN
SENIOR CORPORATE MANAGER
Accepted on the terms and conditions stated herein, pursuant to a
resolution of the Board of Directors (a certified copy of which is
attached hereto).
For & on behalf of
PRO-BEL LIMITED
DIRECTOR
Accepted on the terms and conditions stated herein, pursuant to a
resolution of the Board of Directors (a certified copy of which is
attached hereto).
For & on behalf of
XEBEC ELECTRONIC PRODUCTION SERVICES LIMITED
DIRECTOR
Accepted on the terms and conditions stated herein, pursuant to a
resolution of the Board of Directors (a certified copy of which is
attached hereto).
For & on behalf of
TRILOGY BROADCAST LIMITED
DIRECTOR
Accepted on the terms and conditions stated herein, pursuant to a
resolution of the Board of Directors (a certified copy of which is
attached hereto).
For & on behalf of
PRO-BEL SOFTWARE LIMITED
DIRECTOR
PRO-BEL LIMITED
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS HELD ON
20 December 1996 at Danehill Lower Earley
Present: Roger Henderson Michael Knight Graham Pitman
Rayond Hartman David Steel Graham Roe
Derek Owen Roger Stanwell
There was produced to the meeting a Facility Letter dated 19th December
1996 from Barclays Bank PLC ("the Bank"), Oxford City Office to the
Company setting out the terms and conditions upon which the Bank is
prepared to provide a Bond, Guarantees and Indemnities facility of
300,000 pounds sterling until 31st December 1997.
IT WAS RESOLVED
1. That the terms and conditions of the Bonds, Guarantees and
Indemnities facility as set out in the said Facility Letter be and they
are hereby approved and accepted.
2. That Roger Henderson be and is hereby authorised to sign on behalf
of the Company the copy of the said Facility Letter to indicate
acceptance of the terms and conditions.
3. That the Bank be and is hereby authorised to act in all matters
relating to the facility upon instructions from the Company signed in
accordance with the Bank's mandate for the Company's account with the
Bank, current from time to time.
I hereby certify the above to be true extract from the Minutes of a
Meeting of the Board of Directors held on the date shown above.
/s/ Roger Henderson
FOR AND ON BEHALF OF
PRO-BEL LIMITED
XEBEC ELECTRONIC PRODUCTION SERVICES LIMITED
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS HELD ON
20 December 1996 at Danehill Lower Earley
Present: Roger Henderson
Graham Pitman
There was produced to the meeting a Facility Letter dated 19th December
1996 from Barclays Bank PLC ("the Bank"), Oxford City Office to the
Company setting out the terms and conditions upon which the Bank is
prepared to provide a Bond, Guarantees and Indemnities facility of
300,000 pounds sterling until 31st December 1997.
IT WAS RESOLVED
1. That the terms and conditions of the Bonds, Guarantees and
Indemnities facility as set out in the said Facility Letter be and they
are hereby approved and accepted.
2. That Graham Pitman be and is hereby authorised to sign on behalf
of the Company the copy of the said Facility Letter to indicate
acceptance of the terms and conditions.
3. That the Bank be and is hereby authorised to act in all matters
relating to the facility upon instructions from the Company signed in
accordance with the Bank's mandate for the Company's account with the
Bank, current from time to time.
I hereby certify the above to be true extract from the Minutes of a
Meeting of the Board of Directors held on the date shown above.
/s/ Graham Pitman
FOR AND ON BEHALF OF
PRO-BEL LIMITED
TRILOGY BROADCAST LIMITED
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS HELD ON
20 December 1996 at Danehill Lower Earley
Present: Raymond Hartman Roger Stanwell
Graham Pitman Phil White
There was produced to the meeting a Facility Letter dated 19th December
1996 from Barclays Bank PLC ("the Bank"), Oxford City Office to the
Company setting out the terms and conditions upon which the Bank is
prepared to provide a Bond, Guarantees and Indemnities facility of
300,000 pounds sterling until 31st December 1997.
IT WAS RESOLVED
1. That the terms and conditions of the Bonds, Guarantees and
Indemnities facility as set out in the said Facility Letter be and they
are hereby approved and accepted.
2. That Raymond Hartman be and is hereby authorised to sign on behalf
of the Company the copy of the said Facility Letter to indicate
acceptance of the terms and conditions.
3. That the Bank be and is hereby authorised to act in all matters
relating to the facility upon instructions from the Company signed in
accordance with the Bank's mandate for the Company's account with the
Bank, current from time to time.
I hereby certify the above to be true extract from the Minutes of a
Meeting of the Board of Directors held on the date shown above.
/s/ Raymond Hartman
FOR AND ON BEHALF OF
PRO-BEL LIMITED
PRO-BEL SOFTWARE LIMITED
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS HELD ON
20 December 1996 at Danehill Lower Earley
Present: Raymond Hartman Roger Meath
Derek Own Malcolm Butler
Roger Henderson Neil Maycock
There was produced to the meeting a Facility Letter dated 19th December
1996 from Barclays Bank PLC ("the Bank"), Oxford City Office to the
Company setting out the terms and conditions upon which the Bank is
prepared to provide a Bond, Guarantees and Indemnities facility of
300,000 pounds sterling until 31st December 1997.
IT WAS RESOLVED
1. That the terms and conditions of the Bonds, Guarantees and
Indemnities facility as set out in the said Facility Letter be and they
are hereby approved and accepted.
2. That Roger Henderson be and is hereby authorised to sign on behalf
of the Company the copy of the said Facility Letter to indicate
acceptance of the terms and conditions.
3. That the Bank be and is hereby authorised to act in all matters
relating to the facility upon instructions from the Company signed in
accordance with the Bank's mandate for the Company's account with the
Bank, current from time to time.
I hereby certify the above to be true extract from the Minutes of a
Meeting of the Board of Directors held on the date shown above.
/s/ Roger Henderson
FOR AND ON BEHALF OF
PRO-BEL LIMITED
BARCLAYS BANK PLC
Oxford Corporate Bank ing Centre
P.O. Box 858, Oxford OX1 3YP
PRIVATE AND CONFIDENTIAL
The Directors Your Ref:
H/JEF/SH
Pro-Bel Limited Our Ref: 01865 442139
Triology Broadcast Limited Fax No.: 01865
442570
Pro-Bel Software Limited
Xebec Electronic Production Services Ltd. 19th December
1996
Danehill, Lower Early
Reading RG6 4PB
Dear Sirs
FINANCIAL CRITERIA
I thought that it would be helpful to write to indicate the financial
criteria which the Bank expects Pro-bel Limited (and its subsidiary
companies) ("the Company") to observe in connection with the facilities
made available to it by the Bank under our letter dated 19th December
1996.
These criteria are not intended to create legally binding covenants on
the Company but to indicate the guidelines within which the Bank
expects the Company to operate. The contents of this letter are not
intended to affect the above facilities and each facility shall remain
repayable on demand by the Bank at any time, whether or not the Company
has failed to observe any of the financial criteria.
Financial Criteria
DEBTOR FORMULA
(BOOK DEBTS):
The Borrower shall ensure that the total amount of indebtedness (actual
and contingent) incurred by the Borrower to the Bank shall at all times
be covered at least one and a half times by the aggregate value of
unencumbered book debts receivable by the Borrower from debtors (except
its subsidiaries) which are not overdue by more than 30 days. Overseas
debtors will be covered by an appropriate N.C.M. Policy. The Borrower
shall, within 30 days of the last day of the month under review provide
to the Bank such information as the Bank may reasonably require to
enable it to monitor compliance with this formula. Notwithstanding
this provision, the facilities offered under this letter shall remain
repayable on demand by the Bank at any time, whether or not the
Borrower has complied with the above formula.
PRO-BEL INC.:
During the term of this Facility neither the Borrower nor any of its
subsidiaries will provide any further financial accommodation or make
any investments by way of shares or debentures (secured or unsecured)
or purchase fixed asset in Pro-bel Inc save for this which have already
been agreed by the Bank.
EVENT OF DEFAULT:
By its nature the facility is repayable upon demand and the Bank
retains the right, particularly in the event of a breach of the above
conditions. I would be grateful if you could please sign and return the
attached copy of this letter by way of acknowledgement.
Yours faithfully
/s/ JA Bullen
JA BULLEN
SENIOR CORPORATE MANAGER
Accepted on the terms and conditions contained herein.
For & on behalf of
PRO-BEL LIMITED
Accepted on the terms and conditions contained herein.
For & on behalf of
XEBEC ELECTRONIC PRODUCTION SERVICES LIMITED
Accepted on the terms and conditions contained herein.
For & on behalf of
TRILOGY BROADCAST LIMITED
Accepted on the terms and conditions contained herein.
For & on behalf of
PRO-BEL SOFTWARE LIMITED
Accepted on the terms and conditions contained herein.
Indemnification Agreement: Chyron Corporation (New York)
AGREEMENT, effective as of November 19, 1996 between Chyron
Corporation, a New York corporation (the "Company"), and Roi Agneta
(the "Indemnitee").
WHEREAS, it is essential to the Company to remain and attract as
directors and officers the most capable persons available; and
WHEREAS, Indemnitee is a director or officer of the Company; and
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and officers of public companies in today's environment; and
WHEREAS, the By-Laws of the Company provide: "The Corporation shall
indemnify any person to the full extent permitted, and in the manner
provided, by the New York Business Corporation Law ["BCL"], as the
same now exists or may hereafter be amended" and
WHEREAS, this Agreement satisfies the provision of Section 721 of
the BCL: and
WHEREAS, in recognition of the fact that the Indemnitee continues to
serve as a director or officer of the Company in part in reliance on
the aforesaid By-Laws and Indemnitee's need for substantial
protection against personal liability in order to enhance
Indemnitee's continued service to the Company in an effective
manner, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such By-Laws will be
available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such By-Laws or any change in the
composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), and due to the potential
inadequacy of the Company's directors' and officers' liability
insurance coverage, the Company wishes to provide in this Agreement
for the indemnification of, and the advancing of expenses to,
Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of
Indemnitee under the Company's directors' and officers' liability
insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to service the Company directly or, in its request, with
another enterprise, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Certain Definitions.
(a) Approved Law Firm: shall mean any law firm (i) located in New
York City and (ii) rated "av" by Martindale-Hubbel Law Directory.
(b) Board of Directors: shall mean the Board of Directors of the
Company.
(c) Change in Control: shall be deemed to have occurred if (i) any
"person" (as such term isused in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than any
stockholder (and/or affiliate of such stockholder) on the date of
this Agreement or a trustee or other fiduciary holding securities
under an employee benefit plan of the Company in substantially the
same portions as their ownership of stock of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly of securities of the Company
representing 15 percent or more of the totaling voting power
represented by the Company's then outstanding Voting Securities
(such person being hereinafter referred to as an "Acquiring
Person"), or (ii) during any 24- consecutive-month period,
individuals who at the beginning of such period constitute the
Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least two-
thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the shareholders
of the Company approve a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which
would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities
of the surviving entry) at least 80 percent of the total voting
power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all the
Company's assets.
(d) Claim: shall mean any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation, whether
conducted by the company or any other party, that Indemnitee in
good faith believes might lead to the institution of any such
action, suite or proceeding, whether civil, criminal,
administrative, investigative or other.
(e) Expenses: shall include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, being a witness in or
participate in, any Claim relating to any Indemnifiable Event,
together with interest, computed at the Company's average cost of
funds for short-term borrowings, accrued from the date of incurrence
of such expense to the date Indemnitee receives reimbursement
therefore.
(f) Indemnifiable Event: shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer,
employee, agent or fiduciary of the Company, or is or was serving at
the request of the Company as a director, officer, employee,
trustee, agent or fiduciary of another corporation of any type or
kind, domestic or foreign, partnership, joint venture, trust,
employee benefit plan or other enterprise, or by reason of anything
done or not done by Indemnitee in such capacity. Without limitation
of any indemnification provided hereunder, an Indemnitee serving (i)
another corporation, partnership, joint venture or trust of which 10
percent or more of the voting power or residual economic interest is
held, directly or indirectly, by the Company, or (ii) any employee
benefit plan of the Company or an entity referred to in clause (i),
in any capacity shall be deemed to be doing so at the request of the
Company.
(g) Reviewing Party: shall be (i) the Board of Directors acting by
quorum consisting of directors who are not parties to the particular
Claim with respect to which Indemnitee is seeking indemnification,
or (ii) if such a quorum is not obtainable or, even if obtainable,
if a quorum of disinterested directors so directs, (A) the Board of
Directors upon the opinion in writing of independent legal counsel
that indemnification is proper in the circumstances because the
applicable standard of conduct set forth in Section 2 of this
Agreement and in Section 721 of the BCL has been met by the
Indemnitee or (B) the shareholders upon a finding that the
Indemnitee has met the applicable standard of conduct referred to in
clause (ii)(A) of this definition.
(h) Voting Securities: shall mean any securities of the Company
which vote generally in the election of the directors.
2. Basic Indemnification Arrangement.
If Indemnitee was, is or becomes at any time a party to, or witness
or other participant in, or is threatened to be made a party to, or
witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 days after written
demand is presented to the Company, against any and all Expenses,
judgements, fines (including excise taxes assessed on an Indemnitee
with respect to an employee benefit plan), penalties and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with, or in respect of, such
Expenses, judgements, fines, penalties or amounts paid in
settlement) of such Claim. If so requested by Indemnitee, the
Company shall advance (within two business days of such request) any
and all Expenses to Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary; (i)
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement if a judgement or other final adjudication adverse to the
Indemnitee establishes that Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or
that Indemnitee personally gained in fact a financial profit or
other advantage to which Indemnitee was not legally entitled and
(ii) prior to a Change in Control Indemnitee shall not be entitled
to indemnification pursuant to this Agreement in connection
with any Claim initiated by Indemnitee against the Company or any
director or officer of the Company unless the Company has jointed in
or consented to the initiation of such Claim.
3. Payment.
Notwithstanding the provision of Section 2, the obligations of the
Company under Section 2 (which shall in no event be deemed to
preclude any right to indemnification to which Indemnitee may be
entitled under Section 723(a) of the BCL) shall be subject to the
condition that the Reviewing Party shall have authorized such
indemnification in the specific case by having determined that
Indemnitee is permitted to be indemnified under the applicable
standard of conduct set forth in Section 2 and applicable law. The
Company shall promptly call a meeting of the Board of Directors with
respect to a Claim and agrees to use its best efforts to facilitate
a prompt determination by the Receiving Party with respect to the
Claim. Indemnitee shall be afforded the opportunity to make
submissions to the Reviewing Party with respect to the Claim. The
obligation of the company to make an Expense Advance pursuant to
Section 2 shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under Section 2 and applicable
law, the Company shall be entitled to be reimbursed by Indemnitee
(who hereby agrees and undertakes to the full extent required by
paragraph (a) of Section 725 of the BCL to reimburse the Company)
for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced legal proceedings in a court of competent
jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the
Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee
shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). If there has been no determination by the
Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or
in part under applicable law, Indemnitee shall have the right to
commence litigation in any court in the State of New York having
subject matter jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or challenging any
such determination by the Reviewing Party or any aspect thereof, and
the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Indemnitee.
4. Change in Control.
If there is a Change in Control of the Company (other than a Change
in Control which has been approved by a majority of the Board of
Directors who were directors immediately prior to such Change in
Control) then (i) all determinations by the Company pursuant to the
first sentence of Section 3 hereof and Section 723(b) of the BCL
shall be made pursuant to subparagraph (1) or (2)(A) of such Section
723(b) and (ii) with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or By-
law of the Company now or hereinafter in effect relating to Claims
for Indemnifiable Events (including, but not limited to, any option
to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of
the BCL) the Company (including the Board of Directors) shall seek
legal advice from (and only from) special, independent counsel
selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld), and who has not otherwise
performed services for the Company (or any subsidiary of the
Company) or the Acquiring Person (or any affiliate or associate of
such Acquiring Person) within the last five years (other than in
connection with such matters) or indemnitee. Unless Indemnitee has
theretofore selected counsel pursuant to this Section 4 and such
counsel has been approved by the Company, any Approved Law Firm
shall be deemed to satisfy the requirements set forth above. Such
counsel, among otherthings, shall render its written opinion to the
Company, the Board of Directors and Indemnitee as to whether and
to what extent the Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees
of the special, independent counsel referred to above and to fully
indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising our of or
relating to this Agreement or its engagement pursuant hereto. As
used in this Section 4, the terms "affiliate" and "associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended and in effect on the date of this Agreement.
5. Indemnification for Additional Expenses.
The Company shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee, shall
(within two business days of such request) advance such expenses to
Indemnitee, which are incurred by Indemnitee in connection with
any claim asserted or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under
this Agreement or any other agreement or By-law of the Company now
or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery under any directors' and officers' liability
insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, advance expenses payment or insurance recovery, as
the case may be.
6. Partial Indemnity, Etc.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the
Expenses, judgements, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the
portion thereto to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee shall be
indemnified, to the extent permitted by law, against all Expenses
incurred in connection with such Indemnifiable Event. In connection
with any determination by the Reviewing Party or otherwise as to
whether Indemnitee is entitled to be indemnified hereunder, the
burden of proof shall, to the extent permitted by law, be on the
Company to establish that Indemnitee is not so entitled.
7. Presumption.
For purposes of this Agreement, the termination of any claim,
action, suite or proceeding, whether civil or criminal, by
judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere or its
equivalent, shall not create a presumption that Indemnitee did not
meet any particular standard of conduct or have any particular
belief or that a court has determined that indemnification is not
permitted by applicable law.
8. Nonexclusivity, Etc.
The rights of the Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the By-laws of the Company,
the BCL or otherwise. To the extent that a change in the BCL
(whether by statue or judicial decision) permits greater
indemnification by agreement than would be afforded currently under
the By-laws of the Company and this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.
9. Liability Insurance
To the extent the Company maintains an insurance policy or policies
providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for
any director or officer of the Company.
10. Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or on behalf of the Company or
any affiliate of the Company against Indemnitee, Indemnitee's
spouse, heirs, executors or personal or legal representatives after
the expiration of two years from the date of accrual of such cause
of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted
by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter
period shall govern.
11. Amendments, Etc. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of
the rights of recovery of Indemnitee, who shall execute all papers
required and shall do everything that may be necessary to secure
such rights, including the execution of such documents necessary to
enable the Company effectively to bring suit to enforce such rights.
13. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any
claim made against Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance policy, By-law or
otherwise) of the amounts otherwise Indemnifiable hereunder.
14. Specific Performance. The parties recognize that if any
provision of this Agreement is violated by the Company, Indemnitee
may be without an adequate remedy at law. Accordingly, in the event
of any such violation, the Indemnitee shall be entitled, if
Indemnitee so elects, to institute proceedings, either at law or in
equity, to obtain damages, to enforce specific performance, to
enjoin such violation, or to obtain any relief or any
combination of the foregoing as Indemnitee may elect to pursue.
15. Binding Effect, Etc. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company),
assigns, spouses, heirs, and personal and legal representatives.
This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of the
Company or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be
severable if any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court
of competent jurisdication to be invalid, void or other wise
unenforceable, and the remaining provisions shall remain
enforceable to the fullest extent permitted by law.
17. Governing Law. This Agreement shall be governed by, and be
construed and enforced in accordance with, the laws of the State of
New York applicable to contracts made and to be performed in such
state without giving effect to the principles of conflicts of laws.
Executed this 19th day of November, 1996.
CHYRON CORPORATION
/s/Michael Wellesley-Wesley
Michael Wellesley-Wesley
Chief Executive Officer
/s/Roi Agneta
Roi Agneta
Idemnification Agreement: Chyron Corporation (New York)
AGREEMENT, effective as of November 19, 1996 between Chyron
Corporation, a New York corporation (the "Company"), and Sheldon
Camhy (the "Indemnitee").
WHEREAS, it is essential to the Company to remain and attract as
directors and officers the most capable persons available; and
WHEREAS, Indemnitee is a director or officer of the Company; and
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and officers of public companies in today's environment; and
WHEREAS, the By-Laws of the Company provide: "The Corporation shall
indemnify any person to the full extent permitted, and in the manner
provided, by the New York Business Corporation Law ["BCL"], as the
same now exists or may hereafter be amended" and
WHEREAS, this Agreement satisfies the provision of Section 721 of
the BCL: and
WHEREAS, in recognition of the fact that the Indemnitee continues to
serve as a director or officer of the Company in part in reliance on
the aforesaid By-Laws and Indemnitee's need for substantial
protection against personal liabiity in order to enhance
Indemnitee's continued service to the Company in an effective
manner, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such By-Laws will be
available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such By-Laws or any change in the
composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), and due to the potential
inadequacy of the Company's directors' and officers' liability
insurance coverage, the Company wishes to provide in this Agreement
for the indemnification of, and the advancing of expenses to,
Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of
Indemnitee under the Company's directors' and officers' liability
insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to service the Company directly or, in its request, with
another enterprise, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Certain Definitions.
(a) Approved Law Firm: shall mean any law firm (i) located in New
York City and (ii) rated "av" by Martindale-Hubbel Law Directory.
(b) Board of Directors: shalll mean the Board of Directors of the
Company.
(c) Change in Control: shall be deemed to have occured if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than any
stockholder (and/or affiliate of such stockholder) on the date of
this Agreement or a trustee or other fiduciary holding securities
under an employee benefit plan of the Company in substantially the
same portions as their ownership of stock of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly of securities of the Company
representing 15 percent or more of the totaling voting power
represented by the Company's then outstanding Voting Securities
(such person being hereinafter referred to as an "Acquiring
Person"), or (ii) during any 24-consecutive-month period,
individuals who at the beginning of such period constitute the Board
of Directors of the Company and any new director whose election by
the Board of Directors or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a majority thereof, or (iii) the shareholders of the
Company approve a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would
result in the Voting Securities of the Comany outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities
of the survivng entry) at least 80 percent of the total voting power
repreented by the Voting Securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation,
or (iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's
assets.
(d) Claim: shall mean any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation, whether
conducted by the company or any other party, that Indemnitee in
good faith believes might lead to the institution of any such
action, suite or proceeding, whether civil, criminal,
administrative, investigative or other.
(e) Expenses: shall include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, being a witness in or
participate in, any Claimrelating to any Indemnifiable Event,
together with interest, computed at the Company's average cost of
funds for short-term borrowings, accrued from the date of incurrence
of such expense to the date Indemnitee receives reimbursement
therefore.
(f) Indemnifiable Event: shall mean any event or occurence related
to the fact that Indemnitee is or was a director, officer, employee,
agent or fiduciary of the Company, or is or was serving at the
request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation of any type or kind,
domestic or foreign, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of anything done or
not done by Indemnitee in such capacity. Without limitation of
any indemnification provided hereunder, an Indemnitee serving (i)
another corporation, partnership, joint venture or trust of which 10
percent or more of the voting power or residual economic interest is
held, directly or indirectly, by the Company, or (ii) any employee
benefit plan of the Company or an entity referred to in clause (i),
in any capacity shall be deemed to be doing so at the request of the
Company.
(g) Reviewing Party: shall be (i) the Board of Directors acting by
quorum consisting of directors who are not parties to the particular
Claim with respect to which Indemnitee is seeking indemnification,
or (ii) if such a quorum is not obtainable or, even if obtainable,
if a quorum of disinterested directors so directs, (A) the Board of
Directors upon the opinion in writing of independent legal counsel
that indemnifiction is proper in the circumstances because the
applicable standard of conduct set forth in Section 2 of this
Agreement and in Section 721 of the BCL has been met by the
Indemnitee or (B) the shareholders upon a finding that the Indenitee
has met the applicable standard of conduct referred to in clause
(ii)(A) of this definition.
(h) Voting Securities: shall mean any securities of the Company
which vote generally in the election of the directors.
2. Basic Indemnification Arrangement.
If Indemnitee was, is or becomes at any time a party to, or witness
or other participant in, or is threatened to be made a party to, or
witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 days after written
demand is presented to the Company, against any and all Expenses,
judgements, fines (including excise taxes assessed on an Indemnitee
with respect to an employee benefit plan), penalties and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with, or in respect of, such
Expenses, judgements, fines, penalties or amounts paid in
settlement) of such Claim. If so requested by Indemnitee, the
Company shall advance (within two business days of such request) any
and all Expenses to Indemnitee (an "Expense Advance").
Notwithhstanding anything in this Agreement to the contrary; (i)
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement if a judgement or other final adjudication adverse to the
Indemnitee establishes that Indemnitee's acts were comitted in bad
faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or
that Indemnitee personally gained in fact a financial profit or
other advantage to which Indemniteewas not legally entitled and (ii)
prior to a Change in Control Indemnitee shall not be entitled to
indemnification pursuant to this Agreement in connection with any
Claim initiated by Indemnitee against the Company or any director or
officer of the Company unless the Company has jointed in or
consented to the initiation of such Claim.
3. Payment.
Notwithstanding the provision of Section 2, the obligations of the
Company under Section 2 (which shall in no event be deemed to
preclude any right to indemnification to which Indemnitee may be
entitled under Section 723(a) of the BCL) shall be subject to the
condition that the Reviewing Party shall have authorized such
indemnification in the specific case by having determined that
Indemnitee is permitted to be indemnified under the applicable
standard of conduct set forth in Section 2 and applicable law. The
Company shall promptly call a meeting of the Board of Directors with
respect to a Claim and agrees to use its best efforts to faciiate a
prompt determination by the Receiving Party with respect to the
Claim. Indemnitee shall be afforded the opportunity to make
submissions to the Reviewing Party with respect to the Claim. The
obligation of the company to make an Expense Advance ursuant to
Section 2 shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee
would not be permitted to be so indemnified under Section 2 and
applicable law, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees and undertakes to the full extent
required by paragraph (a) of Section 725 of the BCL to reimburse the
Company) for all such amounts theretofore paid; provided, however,
that if Indemnitee has commenced legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee
should be indemnified under applicable law, any determination made
by the Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee
shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). If there has been no determination by the
Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or
in part under applicable law, Indemnitee shall have the right to
commence litigation in any court in the State of New York having
subject matter jurisdication thereof and in which venue is proper
sekking an initial determination by the court or challenging any
such determination by the Reviewing Party or any aspect thereof, and
the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Indemnitee.
4. Change in Control.
If there is a Change in Control of the Company (other than a Change
in Control which has been approved by a majority of the Board of
Directors who were directors immediately prior to such Change in
Control) then (i) all determinations by the Company pursuant to the
first sentence of Section 3 hereof and Section 723(b) of the BCL
shall be made pursuant to subparagraph (1) or (2)(A) of such Section
723(b) and (ii) with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or By-
law of the Company now or hereinafter in effect relating to Claims
for Indemnifiable Events (including, but not limited to, any option
to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of
the BCL) the Company (including the Board of Directors) shall seek
legal advice from (and only from) special, independent counsel
selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld), and who has not otherwise
performed services for the Company (or any subsidiary of the
Company) or the Acquiring Person (or any affiliate or associate of
such Acquiring Person) within the last five years (other than in
connection with such matters) or indemnitee. Unless Indemnitee has
theretofore selected counsel pursuant to this Section 4 and such
counsel has been aproved by the Company, any Approved Law Firm shall
be deemed to satisfy the requirements set forth above. Such
counsel, among otherthings, shall render its written opinion to the
Company, the Board of Directors and Indemnitee as to whether and to
what extent the Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees
of the special, independent coursel referred to above and to fully
indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising our of or
relating to this Agreement or its engagement pursuant hereto. As
used in this Section 4, the terms "affiliate" and "associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended and in effect on the date of this Agreement.
5. Indemnification for Additional Expenses.
The Company shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee, shall
(within two business days of such request) advance such expenses to
Indemnitee, which are incurred by Indemnitee in connection with
any claim aserted or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under
this Agreement or any other agreement or By-law of the Company now
or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery under any directors' and officers' liability
insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, advance expenses payment or insurance recovery, as
the case may be.
6. Partial Indemnity, Etc.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the
Expenses, judgements, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the
portion thereto to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee shall be
indemnified, to the extent permitted by law, against all Expenses
incurred in connection with such Indemnifiable Event. In connection
with any determination by the Reviewing Party or otherwise as to
whether Indemnitee is entitled to be indemnified hereunder, the
burden of proof shall, to the extent permitted by law, be on the
Company to establish that Indemnitee is not so entitled.
7. Presumption.
For purposes of this Agreement, the termination of any claim,
action, suite or proceeding, whether civil or criminal, by
judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere or its
equivalent, shall not create a presumption that Indemnitee did not
meet any particular standard of conduct or have any
particular belief or that a court has determined that
indemnification is not permitted by applicable law.
8. Nonexclusivity, Etc.
The rights of the Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the By-laws of the Company,
the BCL or otherwise. To the extent that a change in the BCL
(whether by statue or judicial decision) permits greater
indemnification by agreement than would be afforded currently under
the By-laws of the Company and this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.
9. Liability Insurance
To the extent the Company maintains an insurance policy or policies
providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for
any director or officer of the Company.
10. Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or on behalf of the Company or
any affiliate of the Company against Indemnitee, Indemnitee's
spouse, heirs, executors or personal or legal representatives after
the expiration of two years from the date of accrual of such cause
of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted
by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter
period shall govern.
11. Amendments, Etc. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of
the rights of recovery of Indemnitee, who shall execute all papers
required and shall do everything that may be necessary to secure
such rights, including the execution of such documents necessary to
enable the Company effectively to bring suit to enforce such rights.
13. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any
claim made against Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance policy, By-law or
otherwise) of the amounts otherwise Indemnifiable hereunder.
14. Specific Performance. The parties recognize that if any
provision of this Agreement is violated by the Company, Indemnitee
may be without an adequate remedy at law. Accordingly, in the event
of any such violation, the Indemnitee shall be entitled, if
Indemnitee so elects, to institute proceedings, either at law or in
equity, to obtain damages, to enforce specific performance, to
enjoin such violation, or to obtain any relief or any
combination of the foregoing as Indemnitee may elect to pursue.
15. Binding Effect, Etc. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company),
assigns, spouses, heirs, and personal and legal representatives.
This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of the
Company or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be
severable if any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court
of competent jurisdiction to be invalid, void or other wise
unenforceable, and the remaining provisions shall remain
enforceable to the fullest extent permitted by law.
17. Governing Law. This Agreement shall be governed by, and be
construed and enforced in accordance with, the laws of the State of
New York applicable to contracts made and to be performed in such
state without giving effect to the principles of conflicts of laws.
Executed this 19th day of November, 1996.
CHYRON CORPORATION
/s/Michael Wellesley-Wesley
Michael Wellesley-Wesley
Chief Executive Officer
/s/Sheldon Camhy
Sheldon Camhy
Indemnification Agreement: Chyron Corporation (New York)
AGREEMENT, effective as of November 19, 1996 between Chyron
Corporation, a New York corporation (the "Company"), and James
Coppersmith (the "Indemnitee").
WHEREAS, it is essential to the Company to remain and attract as
directors and officers the most capable persons available; and
WHEREAS, Indemnitee is a director or officer of the Company; and
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and officers of public companies in today's environment; and
WHEREAS, the By-Laws of the Company provide: "The Corporation shall
indemnify any person to the full extent permitted, and in the manner
provided, by the New York Business Corporation Law ["BCL"], as the
same now exists or may hereafter be amended" and
WHEREAS, this Agreement satisfies the provision of Section 721 of
the BCL: and
WHEREAS, in recognition of the fact that the Indemnitee continues to
serve as a director or officer of the Company in part in reliance on
the aforesaid By-Laws and Indemnitee's need for substantial
protection against personal liability in order to enhance
Indemnitee's continued service to the Company in an effective
manner, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such By-Laws will be
available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such By-Laws or any change in the
composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), and due to the potential
inadequacy of the Company's directors' and officers' liability
insurance coverage, the Company wishes to provide in this Agreement
for the indemnification of, and the advancing of expenses to,
Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of
Indemnitee under the Company's directors' and officers' liability
insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to service the Company directly or, in its request, with
another enterprise, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Certain Definitions.
(a) Approved Law Firm: shall mean any law firm (i) located in New
York City and (ii) rated "av" by Martindale-Hubbel Law Directory.
(b) Board of Directors: shall mean the Board of Directors of the
Company.
(c) Change in Control: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than any
stockholder (and/or affiliate of such stockholder) on the date of
this Agreement or a trustee or other fiduciary holding securities
under an employee benefit plan of the Company in substantially the
same portions as their ownership of stock of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly of securities of the Company
representing 15 percent or more of the totaling voting power
represented by the Company's then outstanding Voting Securities
(such person being hereinafter referred to as an "Acquiring
Person"), or (ii) during any 24-consecutive-month period,
individuals who at the beginning of such period constitute the
Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least two-
thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the shareholders
of the Company approve a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which
would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities
of the surviving entry) at least 80 percent of the total voting
power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all the
Company's assets.
(d) Claim: shall mean any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation, whether
conducted by the company or any other party, that Indemnitee in good
faith believes might lead to the institution of any such action,
suite or proceeding, whether civil, criminal, administrative,
investigative or other.
(e) Expenses: shall include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, being a witness in or
participate in, any Claim relating to any Indemnifiable Event,
together with interest, computed at the Company's average cost of
funds for short-term borrowings, accrued from the date of incurrence
of such expense to the date Indemnitee receives reimbursement
therefore.
(f) Indemnifiable Event: shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee,
agent or fiduciary of the Company, or is or was serving at the
request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation of any type or kind,
domestic or foreign, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of anything done or
not done by Indemnitee in such capacity. Without limitation of any
indemnification provided hereunder, an Indemnitee serving (i)
another corporation, partnership, joint venture or trust of which 10
percent or more of the voting power or residual economic interest is
held, directly or indirectly, by the Company, or (ii) any employee
benefit plan of the Company or an entity referred to in clause (i),
in any capacity shall be deemed to be doing so at the request of the
Company.
(g) Reviewing Party: shall be (i) the Board of Directors acting by
quorum consisting of directors who are not parties to the particular
Claim with respect to which Indemnitee is seeking indemnification,
or (ii) if such a quorum is not obtainable or, even if obtainable,
if a quorum of disinterested directors so directs, (A) the Board of
Directors upon the opinion in writing of independent legal counsel
that indemnification is proper in the circumstances because the
applicable standard of conduct set forth in Section 2 of this
Agreement and in Section 721 of the BCL has been met by the
Indemnitee or (B) the shareholders upon a finding that the
Indemnitee has met the applicable standard of conduct referred to in
clause (ii) (A) of this definition.
(h) Voting Securities: shall mean any securities of the Company
which vote generally in the election of the directors.
2. Basic Indemnification Arrangement.
If Indemnitee was, is or becomes at any time a party to, or witness
or other participant in, or is threatened to be made a party to, or
witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 days after written
demand is presented to the Company, against any and all Expenses,
judgements, fines (including excise taxes assessed on an Indemnitee
with respect to an employee benefit plan), penalties and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with, or in respect of, such
Expenses, judgements, fines, penalties or amounts paid in
settlement) of such Claim. If so requested by Indemnitee, the
Company shall advance (within two business days of such request) any
and all Expenses to Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary; (i)
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement if a judgement or other final adjudication adverse to the
Indemnitee establishes that Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or
that Indemnitee personally gained in fact a financial profit or
other advantage to which Indemnitee was not legally entitled and
(ii) prior to a Change in Control Indemnitee shall not be entitled
to indemnification pursuant to this Agreement in connection
with any Claim initiated by Indemnitee against the Company or any
director or officer of the Company unless the Company has jointed in
or consented to the initiation of such Claim.
3. Payment.
Notwithstanding the provision of Section 2, the obligations of the
Company under Section 2 (which shall in no event be deemed to
preclude any right to indemnification to which Indemnitee may be
entitled under Section 723(a) of the BCL) shall be subject to the
condition that the Reviewing Party shall have authorized such
indemnification in the specific case by having determined that
Indemnitee is permitted to be indemnified under the applicable
standard of conduct set forth in Section 2 and applicable law. The
Company shall promptly call a meeting of the Board of Directors with
respect to a Claim and agrees to use its best efforts to facilitate
a prompt determination by the Receiving Party with respect to the
Claim. Indemnitee shall be afforded the opportunity to make
submissions to the Reviewing Party with respect to the Claim. The
obligation of the company to make an Expense Advance pursuant to
Section 2 shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under Section 2 and
applicable law, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees and undertakes to the full extent
required by paragraph (a) of Section 725 of the BCL to reimburse the
Company) for all such amounts theretofore paid; provided, however,
that if Indemnitee has commenced legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee
should be indemnified under applicable law, any determination made
by the Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee
shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). If there has been no determination by the
Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or
in part under applicable law, Indemnitee shall have the right to
commence litigation in any court in the State of New York having
subject matter jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or challenging any
such determination by the Reviewing Party or any aspect thereof, and
the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Indemnitee.
4. Change in Control.
If there is a Change in Control of the Company (other than a Change
in Control which has been approved by a majority of the Board of
Directors who were directors immediately prior to such Change in
Control) then (i) all determinations by the Company pursuant to the
first sentence of Section 3 hereof and Section 723(b) of the BCL
shall be made pursuant to subparagraph (1) or (2)(A) of such Section
723(b) and (ii) with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or By-
law of the Company now or hereinafter in effect relating to Claims
for Indemnifiable Events (including, but not limited to, any option
to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of
the BCL) the Company (including the Board of Directors) shall seek
legal advice from (and only from) special, independent counsel
selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld), and who has not otherwise
performed services for the Company (or any subsidiary of the
Company) or the Acquiring Person (or any affiliate or associate of
such Acquiring Person) within the last five years (other than in
connection with such matters) or indemnitee. Unless Indemnitee has
theretofore selected counsel pursuant to this Section 4 and such
counsel has been approved by the Company, any Approved Law Firm
shall be deemed to satisfy the requirements set forth above. Such
counsel, among otherthings, shall render its written opinion to the
Company, the Board of Directors and Indemnitee as to whether and to
what extent the Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees
of the special, independent counsel referred to above and to fully
indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising our of or
relating to this Agreement or its engagement pursuant hereto. As
used in this Section 4, the terms "affiliate" and "associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended and in effect on the date of this Agreement.
5. Indemnification for Additional Expenses.
The Company shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee, shall
(within two business days of such request) advance such expenses to
Indemnitee, which are incurred by Indemnitee in connection with
any claim asserted or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under
this Agreement or any other agreement or By-law of the Company now
or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery under any directors' and officers' liability
insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, advance expenses payment or insurance recovery, as
the case may be.
6. Partial Indemnity, Etc.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the
Expenses, judgements, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the
portion thereto to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee shall be
indemnified, to the extent permitted by law, against all Expenses
incurred in connection with such Indemnifiable Event. In connection
with any determination by the Reviewing Party or otherwise as to
whether Indemnitee is entitled to be indemnified hereunder, the
burden of proof shall, to the extent permitted by law, be on the
Company to establish that Indemnitee is not so entitled.
7. Presumption.
For purposes of this Agreement, the termination of any claim,
action, suite or proceeding, whether civil or criminal, by
judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere or its
equivalent, shall not create a presumption that Indemnitee did not
meet any particular standard of conduct or have any particular
belief or that a court has determined that indemnification is not
permitted by applicable law.
8. Nonexclusivity, Etc.
The rights of the Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the By-laws of the Company,
the BCL or otherwise. To the extent that a change in the BCL
(whether by statue or judicial decision) permits greater
indemnification by agreement than would be afforded currently under
the By-laws of the Company and this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.
9. Liability Insurance
To the extent the Company maintains an insurance policy or policies
providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for
any director or officer of the Company.
10. Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or on behalf of the Company or
any affiliate of the Company against Indemnitee, Indemnitee's
spouse, heirs, executors or personal or legal representatives after
the expiration of two years from the date of accrual of such cause
of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted
by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter
period shall govern.
11. Amendments, Etc. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all
papers required and shall do everything that may be necessary to
secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce
such rights.
13. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any
claim made against Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance policy, By-law or
otherwise) of the amounts otherwise Indemnifiable hereunder.
14. Specific Performance. The parties recognize that if any
provision of this Agreement is violated by the Company, Indemnitee
may be without an adequate remedy at law. Accordingly, in the event
of any such violation, the Indemnitee shall be entitled, if
Indemnitee so elects, to institute proceedings, either at law or in
equity, to obtain damages, to enforce specific performance, to
enjoin such violation, or to obtain any relief or any
combination of the foregoing as Indemnitee may elect to pursue.
15. Binding Effect, Etc. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company),
assigns, spouses, heirs, and personal and legal representatives.
This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of the
Company or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be
severable if any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court
of competent jurisdiction to be invalid, void or other wise
unenforceable, and the remaining provisions shall remain
enforceable to the fullest extent permitted by law.
17. Governing Law. This Agreement shall be governed by, and be
construed and enforced in accordance with, the laws of the State of
New York applicable to contracts made and to be performed in such
state without giving effect to the principles of conflicts of laws.
Executed this 19th day of November, 1996.
CHYRON CORPORATION
/s/Michael Wellesley-Wesley
Michael Wellesley-Wesley
Chief Executive Officer
/s/James Coppersmith
James Coppersmith
Indemnification Agreement: Chyron Corporation (New York)
AGREEMENT, effective as of November 19, 1996 between Chyron
Corporation, a New York corporation (the "Company"), and Daniel
DeWolf (the "Indemnitee").
WHEREAS, it is essential to the Company to remain and attract as
directors and officers the most capable persons available; and
WHEREAS, Indemnitee is a director or officer of the Company; and
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and officers of public companies in today's environment; and
WHEREAS, the By-Laws of the Company provide: "The Corporation shall
indemnify any person to the full extent permitted, and in the manner
provided, by the New York Business Corporation Law ["BCL"], as the
same now exists or may hereafter be amended" and
WHEREAS, this Agreement satisfies the provision of Section 721 of
the BCL: and
WHEREAS, in recognition of the fact that the Indemnitee continues to
serve as a director or officer of the Company in part in reliance on
the aforesaid By-Laws and Indemnitee's need for substantial
protection against personal liability in order to enhance
Indemnitee's continued service to the Company in an effective
manner, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such By-Laws will be
available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such By-Laws or any change in the
composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), and due to the potential
inadequacy of the Company's directors' and officers' liability
insurance coverage, the Company wishes to provide in this Agreement
for the indemnification of, and the advancing of expenses to,
Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of
Indemnitee under the Company's directors' and officers' liability
insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to service the Company directly or, in its request, with
another enterprise, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Certain Definitions.
(a) Approved Law Firm: shall mean any law firm (i) located in New
York City and (ii)
rated "av" by Martindale-Hubbel Law Directory.
(b) Board of Directors: shall mean the Board of Directors of the
Company.
(c) Change in Control: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than any
stockholder (and/or affiliate of such stockholder) on the date of
this Agreement or a trustee or other fiduciary holding securities
under an employee benefit plan of the Company in substantially the
same portions as their ownership of stock of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly of securities of the Company
representing 15 percent or more of the totaling voting power
represented by the Company's then outstanding Voting Securities
(such person being hereinafter referred to as an "Acquiring
Person"), or (ii) during any 24-consecutive-month period,
individuals who at the beginning of such period constitute the
Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the shareholders
of the Company approve a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which
would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities
of the surviving entry) at least 80 percent of the total voting
power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all the
Company's assets.
(d) Claim: shall mean any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation, whether
conducted by the company or any other party, that Indemnitee in
good faith believes might lead to the institution of any such
action, suite or proceeding, whether civil, criminal,
administrative, investigative or other.
(e) Expenses: shall include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, being a witness in or
participate in, any Claim relating to any Indemnifiable Event,
together with interest, computed at the Company's average cost of
funds for short-term borrowings, accrued from the date of incurrence
of such expense to the date Indemnitee receives reimbursement
therefore.
(f) Indemnifiable Event: shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee,
agent or fiduciary of the Company, or is or was serving at the
request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation of any type or kind,
domestic or foreign, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of anything done or
not done by Indemnitee in such capacity. Without limitation of any
indemnification provided hereunder, an Indemnitee serving (i)
another corporation, partnership, joint venture or trust of which 10
percent or more of the voting power or residual economic interest is
held, directly or indirectly, by the Company, or (ii) any employee
benefit plan of the Company or an entity referred to in clause (i),
in any capacity shall be deemed to be doing so at the request of the
Company.
(g) Reviewing Party: shall be (i) the Board of Directors acting by
quorum consisting of directors who are not parties to the particular
Claim with respect to which Indemnitee is seeking indemnification,
or (ii) if such a quorum is not obtainable or, even if obtainable,
if a quorum of disinterested directors so directs, (A) the Board of
Directors upon the opinion in writing of independent legal counsel
that indemnification is proper in the circumstances because the
applicable standard of conduct set forth in Section 2 of this
Agreement and in Section 721 of the BCL has been met by the
Indemnitee or (B) the shareholders upon a finding that the
Indemnitee has met the applicable standard of conduct referred to in
clause (ii) (A) of this definition.
(h) Voting Securities: shall mean any securities of the Company
which vote generally in the election of the directors.
2. Basic Indemnification Arrangement.
If Indemnitee was, is or becomes at any time a party to, or witness
or other participant in, or is threatened to be made a party to, or
witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 days after written
demand is presented to the Company, against any and all Expenses,
judgements, fines (including excise taxes assessed on an Indemnitee
with respect to an employee benefit plan), penalties and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with, or in respect of, such
Expenses, judgements, fines, penalties or amounts paid in
settlement) of such Claim. If so requested by Indemnitee, the
Company shall advance (within two business days of such request)
any and all Expenses to Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary; (i)
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement if a judgement or other final adjudication adverse to
the Indemnitee establishes that Indemnitee's acts were committed in
bad faith or were the result of active and deliberate dishonesty
and, in either case, were material to the cause of action so
adjudicated, or that Indemnitee personally gained in fact a
financial profit or other advantage to which Indemnitee was not
legally entitled and (ii) prior to a Change in Control
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement in connection with any Claim initiated by Indemnitee
against the Company or any director or officer of the Company unless
the Company has jointed in or consented to the initiation of such
Claim.
3. Payment.
Notwithstanding the provision of Section 2, the obligations of the
Company under Section 2 (which shall in no event be deemed to
preclude any right to indemnification to which Indemnitee may be
entitled under Section 723(a) of the BCL) shall be subject to the
condition that the Reviewing Party shall have authorized such
indemnification in the specific case by having determined that
Indemnitee is permitted to be indemnified under the applicable
standard of conduct set forth in Section 2 and applicable law. The
Company shall promptly call a meeting of the Board of Directors with
respect to a Claim and agrees to use its best efforts to facilitate
a prompt determination by the Receiving Party with respect to the
Claim. Indemnitee shall be afforded the opportunity to make
submissions to the Reviewing Party with respect to the Claim. The
obligation of the company to make an Expense Advance pursuant to
Section 2 shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under Section 2 and
applicable law, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees and undertakes to the full extent
required by paragraph (a) of Section 725 of the BCL to reimburse the
Company) for all such amounts theretofore paid; provided, however,
that if Indemnitee has commenced legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee
should be indemnified under applicable law, any determination made
by the Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee
shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). If there has been no determination by the
Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or
in part under applicable law, Indemnitee shall have the right to
commence litigation in any court in the State of New York having
subject matter jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or challenging any
such determination by the Reviewing Party or any aspect thereof, and
the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Indemnitee.
4. Change in Control.
If there is a Change in Control of the Company (other than a Change
in Control which has been approved by a majority of the Board of
Directors who were directors immediately prior to such Change in
Control) then (i) all determinations by the Company pursuant to the
first sentence of Section 3 hereof and Section 723(b) of the BCL
shall be made pursuant to subparagraph (1) or (2)(A) of such Section
723(b) and (ii) with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or By-
law of the Company now or hereinafter in effect relating to Claims
for Indemnifiable Events (including, but not limited to, any option
to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of
the BCL) the Company (including the Board of Directors) shall seek
legal advice from (and only from) special, independent counsel
selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld), and who has not otherwise
performed services for the Company (or any subsidiary of the
Company) or the Acquiring Person (or any affiliate or associate of
such Acquiring Person) within the last five years (other than in
connection with such matters) or indemnitee. Unless Indemnitee has
theretofore selected counsel pursuant to this Section 4 and such
counsel has been approved by the Company, any Approved Law Firm
shall be deemed to satisfy the requirements set forth above. Such
counsel, among otherthings, shall render its written opinion to the
Company, the Board of Directors and Indemnitee as to whether and
to what extent the Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable
fees of the special, independent counsel referred to above and to
fully indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising our of or
relating to this Agreement or its engagement pursuant hereto. As
used in this Section 4, the terms "affiliate" and "associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended and in effect on the date of this Agreement.
5. Indemnification for Additional Expenses.
The Company shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee, shall
(within two business days of such request) advance such expenses to
Indemnitee, which are incurred by Indemnitee in connection with
any claim asserted or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under
this Agreement or any other agreement or By-law of the Company now
or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery under any directors' and officers' liability
insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, advance expenses payment or insurance recovery, as
the case may be.
6. Partial Indemnity, Etc.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the
Expenses, judgements, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the
portion thereto to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee shall be
indemnified, to the extent permitted by law, against all Expenses
incurred in connection with suchIndemnifiable Event. In connection
with any determination by the Reviewing Party or otherwise as to
whether Indemnitee is entitled to be indemnified hereunder, the
burden of proof shall, to the extent permitted by law, be on the
Company to establish that Indemnitee is not so entitled.
7. Presumption.
For purposes of this Agreement, the termination of any claim,
action, suite or proceeding, whether civil or criminal, by
judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere or its
equivalent, shall not create a presumption that Indemnitee did not
meet any particular standard of conduct or have any particular
belief or that a court has determined that indemnification is not
permitted by applicable law.
8. Nonexclusivity, Etc.
The rights of the Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the By-laws of the Company,
the BCL or otherwise. To the extent that a change in the BCL
(whether by statue or judicial decision) permits greater
indemnification by agreement than would be afforded currently under
the By-laws of the Company and this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.
9. Liability Insurance
To the extent the Company maintains an insurance policy or policies
providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for
any director or officer of the Company.
10. Period of Limitations. No legal action shall be brought and
no cause of action shall be asserted by or on behalf of the Company
or any affiliate of the Company against Indemnitee, Indemnitee's
spouse, heirs, executors or personal or legal representatives after
the expiration of two years from the date of accrual of such cause
of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted
by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter
period shall govern.
11. Amendments, Etc. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all
papers required and shall do everything that may be necessary to
secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce
such rights.
13. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any
claim made against Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance policy, By-law or
otherwise) of the amounts otherwise Indemnifiable hereunder.
14. Specific Performance. The parties recognize that if any
provision of this Agreement is violated by the Company, Indemnitee
may be without an adequate remedy at law. Accordingly, in the event
of any such violation, the Indemnitee shall be entitled, if
Indemnitee so elects, to institute proceedings, either at law or in
equity, to obtain damages, to enforce specific performance, to
enjoin such violation, or to obtain any relief or any
combination of the foregoing as Indemnitee may elect to pursue.
15. Binding Effect, Etc. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company),
assigns, spouses, heirs, and personal and legal representatives.
This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of the
Company or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be
severable if any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a
court of competent jurisdiction to be invalid, void or other wise
unenforceable, and the remaining provisions shall remain
enforceable to the fullest extent permitted by law.
17. Governing Law. This Agreement shall be governed by, and be
construed and enforced in accordance with, the laws of the State of
New York applicable to contracts made and to be performed in such
state without giving effect to the principles of conflicts of laws.
Executed this 19th day of November, 1996.
CHYRON CORPORATION
/s/Michael Wellesley-Wesley
Michael Wellesley-Wesley
Chief Executive Officer
/s/Daniel DeWolf
Daniel DeWolf
Indemnification Agreement: Chyron Corporation (New York)
AGREEMENT, effective as of November 19, 1996 between Chyron
Corporation, a New York corporation (the "Company"), and Charles M.
Diker (the "Indemnitee").
WHEREAS, it is essential to the Company to remain and attract as
directors and officers the most capable persons available; and
WHEREAS, Indemnitee is a director or officer of the Company; and
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and officers of public companies in today's environment; and
WHEREAS, the By-Laws of the Company provide: "The Corporation shall
indemnify any person to the full extent permitted, and in the manner
provided, by the New York Business Corporation Law ["BCL"], as the
same now exists or may hereafter be amended" and
WHEREAS, this Agreement satisfies the provision of Section 721 of
the BCL: and
WHEREAS, in recognition of the fact that the Indemnitee continues to
serve as a director or officer of the Company in part in reliance on
the aforesaid By-Laws and Indemnitee's need for substantial
protection against personal liability in order to enhance
Indemnitee's continued service to the Company in an effective
manner, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such By-Laws will be
available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such By-Laws or any change in the
composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), and due to the potential
inadequacy of the Company's directors' and officers' liability
insurance coverage, the Company wishes to provide in this Agreement
for the indemnification of, and the advancing of expenses to,
Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of
Indemnitee under the Company's directors' and officers' liability
insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to service the Company directly or, in its request, with
another enterprise, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Certain Definitions.
(a) Approved Law Firm: shall mean any law firm (i) located in New
York City and (ii) rated "av" by Martindale-Hubbel Law Directory.
(b) Board of Directors: shall mean the Board of Directors of the
Company.
(c) Change in Control: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than any
stockholder (and/or affiliate of such stockholder) on the date of
this Agreement or a trustee or other fiduciary holding securities
under an employee benefit plan of the Company in substantially the
same portions as their ownership of stock of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly of securities of the Company
representing 15 percent or more of the totaling voting power
represented by the Company's then outstanding Voting Securities
(such, person being hereinafter referred to as an "Acquiring
Person"), or (ii) during any 24-consecutive-month period,
individuals who at the beginning of such period constitute the
Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the shareholders
of the Company approve a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which
would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities
of the surviving entry) at least 80 percent of the total voting
power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all the
Company's assets.
(d) Claim: shall mean any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation, whether
conducted by the company or any other party, that Indemnitee in good
faith believes might lead to the institution of any such action,
suite or proceeding, whether civil, criminal, administrative,
investigative or other.
(e) Expenses: shall include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, being a witness in or
participate in, any Claim relating to any Indemnifiable Event,
together with interest, computed at the Company's average cost of
funds for short-term borrowings, accrued from the date of incurrence
of such expense to the date Indemnitee receives reimbursement
therefore.
(f) Indemnifiable Event: shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee,
agent or fiduciary of the Company, or is or was serving at the
request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation of any type or kind,
domestic or foreign, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of anything done or
not done by Indemnitee in such capacity. Without limitation of any
indemnification provided hereunder, an Indemnitee serving (i)
another corporation, partnership, joint venture or trust of which 10
percent or more of the voting power or residual economic interest is
held, directly or indirectly, by the Company, or (ii) any employee
benefit plan of the Company or an entity referred to in clause (i),
in any capacity shall be deemed to be doing so at the request of the
Company.
(g) Reviewing Party: shall be (i) the Board of Directors acting by
quorum consisting of directors who are not parties to the particular
Claim with respect to which Indemnitee is seeking indemnification,
or (ii) if such a quorum is not obtainable or, even if obtainable,
if a quorum of disinterested directors so directs, (A) the Board of
Directors upon the opinion in writing of independent legal counsel
that indemnification is proper in the circumstances because the
applicable standard of conduct set forth in Section 2 of this
Agreement and in Section 721 of the BCL has been met by the
Indemnitee or (B) the shareholders upon a finding that the
Indemnitee has met the applicable standard of conduct referred to in
clause (ii) (A) of this definition.
(h) Voting Securities: shall mean any securities of the Company
which vote generally in the election of the directors.
2. Basic Indemnification Arrangement.
If Indemnitee was, is or becomes at any time a party to, or witness
or other participant in, or is threatened to be made a party to, or
witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 days after written
demand is presented to the Company, against any and all Expenses,
judgements, fines (including excise taxes assessed on an Indemnitee
with respect to an employee benefit plan), penalties and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with, or in respect of, such
Expenses, judgements, fines, penalties or amounts paid in
settlement) of such Claim. If so requested by Indemnitee, the
Company shall advance (within two business days of such request) any
and all Expenses to Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary; (i)
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement if a judgement or other final adjudication adverse to the
Indemnitee establishes that Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or
that Indemnitee personally gained in fact a financial profit or
other advantage to which Indemnitee was not legally entitled and
(ii) prior to a Change in Control Indemnitee shall not be entitled
to indemnification pursuant to this Agreement in connection
with any Claim initiated by Indemnitee against the Company or any
director or officer of the Company unless the Company has jointed in
or consented to the initiation of such Claim.
3. Payment.
Notwithstanding the provision of Section 2, the obligations of the
Company under Section 2 (which shall in no event be deemed to
preclude any right to indemnification to which Indemnitee may be
entitled under Section 723(a) of the BCL) shall be subject to the
condition that the Reviewing Party shall have authorized such
indemnification in the specific case by having determined that
Indemnitee is permitted to be indemnified under the applicable
standard of conduct set forth in Section 2 and applicable law. The
Company shall promptly call a meeting of the Board of Directors with
respect to a Claim and agrees to use its best efforts to facilitate
a prompt determination by the Receiving Party with respect to the
Claim. Indemnitee shall be afforded the opportunity to make
submissions to the Reviewing Party with respect to the Claim. The
obligation of the company to make an Expense Advance pursuant to
Section 2 shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under Section 2 and
applicable law, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees and undertakes to the full extent
required by paragraph (a) of Section 725 of the BCL to reimburse the
Company) for all such amounts theretofore paid; provided, however,
that if Indemnitee has commenced legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee
should be indemnified under applicable law, any determination made
by the Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee
shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). If there has been no determination by the
Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or
in part under applicable law, Indemnitee shall have the right to
commence litigation in any court in the State of New York having
subject matter jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or challenging any
such determination by the Reviewing Party or any aspect thereof, and
the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Indemnitee.
4. Change in Control.
If there is a Change in Control of the Company (other than a Change
in Control which has been approved by a majority of the Board of
Directors who were directors immediately prior to such Change in
Control) then (i) all determinations by the Company pursuant to the
first sentence of Section 3 hereof and Section 723(b) of the BCL
shall be made pursuant to subparagraph (1) or (2)(A) of such Section
723(b) and (ii) with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or By-
law of the Company now or hereinafter in effect relating to Claims
for Indemnifiable Events (including, but not limited to, any option
to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of
the BCL) the Company (including the Board of Directors) shall seek
legal advice from (and only from) special, independent counsel
selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld), and who has not otherwise
performed services for the Company (or any subsidiary of the
Company) or the Acquiring Person (or any affiliate or associate of
such Acquiring Person) within the last five years (other than in
connection with such matters) or indemnitee. Unless Indemnitee has
theretofore selected counsel pursuant to this Section 4 and such
counsel has been approved by the Company, any Approved Law Firm
shall be deemed to satisfy the requirements set forth above. Such
counsel, among otherthings, shall render its written opinion to the
Company, the Board of Directors and Indemnitee as to whether and to
what extent the Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees
of the special, independent counsel referred to above and to fully
indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising our of or
relating to this Agreement or its engagement pursuant hereto. As
used in this Section 4, the terms "affiliate" and "associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended and in effect on the date of this Agreement.
5. Indemnification for Additional Expenses.
The Company shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee, shall
(within two business days of such request) advance such expenses to
Indemnitee, which are incurred by Indemnitee in connection with
any claim asserted or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under
this Agreement or any other agreement or By-law of the Company now
or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery under any directors' and officers' liability
insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, advance expenses payment or insurance recovery, as
the case may be.
6. Partial Indemnity, Etc.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the
Expenses, judgements, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the
portion thereto to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee shall be
indemnified, to the extent permitted by law, against all Expenses
incurred in connection with such Indemnifiable Event. In connection
with any determination by the Reviewing Party or otherwise as to
whether Indemnitee is entitled to be indemnified hereunder, the
burden of proof shall, to the extent permitted by law, be on the
Company to establish that Indemnitee is not so entitled.
7. Presumption.
For purposes of this Agreement, the termination of any claim,
action, suite or proceeding, whether civil or criminal, by judgment,
order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere or its equivalent,
shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that
a court has determined that indemnification is not permitted by
applicable law.
8. Nonexclusivity, Etc.
The rights of the Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the By-laws of the Company,
the BCL or otherwise. To the extent that a change in the BCL
(whether by statue or judicial decision) permits greater
indemnification by agreement than would be afforded currently under
the By-laws of the Company and this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.
9. Liability Insurance
To the extent the Company maintains an insurance policy or policies
providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for
any director or officer of the Company.
10. Period of Limitations. No legal action shall be brought and
no cause of action shall be asserted by or on behalf of the Company
or any affiliate of the Company against Indemnitee, Indemnitee's
spouse, heirs, executors or personal or legal representatives after
the expiration of two years from the date of accrual of such cause
of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted
by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter
period shall govern.
11. Amendments, Etc. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all
papers required and shall do everything that may be necessary to
secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce
such rights.
13. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any
claim made against Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance policy, By-law or
otherwise) of the amounts otherwise Indemnifiable hereunder.
14. Specific Performance. The parties recognize that if any
provision of this Agreement is violated by the Company, Indemnitee
may be without an adequate remedy at law. Accordingly, in the event
of any such violation, the Indemnitee shall be entitled, if
Indemnitee so elects, to institute proceedings, either at law or in
equity, to obtain damages, to enforce specific performance, to
enjoin such violation, or to obtain any relief or any
combination of the foregoing as Indemnitee may elect to pursue.
15. Binding Effect, Etc. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company),
assigns, spouses, heirs, and personal and legal representatives.
This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of the
Company or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be
severable if any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court
of competent jurisdiction to be invalid, void or other wise
unenforceable, and the remaining provisions shall remain
enforceable to the fullest extent permitted by law.
17. Governing Law. This Agreement shall be governed by, and be
construed and enforced in accordance with, the laws of the State of
New York applicable to contracts made and to be performed in such
state without giving effect to the principles of conflicts of laws.
Executed this 19th day of November, 1996.
CHYRON CORPORATION
/s/Michael Wellesley-Wesley
Michael Wellesley-Wesley
Chief Executive Officer
/s/Charles M. Diker
Charles M. Diker
Indemnification Agreement: Chyron Corporation (New York)
AGREEMENT, effective as of November 19, 1996 between Chyron
Corporation, a New York corporation (the "Company"), and Donald P.
Greenberg (the "Indemnitee").
WHEREAS, it is essential to the Company to remain and attract as
directors and officers the most capable persons available; and
WHEREAS, Indemnitee is a director or officer of the Company; and
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and officers of public companies in today's environment; and
WHEREAS, the By-Laws of the Company provide: "The Corporation shall
indemnify any person to the full extent permitted, and in the manner
provided, by the New York Business Corporation Law ["BCL"], as the
same now exists or may hereafter be amended" and
WHEREAS, this Agreement satisfies the provision of Section 721 of
the BCL: and
WHEREAS, in recognition of the fact that the Indemnitee continues to
serve as a director or officer of the Company in part in reliance on
the aforesaid By-Laws and Indemnitee's need for substantial
protection against personal liability in order to enhance
Indemnitee's continued service to the Company in an effective
manner, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such By-Laws will be
available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such By-Laws or any change in the
composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), and due to the potential
inadequacy of the Company's directors' and officers' liability
insurance coverage, the Company wishes to provide in this Agreement
for the indemnification of, and the advancing of expenses to,
Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of
Indemnitee under the Company's directors' and officers' liability
insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to service the Company directly or, in its request, with
another enterprise, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Certain Definitions.
(a) Approved Law Firm: shall mean any law firm (i) located in New
York City and (ii) rated "av" by Martindale-Hubbel Law Directory.
(b) Board of Directors: shall mean the Board of Directors of the
Company.
(c) Change in Control: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than any
stockholder (and/or affiliate of such stockholder) on the date of
this Agreement or a trustee or other fiduciary holding securities
under an employee benefit plan of the Company in substantially the
same portions as their ownership of stock of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly of securities of the Company
representing 15 percent or more of the totaling voting power
represented by the Company's then outstanding Voting Securities
(such person being hereinafter referred to as an "Acquiring
Person"), or (ii) during any 24-consecutive-month period,
individuals who at the beginning of such period constitute the
Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the shareholders
of the Company approve a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which
would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities
of the surviving entry) at least 80 percent of the total voting
power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all the
Company's assets.
(d) Claim: shall mean any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation, whether
conducted by the company or any other party, that Indemnitee in
good faith believes might lead to the institution of any such
action, suite or proceeding, whether civil, criminal,
administrative, investigative or other.
(e) Expenses: shall include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, being a witness in or
participate in, any Claim relating to any Indemnifiable Event,
together with interest, computed at the Company's average cost of
funds for short-term borrowings, accrued from the date of incurrence
of such expense to the date Indemnitee receives reimbursement
therefore.
(f) Indemnifiable Event: shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee,
agent or fiduciary of the Company, or is or was serving at the
request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation of any type or kind,
domestic or foreign, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of anything done or
not done by Indemnitee in such capacity. Without limitation of any
indemnification provided hereunder, an Indemnitee serving (i)
another corporation, partnership, joint venture or trust of which 10
percent or more of the voting power or residual economic interest is
held, directly or indirectly, by the Company, or (ii) any employee
benefit plan of the Company or an entity referred to in clause (i),
in any capacity shall be deemed to be doing so at the request of the
Company.
(g) Reviewing Party: shall be (i) the Board of Directors acting by
quorum consisting of directors who are not parties to the particular
Claim with respect to which Indemnitee is seeking indemnification,
or (ii) if such a quorum is not obtainable or, even if obtainable,
if a quorum of disinterested directors so directs, (A) the Board of
Directors upon the opinion in writing of independent legal counsel
that indemnification is proper in the circumstances because the
applicable standard of conduct set forth in Section 2 of this
Agreement and in Section 721 of the BCL has been met by the
Indemnitee or (B) the shareholders upon a finding that the
Indemnitee has met the applicable standard of conduct referred to in
clause (ii) (A) of this definition.
(h) Voting Securities: shall mean any securities of the Company
which vote generally in the election of the directors.
2. Basic Indemnification Arrangement.
If Indemnitee was, is or becomes at any time a party to, or witness
or other participant in, or is threatened to be made a party to, or
witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 days after written
demand is presented to the Company, against any and all Expenses,
judgements, fines (including excise taxes assessed on an Indemnitee
with respect to an employee benefit plan), penalties and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with, or in respect of, such
Expenses, judgements, fines, penalties or amounts paid in
settlement) of such Claim. If so requested by Indemnitee, the
Company shall advance (within two business days of such request) any
and all Expenses to Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary; (i)
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement if a judgement or other final adjudication adverse to
the Indemnitee establishes that Indemnitee's acts were committed in
bad faith or were the result of active and deliberate dishonesty
and, in either case, were material to the cause of action so
adjudicated, or that Indemnitee personally gained in fact a
financial profit or other advantage to which Indemnitee was not
legally entitled and (ii) prior to a Change in Control
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement in connection with any Claim initiated by Indemnitee
against the Company or any director or officer of the Company unless
the Company has jointed in or consented to the initiation of such
Claim.
3. Payment.
Notwithstanding the provision of Section 2, the obligations of the
Company under Section 2 (which shall in no event be deemed to
preclude any right to indemnification to which Indemnitee may be
entitled under Section 723(a) of the BCL) shall be subject to the
condition that the Reviewing Party shall have authorized such
indemnification in the specific case by having determined that
Indemnitee is permitted to be indemnified under the applicable
standard of conduct set forth in Section 2 and applicable law. The
Company shall promptly call a meeting of the Board of Directors with
respect to a Claim and agrees to use its best efforts to facilitate
a prompt determination by the Receiving Party with respect to the
Claim. Indemnitee shall be afforded the opportunity to make
submissions to the Reviewing Party with respect to the Claim. The
obligation of the company to make an Expense Advance pursuant to
Section 2 shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under Section 2 and applicable
law, the Company shall be entitled to be reimbursed by Indemnitee
(who hereby agrees and undertakes to the full extent required by
paragraph (a) of Section 725 of the BCL to reimburse the Company)
for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced legal proceedings in a court of competent
jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the
Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee
shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). If there has been no determination by the
Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or
in part under applicable law, Indemnitee shall have the right to
commence litigation in any court in the State of New York having
subject matter jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or challenging any
such determination by the Reviewing Party or any aspect thereof, and
the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Indemnitee.
4. Change in Control.
If there is a Change in Control of the Company (other than a Change
in Control which has been approved by a majority of the Board of
Directors who were directors immediately prior to such Change in
Control) then (i) all determinations by the Company pursuant to the
first sentence of Section 3 hereof and Section 723(b) of the BCL
shall be made pursuant to subparagraph (1) or (2)(A) of such Section
723(b) and (ii) with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or By-
law of the Company now or hereinafter in effect relating to Claims
for Indemnifiable Events (including, but not limited to, any option
to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of
the BCL) the Company (including the Board of Directors) shall seek
legal advice from (and only from) special, independent counsel
selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld), and who has not otherwise
performed services for the Company (or any subsidiary of the
Company) or the Acquiring Person (or any affiliate or associate of
such Acquiring Person) within the last five years (other than in
connection with such matters) or indemnitee. Unless Indemnitee has
theretofore selected counsel pursuant to this Section 4 and such
counsel has been approved by the Company, any Approved Law Firm
shall be deemed to satisfy the requirements set forth above. Such
counsel, among otherthings, shall render its written opinion to the
Company, the Board of Directors and Indemnitee as to whether and to
what extent the Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable
fees of the special, independent counsel referred to above and to
fully indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising our of or
relating to this Agreement or its engagement pursuant hereto. As
used in this Section 4, the terms "affiliate" and "associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended and in effect on the date of this Agreement.
5. Indemnification for Additional Expenses.
The Company shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee, shall
(within two business days of such request) advance such expenses to
Indemnitee, which are incurred by Indemnitee in connection with
any claim asserted or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under
this Agreement or any other agreement or By-law of the Company now
or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery under any directors' and officers' liability
insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, advance expenses payment or insurance recovery, as
the case may be.
6. Partial Indemnity, Etc.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the
Expenses, judgements, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the
portion thereto to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee shall be
indemnified, to the extent permitted by law, against all Expenses
incurred in connection with such Indemnifiable Event. In connection
with any determination by the Reviewing Party or otherwise as to
whether Indemnitee is entitled to be indemnified hereunder, the
burden of proof shall, to the extent permitted by law, be on the
Company to establish that Indemnitee is not so entitled.
7. Presumption.
For purposes of this Agreement, the termination of any claim,
action, suite or proceeding, whether civil or criminal, by judgment,
order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere or its equivalent,
shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that
a court has determined that indemnification is not permitted by
applicable law.
8. Nonexclusivity, Etc.
The rights of the Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the By-laws of the Company,
the BCL or otherwise. To the extent that a change in the BCL
(whether by statue or judicial decision) permits greater
indemnification by agreement than would be afforded currently under
the By-laws of the Company and this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.
9. Liability Insurance
To the extent the Company maintains an insurance policy or policies
providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for
any director or officer of the Company.
10. Period of Limitations. No legal action shall be brought and
no cause of action shall be asserted by or on behalf of the Company
or any affiliate of the Company against Indemnitee, Indemnitee's
spouse, heirs, executors or personal or legal representatives after
the expiration of two years from the date of accrual of such cause
of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted
by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter
period shall govern.
11. Amendments, Etc. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all
papers required and shall do everything that may be necessary to
secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce
such rights.
13. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any
claim made against Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance policy, By-law or
otherwise) of the amounts otherwise Indemnifiable hereunder.
14. Specific Performance. The parties recognize that if any
provision of this Agreement is violated by the Company, Indemnitee
may be without an adequate remedy at law. Accordingly, in the event
of any such violation, the Indemnitee shall be entitled, if
Indemnitee so elects, to institute proceedings, either at law or in
equity, to obtain damages, to enforce specific performance, to
enjoin such violation, or to obtain any relief or any
combination of the foregoing as Indemnitee may elect to pursue.
15. Binding Effect, Etc. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company),
assigns, spouses, heirs, and personal and legal representatives.
This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of the
Company or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be
severable if any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court
of competent jurisdiction to be invalid, void or other wise
unenforceable, and the remaining provisions shall remain enforceable
to the fullest extent permitted by law.
17. Governing Law. This Agreement shall be governed by, and be
construed and enforced in accordance with, the laws of the State of
New York applicable to contracts made and to be performed in such
state without giving effect to the principles of conflicts of laws.
Executed this 19th day of November, 1996.
CHYRON CORPORATION
/s/Michael Wellesley-Wesley
Michael Wellesley-Wesley
Chief Executive Officer
/s/Donald P. Greenberg
Donald P. Greenberg
Indemnification Agreement: Chyron Corporation (New York)
AGREEMENT, effective as of November 19, 1996 between Chyron
Corporation, a New York corporation (the "Company"), and Ray Hartman
(the "Indemnitee").
WHEREAS, it is essential to the Company to remain and attract as
directors and officers the most capable persons available; and
WHEREAS, Indemnitee is a director or officer of the Company; and
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and officers of public companies in today's environment; and
WHEREAS, the By-Laws of the Company provide: "The Corporation shall
indemnify any person to the full extent permitted, and in the manner
provided, by the New York Business Corporation Law ["BCL"], as the
same now exists or may hereafter be amended" and
WHEREAS, this Agreement satisfies the provision of Section 721 of
the BCL: and
WHEREAS, in recognition of the fact that the Indemnitee continues to
serve as a director or officer of the Company in part in reliance on
the aforesaid By-Laws and Indemnitee's need for substantial
protection against personal liability in order to enhance
Indemnitee's continued service to the Company in an effective
manner, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such By-Laws will be
available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such By-Laws or any change in the
composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), and due to the potential
inadequacy of the Company's directors' and officers' liability
insurance coverage, the Company wishes to provide in this Agreement
for the indemnification of, and the advancing of expenses to,
Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of
Indemnitee under the Company's directors' and officers' liability
insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to service the Company directly or, in its request, with
another enterprise, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Certain Definitions.
(a) Approved Law Firm: shall mean any law firm (i) located in New
York City and (ii) rated "av" by Martindale-Hubbel Law Directory.
(b) Board of Directors: shall mean the Board of Directors of the
Company.
(c) Change in Control: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than any
stockholder (and/or affiliate of such stockholder) on the date of
this Agreement or a trustee or other fiduciary holding securities
under an employee benefit plan of the Company in substantially the
same portions as their ownership of stock of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly of securities of the Company
representing 15 percent or more of the totaling voting power
represented by the Company's then outstanding Voting Securities
(such person being hereinafter referred to as an "Acquiring
Person"), or (ii) during any 24-consecutive-month period,
individuals who at the beginning of such period constitute the
Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the shareholders
of the Company approve a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which
would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities
of the surviving entry) at least 80 percent of the total voting
power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all the
Company's assets.
(d) Claim: shall mean any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation, whether
conducted by the company or any other party, that Indemnitee in good
faith believes might lead to the institution of any such action,
suite or proceeding, whether civil, criminal, administrative,
investigative or other.
(e) Expenses: shall include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, being a witness in or
participate in, any Claim relating to any Indemnifiable Event,
together with interest, computed at the Company's average cost of
funds for short-term borrowings, accrued from the date of incurrence
of such expense to the date Indemnitee receives reimbursement
therefore.
(f) Indemnifiable Event: shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee,
agent or fiduciary of the Company, or is or was serving at the
request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation of any type or kind,
domestic or foreign, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of anything done or
not done by Indemnitee in such capacity. Without limitation of any
indemnification provided hereunder, an Indemnitee serving (i)
another corporation, partnership, joint venture or trust of which 10
percent or more of the voting power or residual economic interest is
held, directly or indirectly, by the Company, or (ii) any employee
benefit plan of the Company or an entity referred to in clause (i),
in any capacity shall be deemed to be doing so at the request of the
Company.
(g) Reviewing Party: shall be (i) the Board of Directors acting by
quorum consisting of directors who are not parties to the particular
Claim with respect to which Indemnitee is seeking indemnification,
or (ii) if such a quorum is not obtainable or, even if obtainable,
if a quorum of disinterested directors so directs, (A) the Board of
Directors upon the opinion in writing of independent legal counsel
that indemnification is proper in the circumstances because the
applicable standard of conduct set forth in Section 2 of this
Agreement and in Section 721 of the BCL has been met by the
Indemnitee or (B) the shareholders upon a finding that the
Indemnitee has met the applicable standard of conduct referred to in
clause (ii) (A) of this definition.
(h) Voting Securities: shall mean any securities of the Company
which vote generally in the election of the directors.
2. Basic Indemnification Arrangement.
If Indemnitee was, is or becomes at any time a party to, or witness
or other participant in, or is threatened to be made a party to, or
witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 days after written
demand is presented to the Company, against any and all Expenses,
judgements, fines (including excise taxes assessed on an Indemnitee
with respect to an employee benefit plan), penalties and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with, or in respect of, such
Expenses, judgements, fines, penalties or amounts paid in
settlement) of such Claim. If so requested by Indemnitee, the
Company shall advance (within two business days of such request) any
and all Expenses to Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary; (i)
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement if a judgement or other final adjudication adverse to the
Indemnitee establishes that Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or
that Indemnitee personally gained in fact a financial profit or
other advantage to which Indemnitee was not legally entitled and
(ii) prior to a Change in Control Indemnitee shall not be entitled
to indemnification pursuant to this Agreement in connection
with any Claim initiated by Indemnitee against the Company or any
director or officer of the Company unless the Company has jointed in
or consented to the initiation of such Claim.
3. Payment.
Notwithstanding the provision of Section 2, the obligations of the
Company under Section 2 (which shall in no event be deemed to
preclude any right to indemnification to which Indemnitee may be
entitled under Section 723(a) of the BCL) shall be subject to the
condition that the Reviewing Party shall have authorized such
indemnification in the specific case by having determined that
Indemnitee is permitted to be indemnified under the applicable
standard of conduct set forth in Section 2 and applicable law. The
Company shall promptly call a meeting of the Board of Directors with
respect to a Claim and agrees to use its best efforts to facilitate
a prompt determination by the Receiving Party with respect to the
Claim. Indemnitee shall be afforded the opportunity to make
submissions to the Reviewing Party with respect to the Claim. The
obligation of the company to make an Expense Advance pursuant to
Section 2 shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under Section 2 and
applicable law, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees and undertakes to the full extent
required by paragraph (a) of Section 725 of the BCL to reimburse the
Company) for all such amounts theretofore paid; provided, however,
that if Indemnitee has commenced legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee
should be indemnified under applicable law, any determination made
by the Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company for any
Expense Advance until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have
been exhausted or lapsed). If there has been no determination by
the Reviewing Party or if the Reviewing Party determines that
Indemnitee substantively would not be permitted to be indemnified in
whole or in part under applicable law, Indemnitee shall have the
right to commence litigation in any court in the State of New York
having subject matter jurisdiction thereof and in which venue is
proper seeking an initial determination by the court or challenging
any such determination by the Reviewing Party or any aspect thereof,
and the Company hereby consents to service of process and to appear
in any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Indemnitee.
4. Change in Control.
If there is a Change in Control of the Company (other than a Change
in Control which has been approved by a majority of the Board of
Directors who were directors immediately prior to such Change in
Control) then (i) all determinations by the Company pursuant to the
first sentence of Section 3 hereof and Section 723(b) of the BCL
shall be made pursuant to subparagraph (1) or (2)(A) of such Section
723(b) and (ii) with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or By-
law of the Company now or hereinafter in effect relating to Claims
for Indemnifiable Events (including, but not limited to, any option
to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of
the BCL) the Company (including the Board of Directors) shall seek
legal advice from (and only from) special, independent counsel
selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld), and who has not otherwise
performed services for the Company (or any subsidiary of the
Company) or the Acquiring Person (or any affiliate or associate of
such Acquiring Person) within the last five years (other than in
connection with such matters) or indemnitee. Unless Indemnitee has
theretofore selected counsel pursuant to this Section 4 and such
counsel has been approved by the Company, any Approved Law Firm
shall be deemed to satisfy the requirements set forth above. Such
counsel, among otherthings, shall render its written opinion to the
Company, the Board of Directors and Indemnitee as to whether and to
what extent the Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees
of the special, independent counsel referred to above and to fully
indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising our of or
relating to this Agreement or its engagement pursuant hereto. As
used in this Section 4, the terms "affiliate" and "associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended and in effect on the date of this Agreement.
5. Indemnification for Additional Expenses.
The Company shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee, shall
(within two business days of such request) advance such expenses to
Indemnitee, which are incurred by Indemnitee in connection with
any claim asserted or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under
this Agreement or any other agreement or By-law of the Company now
or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery under any directors' and officers' liability
insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, advance expenses payment or insurance recovery, as
the case may be.
6. Partial Indemnity, Etc.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the
Expenses, judgements, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the
portion thereto to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee shall be
indemnified, to the extent permitted by law, against all Expenses
incurred in connection with such Indemnifiable Event. In connection
with any determination by the Reviewing Party or otherwise as to
whether Indemnitee is entitled to be indemnified hereunder, the
burden of proof shall, to the extent permitted by law, be on the
Company to establish that Indemnitee is not so entitled.
7. Presumption.
For purposes of this Agreement, the termination of any claim,
action, suite or proceeding, whether civil or criminal, by judgment,
order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere or its equivalent,
shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that
a court has determined that indemnification is not permitted by
applicable law.
8. Nonexclusivity, Etc.
The rights of the Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the By-laws of the Company,
the BCL or otherwise. To the extent that a change in the BCL
(whether by statue or judicial decision) permits greater
indemnification by agreement than would be afforded currently under
the By-laws of the Company and this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.
9. Liability Insurance
To the extent the Company maintains an insurance policy or policies
providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for
any director or officer of the Company.
10. Period of Limitations. No legal action shall be brought and
no cause of action shall be asserted by or on behalf of the Company
or any affiliate of the Company against Indemnitee, Indemnitee's
spouse, heirs, executors or personal or legal representatives after
the expiration of two years from the date of accrual of such cause
of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted
by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter
period shall govern.
11. Amendments, Etc. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all
papers required and shall do everything that may be necessary to
secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce
such rights.
13. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any
claim made against Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance policy, By-law or
otherwise) of the amounts otherwise Indemnifiable hereunder.
14. Specific Performance. The parties recognize that if any
provision of this Agreement is violated by the Company, Indemnitee
may be without an adequate remedy at law. Accordingly, in the event
of any such violation, the Indemnitee shall be entitled, if
Indemnitee so elects, to institute proceedings, either at law or in
equity, to obtain damages, to enforce specific performance, to
enjoin such violation, or to obtain any relief or any
combination of the foregoing as Indemnitee may elect to pursue.
15. Binding Effect, Etc. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company),
assigns, spouses, heirs, and personal and legal
representatives. This Agreement shall continue in effect regardless
of whether Indemnitee continues to serve as an officer or director
of the Company or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be
severable if any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court
of competent jurisdiction to be invalid, void or other wise
unenforceable, and the remaining provisions shall remain
enforceable to the fullest extent permitted by law.
17. Governing Law. This Agreement shall be governed by, and be
construed and enforced in accordance with, the laws of the State of
New York applicable to contracts made and to be performed in such
state without giving effect to the principles of conflicts of laws.
Executed this 19th day of November, 1996.
CHYRON CORPORATION
/s/Michael Wellesley-Wesley
Michael Wellesley-Wesley
Chief Executive Officer
/s/Ray Hartman
Ray Hartman
Indemnification Agreement: Chyron Corporation (New York)
AGREEMENT, effective as of November 19, 1996 between Chyron
Corporation, a New York corporation (the "Company"), and Roger
Henderson (the "Indemnitee").
WHEREAS, it is essential to the Company to remain and attract as
directors and officers the most capable persons available; and
WHEREAS, Indemnitee is a director or officer of the Company; and
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and officers of public companies in today's environment; and
WHEREAS, the By-Laws of the Company provide: "The Corporation shall
indemnify any person to the full extent permitted, and in the manner
provided, by the New York Business Corporation Law ["BCL"], as the
same now exists or may hereafter be amended" and
WHEREAS, this Agreement satisfies the provision of Section 721 of
the BCL: and
WHEREAS, in recognition of the fact that the Indemnitee continues to
serve as a director or officer of the Company in part in reliance on
the aforesaid By-Laws and Indemnitee's need for substantial
protection against personal liability in order to enhance
Indemnitee's continued service to the Company in an effective
manner, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such By-Laws will be
available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such By-Laws or any change in the
composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), and due to the potential
inadequacy of the Company's directors' and officers' liability
insurance coverage, the Company wishes to provide in this Agreement
for the indemnification of, and the advancing of expenses to,
Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of
Indemnitee under the Company's directors' and officers' liability
insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to service the Company directly or, in its request, with
another enterprise, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Certain Definitions.
(a) Approved Law Firm: shall mean any law firm (i) located in New
York City and (ii) rated "av" by Martindale-Hubbel Law Directory.
(b) Board of Directors: shall mean the Board of Directors of the
Company.
(c) Change in Control: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than any
stockholder (and/or affiliate of such stockholder) on the date of
this Agreement or a trustee or other fiduciary holding securities
under an employee benefit plan of the Company in substantially the
same portions as their ownership of stock of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly of securities of the Company
representing 15 percent or more of the totaling voting power
represented by the Company's then outstanding Voting Securities
(such person being hereinafter referred to as an "Acquiring
Person"), or (ii) during any 24-consecutive-month period,
individuals who at the beginning of such period constitute the
Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the shareholders
of the Company approve a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which
would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities
of the surviving entry) at least 80 percent of the total voting
power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all the
Company's assets.
(d) Claim: shall mean any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation, whether
conducted by the company or any other party, that Indemnitee in
good faith believes might lead to the institution of any such
action, suite or proceeding, whether civil, criminal,
administrative, investigative or other.
(e) Expenses: shall include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, being a witness in or
participate in, any Claim relating to any Indemnifiable Event,
together with interest, computed at the Company's average cost of
funds for short-term borrowings, accrued from the date of incurrence
of such expense to the date Indemnitee receives reimbursement
therefore.
(f) Indemnifiable Event: shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee,
agent or fiduciary of the Company, or is or was serving at the
request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation of any type or kind,
domestic or foreign, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of anything done or
not done by Indemnitee in such capacity. Without limitation of any
indemnification provided hereunder, an Indemnitee serving (i)
another corporation, partnership, joint venture or trust of which 10
percent or more of the voting power or residual economic interest is
held, directly or indirectly, by the Company, or (ii) any employee
benefit plan of the Company or an entity referred to in clause (i),
in any capacity shall be deemed to be doing so at the request of the
Company.
(g) Reviewing Party: shall be (i) the Board of Directors acting by
quorum consisting of directors who are not parties to the particular
Claim with respect to which Indemnitee is seeking indemnification,
or (ii) if such a quorum is not obtainable or, even if obtainable,
if a quorum of disinterested directors so directs, (A) the Board of
Directors upon the opinion in writing of independent legal counsel
that indemnification is proper in the circumstances because the
applicable standard of conduct set forth in Section 2 of this
Agreement and in Section 721 of the BCL has been met by the
Indemnitee or (B) the shareholders upon a finding that the
Indemnitee has met the applicable standard of conduct referred to in
clause (ii) (A) of this definition.
(h) Voting Securities: shall mean any securities of the Company
which vote generally in the election of the directors.
2. Basic Indemnification Arrangement.
If Indemnitee was, is or becomes at any time a party to, or witness
or other participant in, or is threatened to be made a party to, or
witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 days after written
demand is presented to the Company, against any and all Expenses,
judgements, fines (including excise taxes assessed on an Indemnitee
with respect to an employee benefit plan), penalties and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with, or in respect of, such
Expenses, judgements, fines, penalties or amounts paid in
settlement) of such Claim. If so requested by Indemnitee, the
Company shall advance (within two business days of such request) any
and all Expenses to Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary; (i)
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement if a judgement or other final adjudication adverse to the
Indemnitee establishes that Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or
that Indemnitee personally gained in fact a financial profit or
other advantage to which Indemnitee was not legally entitled and
(ii) prior to a Change in Control Indemnitee shall not be entitled
to indemnification pursuant to this Agreement in connection
with any Claim initiated by Indemnitee against the Company or any
director or officer of the Company unless the Company has jointed in
or consented to the initiation of such Claim.
3. Payment.
Notwithstanding the provision of Section 2, the obligations of the
Company under Section 2 (which shall in no event be deemed to
preclude any right to indemnification to which Indemnitee may be
entitled under Section 723(a) of the BCL) shall be subject to the
condition that the Reviewing Party shall have authorized such
indemnification in the specific case by having determined that
Indemnitee is permitted to be indemnified under the applicable
standard of conduct set forth in Section 2 and applicable law. The
Company shall promptly call a meeting of the Board of Directors with
respect to a Claim and agrees to use its best efforts to facilitate
a prompt determination by the Receiving Party with respect to the
Claim. Indemnitee shall be afforded the opportunity to make
submissions to the Reviewing Party with respect to the Claim. The
obligation of the company to make an Expense Advance pursuant to
Section 2 shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under Section 2 and applicable
law, the Company shall be entitled to be reimbursed by Indemnitee
(who hereby agrees and undertakes to the full extent required by
paragraph (a) of Section 725 of the BCL to reimburse the Company)
for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced legal proceedings in a court of competent
jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the
Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee
shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). If there has been no determination by the
Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or
in part under applicable law, Indemnitee shall have the right to
commence litigation in any court in the State of New York having
subject matter jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or challenging any
such determination by the Reviewing Party or any aspect thereof, and
the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Indemnitee.
4. Change in Control.
If there is a Change in Control of the Company (other than a Change
in Control which has been approved by a majority of the Board of
Directors who were directors immediately prior to such Change in
Control) then (i) all determinations by the Company pursuant to the
first sentence of Section 3 hereof and Section 723(b) of the BCL
shall be made pursuant to subparagraph (1) or (2)(A) of such Section
723(b) and (ii) with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or By-
law of the Company now or hereinafter in effect relating to Claims
for Indemnifiable Events (including, but not limited to, any option
to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of
the BCL) the Company (including the Board of Directors) shall seek
legal advice from (and only from) special, independent counsel
selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld), and who has not otherwise
performed services for the Company (or any subsidiary of the
Company) or the Acquiring Person (or any affiliate or associate of
such Acquiring Person) within the last five years (other than in
connection with such matters) or indemnitee. Unless Indemnitee has
theretofore selected counsel pursuant to this Section 4 and such
counsel has been approved by the Company, any Approved Law Firm
shall be deemed to satisfy the requirements set forth above. Such
counsel, among otherthings, shall render its written opinion to the
Company, the Board of Directors and Indemnitee as to whether and to
what extent the Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable
fees of the special, independent counsel referred to above and to
fully indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising our of or
relating to this Agreement or its engagement pursuant hereto. As
used in this Section 4, the terms "affiliate" and "associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended and in effect on the date of this Agreement.
5. Indemnification for Additional Expenses.
The Company shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee, shall
(within two business days of such request) advance such expenses to
Indemnitee, which are incurred by Indemnitee in connection with
any claim asserted or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under
this Agreement or any other agreement or By-law of the Company now
or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery under any directors' and officers' liability
insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, advance expenses payment or insurance recovery, as
the case may be.
6. Partial Indemnity, Etc.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the
Expenses, judgements, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the
portion thereto to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee shall be
indemnified, to the extent permitted by law, against all Expenses
incurred in connection with such Indemnifiable Event. In connection
with any determination by the Reviewing Party or otherwise as to
whether Indemnitee is entitled to be indemnified hereunder, the
burden of proof shall, to the extent permitted by law, be on the
Company to establish that Indemnitee is not so entitled.
7. Presumption.
For purposes of this Agreement, the termination of any claim,
action, suite or proceeding, whether civil or criminal, by judgment,
order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere or its equivalent,
shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that
a court has determined that indemnification is not permitted by
applicable law.
8. Nonexclusivity, Etc.
The rights of the Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the By-laws of the Company,
the BCL or otherwise. To the extent that a change in the BCL
(whether by statue or judicial decision) permits greater
indemnification by agreement than would be afforded currently under
the By-laws of the Company and this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.
9. Liability Insurance
To the extent the Company maintains an insurance policy or policies
providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for
any director or officer of the Company.
10. Period of Limitations. No legal action shall be brought and
no cause of action shall be asserted by or on behalf of the Company
or any affiliate of the Company against Indemnitee, Indemnitee's
spouse, heirs, executors or personal or legal representatives after
the expiration of two years from the date of accrual of such cause
of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted
by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter
period shall govern.
11. Amendments, Etc. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all
papers required and shall do everything that may be necessary to
secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce
such rights.
13. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any
claim made against Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance policy, By-law or
otherwise) of the amounts otherwise Indemnifiable hereunder.
14. Specific Performance. The parties recognize that if any
provision of this Agreement is violated by the Company, Indemnitee
may be without an adequate remedy at law. Accordingly, in the event
of any such violation, the Indemnitee shall be entitled, if
Indemnitee so elects, to institute proceedings, either at law or in
equity, to obtain damages, to enforce specific performance, to
enjoin such violation, or to obtain any relief or any
combination of the foregoing as Indemnitee may elect to pursue.
15. Binding Effect, Etc. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company),
assigns, spouses, heirs, and personal and legal
representatives. This Agreement shall continue in effect regardless
of whether Indemnitee continues to serve as an officer or director
of the Company or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be
severable if any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court
of competent jurisdiction to be invalid, void or other wise
unenforceable, and the remaining provisions shall remain
enforceable to the fullest extent permitted by law.
17. Governing Law. This Agreement shall be governed by, and be
construed and enforced in accordance with, the laws of the State of
New York applicable to contracts made and to be performed in such
state without giving effect to the principles of conflicts of laws.
Executed this 19th day of November, 1996.
CHYRON CORPORATION
/s/Michael Wellesley-Wesley
Michael Wellesley-Wesley
Chief Executive Officer
/s/Roger Henderson
Roger Henderson
Indemnification Agreement: Chyron Corporation (New York)
AGREEMENT, effective as of November 19, 1996 between Chyron
Corporation, a New York corporation (the "Company"), and Isaac
Hersly (the "Indemnitee").
WHEREAS, it is essential to the Company to remain and attract as
directors and officers the most capable persons available; and
WHEREAS, Indemnitee is a director or officer of the Company; and
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and officers of public companies in today's environment; and
WHEREAS, the By-Laws of the Company provide: "The Corporation shall
indemnify any person to the full extent permitted, and in the manner
provided, by the New York Business Corporation Law ["BCL"], as the
same now exists or may hereafter be amended" and
WHEREAS, this Agreement satisfies the provision of Section 721 of
the BCL: and
WHEREAS, in recognition of the fact that the Indemnitee continues to
serve as a director or officer of the Company in part in reliance on
the aforesaid By-Laws and Indemnitee's need for substantial
protection against personal liability in order to enhance
Indemnitee's continued service to the Company in an effective
manner, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such By-Laws will be
available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such By-Laws or any change in the
composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), and due to the potential
inadequacy of the Company's directors' and officers' liability
insurance coverage, the Company wishes to provide in this Agreement
for the indemnification of, and the advancing of expenses to,
Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of
Indemnitee under the Company's directors' and officers' liability
insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to service the Company directly or, in its request, with
another enterprise, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Certain Definitions.
(a) Approved Law Firm: shall mean any law firm (i) located in New
York City and (ii) rated "av" by Martindale-Hubbel Law Directory.
(b) Board of Directors: shall mean the Board of Directors of the
Company.
(c) Change in Control: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than any
stockholder (and/or affiliate of such stockholder) on the date of
this Agreement or a trustee or other fiduciary holding securities
under an employee benefit plan of the Company in substantially the
same portions as their ownership of stock of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly of securities of the Company
representing 15 percent or more of the totaling voting power
represented by the Company's then outstanding Voting Securities
(such person being hereinafter referred to as an "Acquiring
Person"), or (ii) during any 24-consecutive-month period,
individuals who at the beginning of such period constitute the
Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least two-
thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the shareholders
of the Company approve a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which
would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities
of the surviving entry) at least 80 percent of the total voting
power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all the
Company's assets.
(d) Claim: shall mean any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation, whether
conducted by the company or any other party, that Indemnitee in
good faith believes might lead to the institution of any such
action, suite or proceeding, whether civil, criminal,
administrative, investigative or other.
(e) Expenses: shall include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, being a witness in or
participate in, any Claim relating to any Indemnifiable Event,
together with interest, computed at the Company's average cost of
funds for short-term borrowings, accrued from the date of incurrence
of such expense to the date Indemnitee receives reimbursement
therefore.
(f) Indemnifiable Event: shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee,
agent or fiduciary of the Company, or is or was serving at the
request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation of any type or kind,
domestic or foreign, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of anything done or
not done by Indemnitee in such capacity. Without limitation of
any indemnification provided hereunder, an Indemnitee serving (i)
another corporation, partnership, joint venture or trust of which 10
percent or more of the voting power or residual economic interest is
held, directly or indirectly, by the Company, or (ii) any employee
benefit plan of the Company or an entity referred to in clause (i),
in any capacity shall be deemed to be doing so at the request of the
Company.
(g) Reviewing Party: shall be (i) the Board of Directors acting by
quorum consisting of directors who are not parties to the particular
Claim with respect to which Indemnitee is seeking indemnification,
or (ii) if such a quorum is not obtainable or, even if obtainable,
if a quorum of disinterested directors so directs, (A) the Board of
Directors upon the opinion in writing of independent legal counsel
that indemnification is proper in the circumstances because the
applicable standard of conduct set forth in Section 2 of this
Agreement and in Section 721 of the BCL has been met by the
Indemnitee or (B) the shareholders upon a finding that the
Indemnitee has met the applicable standard of conduct referred to in
clause (ii) (A) of this definition.
(h) Voting Securities: shall mean any securities of the Company
which vote generally in the election of the directors.
2. Basic Indemnification Arrangement.
If Indemnitee was, is or becomes at any time a party to, or witness
or other participant in, or is threatened to be made a party to, or
witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 days after written
demand is presented to the Company, against any and all Expenses,
judgements, fines (including excise taxes assessed on an Indemnitee
with respect to an employee benefit plan), penalties and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with, or in respect of, such
Expenses, judgements, fines, penalties or amounts paid in
settlement) of such Claim. If so requested by Indemnitee, the
Company shall advance (within two business days of such request) any
and all Expenses to Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary; (i)
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement if a judgement or other final adjudication adverse to the
Indemnitee establishes that Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or
that Indemnitee personally gained in fact a financial profit or
other advantage to which Indemnitee was not legally entitled and
(ii) prior to a Change in Control Indemnitee shall not be entitled
to indemnification pursuant to this Agreement in connection
with any Claim initiated by Indemnitee against the Company or any
director or officer of the Company unless the Company has jointed in
or consented to the initiation of such Claim.
3. Payment.
Notwithstanding the provision of Section 2, the obligations of the
Company under Section 2 (which shall in no event be deemed to
preclude any right to indemnification to which Indemnitee may be
entitled under Section 723(a) of the BCL) shall be subject to the
condition that the Reviewing Party shall have authorized such
indemnification in the specific case by having determined that
Indemnitee is permitted to be indemnified under the applicable
standard of conduct set forth in Section 2 and applicable law. The
Company shall promptly call a meeting of the Board of Directors with
respect to a Claim and agrees to use its best efforts to facilitate
a prompt determination by the Receiving Party with respect to the
Claim. Indemnitee shall be afforded the opportunity to make
submissions to the Reviewing Party with respect to the Claim. The
obligation of the company to make an Expense Advance pursuant to
Section 2 shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under Section 2 and
applicable law, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees and undertakes to the full extent
required by paragraph (a) of Section 725 of the BCL to reimburse the
Company) for all such amounts theretofore paid; provided, however,
that if Indemnitee has commenced legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee
should be indemnified under applicable law, any determination made
by the Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee
shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). If there has been no determination by the
Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or
in part under applicable law, Indemnitee shall have the right to
commence litigation in any court in the State of New York having
subject matter jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or challenging any
such determination by the Reviewing Party or any aspect thereof, and
the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Indemnitee.
4. Change in Control.
If there is a Change in Control of the Company (other than a Change
in Control which has been approved by a majority of the Board of
Directors who were directors immediately prior to such Change in
Control) then (i) all determinations by the Company pursuant to the
first sentence of Section 3 hereof and Section 723(b) of the BCL
shall be made pursuant to subparagraph (1) or (2)(A) of such Section
723(b) and (ii) with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or By-
law of the Company now or hereinafter in effect relating to Claims
for Indemnifiable Events (including, but not limited to, any option
to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of
the BCL) the Company (including the Board of Directors) shall seek
legal advice from (and only from) special, independent counsel
selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld), and who has not otherwise
performed services for the Company (or any subsidiary of the
Company) or the Acquiring Person (or any affiliate or associate of
such Acquiring Person) within the last five years (other than in
connection with such matters) or indemnitee. Unless Indemnitee has
theretofore selected counsel pursuant to this Section 4 and such
counsel has been approved by the Company, any Approved Law Firm
shall be deemed to satisfy the requirements set forth above. Such
counsel, among otherthings, shall render its written opinion to the
Company, the Board of Directors and Indemnitee as to whether and to
what extent the Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees
of the special, independent counsel referred to above and to fully
indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising our of or
relating to this Agreement or its engagement pursuant hereto. As
used in this Section 4, the terms "affiliate" and "associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended and in effect on the date of this Agreement.
5. Indemnification for Additional Expenses.
The Company shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee, shall
(within two business days of such request) advance such expenses to
Indemnitee, which are incurred by Indemnitee in connection with
any claim asserted or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under
this Agreement or any other agreement or By-law of the Company now
or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery under any directors' and officers' liability
insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, advance expenses payment or insurance recovery, as
the case may be.
6. Partial Indemnity, Etc.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the
Expenses, judgements, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the
portion thereto to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee shall be
indemnified, to the extent permitted by law, against all Expenses
incurred in connection with such Indemnifiable Event. In connection
with any determination by the Reviewing Party or otherwise as to
whether Indemnitee is entitled to be indemnified hereunder, the
burden of proof shall, to the extent permitted by law, be on the
Company to establish that Indemnitee is not so entitled.
7. Presumption.
For purposes of this Agreement, the termination of any claim,
action, suite or proceeding, whether civil or criminal, by judgment,
order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere or its equivalent,
shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that
a court has determined that indemnification is not permitted by
applicable law.
8. Nonexclusivity, Etc.
The rights of the Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the By-laws of the Company,
the BCL or otherwise. To the extent that a change in the BCL
(whether by statue or judicial decision) permits greater
indemnification by agreement than would be afforded currently under
the By-laws of the Company and this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.
9. Liability Insurance
To the extent the Company maintains an insurance policy or policies
providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for
any director or officer of the Company.
10. Period of Limitations. No legal action shall be brought and
no cause of action shall be asserted by or on behalf of the Company
or any affiliate of the Company against Indemnitee, Indemnitee's
spouse, heirs, executors or personal or legal representatives after
the expiration of two years from the date of accrual of such cause
of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted
by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter
period shall govern.
11. Amendments, Etc. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all
papers required and shall do everything that may be necessary to
secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce
such rights.
13. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any
claim made against Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance policy, By-law or
otherwise) of the amounts otherwise Indemnifiable hereunder.
14. Specific Performance. The parties recognize that if any
provision of this Agreement is violated by the Company, Indemnitee
may be without an adequate remedy at law. Accordingly, in the event
of any such violation, the Indemnitee shall be entitled, if
Indemnitee so elects, to institute proceedings, either at law or in
equity, to obtain damages, to enforce specific performance, to
enjoin such violation, or to obtain any relief or any
combination of the foregoing as Indemnitee may elect to pursue.
15. Binding Effect, Etc. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company),
assigns, spouses, heirs, and personal and legal representatives.
This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of the
Company or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be
severable if any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court
of competent jurisdiction to be invalid, void or other wise
unenforceable, and the remaining provisions shall remain enforceable
to the fullest extent permitted by law.
17. Governing Law. This Agreement shall be governed by, and be
construed and enforced in accordance with, the laws of the State of
New York applicable to contracts made and to be performed in such
state without giving effect to the principles of conflicts of laws.
Executed this 19th day of November, 1996.
CHYRON CORPORATION
/s/Michael Wellesley-Wesley
Michael Wellesley-Wesley
Chief Executive Officer
/s/Isaac Hersly
Isaac Hersly
Indemnification Agreement: Chyron Corporation (New York)
AGREEMENT, effective as of November 19, 1996 between Chyron
Corporation, a New York corporation (the "Company"), and Alan J.
Hirschfield (the "Indemnitee").
WHEREAS, it is essential to the Company to remain and attract as
directors and officers the most capable persons available; and
WHEREAS, Indemnitee is a director or officer of the Company; and
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and officers of public companies in today's environment; and
WHEREAS, the By-Laws of the Company provide: "The Corporation shall
indemnify any person to the full extent permitted, and in the manner
provided, by the New York Business Corporation Law ["BCL"], as the
same now exists or may hereafter be amended" and
WHEREAS, this Agreement satisfies the provision of Section 721 of
the BCL: and
WHEREAS, in recognition of the fact that the Indemnitee continues to
serve as a director or officer of the Company in part in reliance on
the aforesaid By-Laws and Indemnitee's need for substantial
protection against personal liability in order to enhance
Indemnitee's continued service to the Company in an effective
manner, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such By-Laws will be
available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such By-Laws or any change in the
composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), and due to the potential
inadequacy of the Company's directors' and officers' liability
insurance coverage, the Company wishes to provide in this Agreement
for the indemnification of, and the advancing of expenses to,
Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of
Indemnitee under the Company's directors' and officers' liability
insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to service the Company directly or, in its request, with
another enterprise, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Certain Definitions.
(a) Approved Law Firm: shall mean any law firm (i) located in New
York City and (ii) rated "av" by Martindale-Hubbel Law Directory.
(b) Board of Directors: shall mean the Board of Directors of the
Company.
(c) Change in Control: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than any
stockholder (and/or affiliate of such stockholder) on the date of
this Agreement or a trustee or other fiduciary holding securities
under an employee benefit plan of the Company in substantially the
same portions as their ownership of stock of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly of securities of the Company
representing 15 percent or more of the totaling voting power
represented by the Company's then outstanding Voting Securities
(such person being hereinafter referred to as an "Acquiring
Person"), or (ii) during any 24-consecutive-month period,
individuals who at the beginning of such period constitute the
Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least two-
thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the shareholders
of the Company approve a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which
would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities
of the surviving entry) at least 80 percent of the total voting
power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all the
Company's assets.
(d) Claim: shall mean any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation, whether
conducted by the company or any other party, that Indemnitee in good
faith believes might lead to the institution of any such action,
suite or proceeding, whether civil, criminal, administrative,
investigative or other.
(e) Expenses: shall include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, being a witness in or
participate in, any Claim relating to any Indemnifiable Event,
together with interest, computed at the Company's average cost of
funds for short-term borrowings, accrued from the date of incurrence
of such expense to the date Indemnitee receives reimbursement
therefore.
(f) Indemnifiable Event: shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer,
employee, agent or fiduciary of the Company, or is or was serving at
the request of the Company as a director, officer, employee,
trustee, agent or fiduciary of another corporation of any type or
kind, domestic or foreign, partnership, joint venture, trust,
employee benefit plan or other enterprise, or by reason of anything
done or not done by Indemnitee in such capacity. Without limitation
of any indemnification provided hereunder, an Indemnitee serving (i)
another corporation, partnership, joint venture or trust of which 10
percent or more of the voting power or residual economic interest is
held, directly or indirectly, by the Company, or (ii) any employee
benefit plan of the Company or an entity referred to in clause (i),
in any capacity shall be deemed to be doing so at the request of the
Company.
(g) Reviewing Party: shall be (i) the Board of Directors acting by
quorum consisting of directors who are not parties to the particular
Claim with respect to which Indemnitee is seeking indemnification,
or (ii) if such a quorum is not obtainable or, even if obtainable,
if a quorum of disinterested directors so directs, (A) the Board of
Directors upon the opinion in writing of independent legal counsel
that indemnification is proper in the circumstances because the
applicable standard of conduct set forth in Section 2 of this
Agreement and in Section 721 of the BCL has been met by the
Indemnitee or (B) the shareholders upon a finding that the
Indemnitee has met the applicable standard of conduct referred to in
clause (ii) (A) of this definition.
(h) Voting Securities: shall mean any securities of the Company
which vote generally in the election of the directors.
2. Basic Indemnification Arrangement.
If Indemnitee was, is or becomes at any time a party to, or witness
or other participant in, or is threatened to be made a party to, or
witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 days after written
demand is presented to the Company, against any and all Expenses,
judgements, fines (including excise taxes assessed on an Indemnitee
with respect to an employee benefit plan), penalties and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with, or in respect of, such
Expenses, judgements, fines, penalties or amounts paid in
settlement) of such Claim. If so requested by Indemnitee, the
Company shall advance (within two business days of such request) any
and all Expenses to Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary; (i)
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement if a judgement or other final adjudication adverse to the
Indemnitee establishes that Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or
that Indemnitee personally gained in fact a financial profit or
other advantage to which Indemnitee was not legally entitled and
(ii) prior to a Change in Control Indemnitee shall not be entitled
to indemnification pursuant to this Agreement in connection
with any Claim initiated by Indemnitee against the Company or any
director or officer of the Company unless the Company has jointed in
or consented to the initiation of such Claim.
3. Payment.
Notwithstanding the provision of Section 2, the obligations of the
Company under Section 2 (which shall in no event be deemed to
preclude any right to indemnification to which Indemnitee may be
entitled under Section 723(a) of the BCL) shall be subject to the
condition that the Reviewing Party shall have authorized such
indemnification in the specific case by having determined that
Indemnitee is permitted to be indemnified under the applicable
standard of conduct set forth in Section 2 and applicable law. The
Company shall promptly call a meeting of the Board of Directors with
respect to a Claim and agrees to use its best efforts to facilitate
a prompt determination by the Receiving Party with respect to the
Claim. Indemnitee shall be afforded the opportunity to make
submissions to the Reviewing Party with respect to the Claim. The
obligation of the company to make an Expense Advance pursuant to
Section 2 shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under Section 2 and
applicable law, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees and undertakes to the full extent
required by paragraph (a) of Section 725 of the BCL to reimburse the
Company) for all such amounts theretofore paid; provided, however,
that if Indemnitee has commenced legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee
should be indemnified under applicable law, any determination made
by the Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company for any
Expense Advance until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have
been exhausted or lapsed). If there has been no determination by
the Reviewing Party or if the Reviewing Party determines that
Indemnitee substantively would not be permitted to be indemnified in
whole or in part under applicable law, Indemnitee shall have the
right to commence litigation in any court in the State of New York
having subject matter jurisdiction thereof and in which venue is
proper seeking an initial determination by the court or challenging
any such determination by the Reviewing Party or any aspect thereof,
and the Company hereby consents to service of process and to appear
in any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Indemnitee.
4. Change in Control.
If there is a Change in Control of the Company (other than a Change
in Control which has been approved by a majority of the Board of
Directors who were directors immediately prior to such Change in
Control) then (i) all determinations by the Company pursuant to the
first sentence of Section 3 hereof and Section 723(b) of the BCL
shall be made pursuant to subparagraph (1) or (2)(A) of such Section
723(b) and (ii) with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or By-
law of the Company now or hereinafter in effect relating to Claims
for Indemnifiable Events (including, but not limited to, any option
to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of
the BCL) the Company (including the Board of Directors) shall seek
legal advice from (and only from) special, independent counsel
selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld), and who has not otherwise
performed services for the Company (or any subsidiary of the
Company) or the Acquiring Person (or any affiliate or associate of
such Acquiring Person) within the last five years (other than in
connection with such matters) or indemnitee. Unless Indemnitee has
theretofore selected counsel pursuant to this Section 4 and such
counsel has been approved by the Company, any Approved Law Firm
shall be deemed to satisfy the requirements set forth above. Such
counsel, among otherthings, shall render its written opinion to the
Company, the Board of Directors and Indemnitee as to whether and to
what extent the Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable
fees of the special, independent counsel referred to above and to
fully indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising our of or
relating to this Agreement or its engagement pursuant hereto. As
used in this Section 4, the terms "affiliate" and "associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended and in effect on the date of this Agreement.
5. Indemnification for Additional Expenses.
The Company shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee, shall
(within two business days of such request) advance such expenses to
Indemnitee, which are incurred by Indemnitee in connection with
any claim asserted or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under
this Agreement or any other agreement or By-law of the Company now
or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery under any directors' and officers' liability
insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, advance expenses payment or insurance recovery, as
the case may be.
6. Partial Indemnity, Etc.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the
Expenses, judgements, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the
portion thereto to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee shall be
indemnified, to the extent permitted by law, against all Expenses
incurred in connection with such Indemnifiable Event. In connection
with any determination by the Reviewing Party or otherwise as to
whether Indemnitee is entitled to be indemnified hereunder, the
burden of proof shall, to the extent permitted by law, be on the
Company to establish that Indemnitee is not so entitled.
7. Presumption.
For purposes of this Agreement, the termination of any claim,
action, suite or proceeding, whether civil or criminal, by judgment,
order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere or its equivalent,
shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that
a court has determined that indemnification is not permitted by
applicable law.
8. Nonexclusivity, Etc.
The rights of the Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the By-laws of the Company,
the BCL or otherwise. To the extent that a change in the BCL
(whether by statue or judicial decision) permits greater
indemnification by agreement than would be afforded currently under
the By-laws of the Company and this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.
9. Liability Insurance
To the extent the Company maintains an insurance policy or olicies
providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for
any director or officer of the Company.
10. Period of Limitations. No legal action shall be brought and
no cause of action shall be asserted by or on behalf of the Company
or any affiliate of the Company against Indemnitee, Indemnitee's
spouse, heirs, executors or personal or legal representatives after
the expiration of two years from the date of accrual of such cause
of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted
by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter
period shall govern.
11. Amendments, Etc. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all
papers required and shall do everything that may be necessary to
secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce
such rights.
13. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any
claim made against Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance policy, By-law or
otherwise) of the amounts otherwise Indemnifiable hereunder.
14. Specific Performance. The parties recognize that if any
provision of this Agreement is violated by the Company, Indemnitee
may be without an adequate remedy at law. Accordingly, in the event
of any such violation, the Indemnitee shall be entitled, if
Indemnitee so elects, to institute proceedings, either at law or in
equity, to obtain damages, to enforce specific performance, to
enjoin such violation, or to obtain any relief or any
combination of the foregoing as Indemnitee may elect to pursue.
15. Binding Effect, Etc. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company),
assigns, spouses, heirs, and personal and legal representatives.
This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of the
Company or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be
severable if any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court
of competent jurisdiction to be invalid, void or other wise
unenforceable, and the remaining provisions shall remain
enforceable to the fullest extent permitted by law.
17. Governing Law. This Agreement shall be governed by, and be
construed and enforced in accordance with, the laws of the State of
New York applicable to contracts made and to be performed in such
state without giving effect to the principles of conflicts of laws.
Executed this 19th day of November, 1996.
CHYRON CORPORATION
/s/Michael Wellesley-Wesley
Michael Wellesley-Wesley
Chief Executive Officer
/s/Alan J. Hirschfield
Alan J. Hirschfield
Indemnification Agreement: Chyron Corporation (New York)
AGREEMENT, effective as of November 19, 1996 between Chyron
Corporation, a New York corporation (the "Company"), and Patricia
Lampe (the "Indemnitee").
WHEREAS, it is essential to the Company to remain and attract as
directors and officers the most capable persons available; and
WHEREAS, Indemnitee is a director or officer of the Company; and
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and officers of public companies in today's environment; and
WHEREAS, the By-Laws of the Company provide: "The Corporation shall
indemnify any person to the full extent permitted, and in the manner
provided, by the New York Business Corporation Law ["BCL"], as the
same now exists or may hereafter be amended" and
WHEREAS, this Agreement satisfies the provision of Section 721 of
the BCL: and
WHEREAS, in recognition of the fact that the Indemnitee continues to
serve as a director or officer of the Company in part in reliance on
the aforesaid By-Laws and Indemnitee's need for substantial
protection against personal liability in order to enhance
Indemnitee's continued service to the Company in an effective
manner, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such By-Laws will be
available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such By-Laws or any change in the
composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), and due to the potential
inadequacy of the Company's directors' and officers' liability
insurance coverage, the Company wishes to provide in this Agreement
for the indemnification of, and the advancing of expenses to,
Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of
Indemnitee under the Company's directors' and officers' liability
insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to service the Company directly or, in its request, with
another enterprise, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Certain Definitions.
(a) Approved Law Firm: shall mean any law firm (i) located in New
York City and (ii) rated "av" by Martindale-Hubbel Law Directory.
(b) Board of Directors: shall mean the Board of Directors of the
Company.
(c) Change in Control: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than any
stockholder (and/or affiliate of such stockholder) on the date of
this Agreement or a trustee or other fiduciary holding securities
under an employee benefit plan of the Company in substantially the
same portions as their ownership of stock of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly of securities of the Company
representing 15 percent or more of the totaling voting power
represented by the Company's then outstanding Voting Securities
(such person being hereinafter referred to as an "Acquiring
Person"), or (ii) during any 24-consecutive-month period,
individuals who at the beginning of such period constitute the
Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the shareholders
of the Company approve a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which
would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities
of the surviving entry) at least 80 percent of the total voting
power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all the
Company's assets.
(d) Claim: shall mean any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation, whether
conducted by the company or any other party, that Indemnitee in
good faith believes might lead to the institution of any such
action, suite or proceeding, whether civil, criminal,
administrative, investigative or other.
(e) Expenses: shall include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, being a witness in or
participate in, any Claim relating to any Indemnifiable Event,
together with interest, computed at the Company's average cost of
funds for short-term borrowings, accrued from the date of incurrence
of such expense to the date Indemnitee receives reimbursement
therefore.
(f) Indemnifiable Event: shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee,
agent or fiduciary of the Company, or is or was serving at the
request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation of any type or kind,
domestic or foreign, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of anything done or
not done by Indemnitee in such capacity. Without limitation of any
indemnification provided hereunder, an Indemnitee serving (i)
another corporation, partnership, joint venture or trust of which 10
percent or more of the voting power or residual economic interest is
held, directly or indirectly, by the Company, or (ii) any employee
benefit plan of the Company or an entity referred to in clause (i),
in any capacity shall be deemed to be doing so at the request of the
Company.
(g) Reviewing Party: shall be (i) the Board of Directors acting by
quorum consisting of directors who are not parties to the particular
Claim with respect to which Indemnitee is seeking indemnification,
or (ii) if such a quorum is not obtainable or, even if obtainable,
if a quorum of disinterested directors so directs, (A) the Board of
Directors upon the opinion in writing of independent legal counsel
that indemnification is proper in the circumstances because the
applicable standard of conduct set forth in Section 2 of this
Agreement and in Section 721 of the BCL has been met by the
Indemnitee or (B) the shareholders upon a finding that the
Indemnitee has met the applicable standard of conduct referred to in
clause (ii)(A) of this definition.
(h) Voting Securities: shall mean any securities of the Company
which vote generally in the election of the directors.
2. Basic Indemnification Arrangement.
If Indemnitee was, is or becomes at any time a party to, or witness
or other participant in, or is threatened to be made a party to, or
witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 days after written
demand is presented to the Company, against any and all Expenses,
judgements, fines (including excise taxes assessed on an Indemnitee
with respect to an employee benefit plan), penalties and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with, or in respect of, such
Expenses, judgements, fines, penalties or amounts paid in
settlement) of such Claim. If so requested by Indemnitee, the
Company shall advance (within two business days of such request) any
and all Expenses to Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary; (i)
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement if a judgement or other final adjudication adverse to the
Indemnitee establishes that Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or
that Indemnitee personally gained in fact a financial profit or
other advantage to which Indemnitee was not legally entitled and
(ii) prior to a Change in Control Indemnitee shall not be entitled
to indemnification pursuant to this Agreement in connection
with any Claim initiated by Indemnitee against the Company or any
director or officer of the Company unless the Company has jointed in
or consented to the initiation of such Claim.
3. Payment.
Notwithstanding the provision of Section 2, the obligations of the
Company under Section 2 (which shall in no event be deemed to
preclude any right to indemnification to which Indemnitee may be
entitled under Section 723(a) of the BCL) shall be subject to the
condition that the Reviewing Party shall have authorized such
indemnification in the specific case by having determined that
Indemnitee is permitted to be indemnified under the applicable
standard of conduct set forth in Section 2 and applicable law. The
Company shall promptly call a meeting of the Board of Directors with
respect to a Claim and agrees to use its best efforts to facilitate
a prompt determination by the Receiving Party with respect to the
Claim. Indemnitee shall be afforded the opportunity to make
submissions to the Reviewing Party with respect to the Claim. The
obligation of the company to make an Expense Advance pursuant to
Section 2 shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under Section 2 and applicable
law, the Company shall be entitled to be reimbursed by Indemnitee
(who hereby agrees and undertakes to the full extent required by
paragraph (a) of Section 725 of the BCL to reimburse the Company)
for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced legal proceedings in a court of competent
jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the
Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee
shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). If there has been no determination by the
Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or
in part under applicable law, Indemnitee shall have the right to
commence litigation in any court in the State of New York having
subject matter jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or challenging any
such determination by the Reviewing Party or any aspect thereof, and
the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Indemnitee.
4. Change in Control.
If there is a Change in Control of the Company (other than a Change
in Control which has been approved by a majority of the Board of
Directors who were directors immediately prior to such Change in
Control) then (i) all determinations by the Company pursuant to the
first sentence of Section 3 hereof and Section 723(b) of the BCL
shall be made pursuant to subparagraph (1) or (2)(A) of such Section
723(b) and (ii) with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or By-
law of the Company now or hereinafter in effect relating to Claims
for Indemnifiable Events (including, but not limited to, any option
to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of
the BCL) the Company (including the Board of Directors) shall seek
legal advice from (and only from) special, independent counsel
selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld), and who has not otherwise
performed services for the Company (or any subsidiary of the
Company) or the Acquiring Person (or any affiliate or associate of
such Acquiring Person) within the last five years (other than in
connection with such matters) or indemnitee. Unless Indemnitee has
theretofore selected counsel pursuant to this Section 4 and such
counsel has been approved by the Company, any Approved Law Firm
shall be deemed to satisfy the requirements set forth above. Such
counsel, among otherthings, shall render its written opinion to the
Company, the Board of Directors and Indemnitee as to whether and to
what extent the Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees
of the special, independent counsel referred to above and to fully
indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising our of or
relating to this Agreement or its engagement pursuant hereto. As
used in this Section 4, the terms "affiliate" and "associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended and in effect on the date of this Agreement.
5. Indemnification for Additional Expenses.
The Company shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee, shall
(within two business days of such request) advance such expenses to
Indemnitee, which are incurred by Indemnitee in connection with
any claim asserted or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under
this Agreement or any other agreement or By-law of the Company now
or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery under any directors' and officers' liability
insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, advance expenses payment or insurance recovery, as
the case may be.
6. Partial Indemnity, Etc.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the
Expenses, judgements, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the
portion thereto to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee shall be
indemnified, to the extent permitted by law, against all Expenses
incurred in connection with such Indemnifiable Event. In connection
with any determination by the Reviewing Party or otherwise as to
whether Indemnitee is entitled to be indemnified hereunder, the
burden of proof shall, to the extent permitted by law, be on the
Company to establish that Indemnitee is not so entitled.
7. Presumption.
For purposes of this Agreement, the termination of any claim,
action, suite or proceeding, whether civil or criminal, by judgment,
order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere or its equivalent,
shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that
a court has determined that indemnification is not permitted by
applicable law.
8. Nonexclusivity, Etc.
The rights of the Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the By-laws of the Company,
the BCL or otherwise. To the extent that a change in the BCL
(whether by statue or judicial decision) permits greater
indemnification by agreement than would be afforded currently under
the By-laws of the Company and this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.
9. Liability Insurance
To the extent the Company maintains an insurance policy or policies
providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for
any director or officer of the Company.
10. Period of Limitations. No legal action shall be brought and
no cause of action shall be asserted by or on behalf of the Company
or any affiliate of the Company against Indemnitee, Indemnitee's
spouse, heirs, executors or personal or legal representatives after
the expiration of two years from the date of accrual of such cause
of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted
by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter
period shall govern.
11. Amendments, Etc. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all
papers required and shall do everything that may be necessary to
secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce
such rights.
13. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any
claim made against Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance policy, By-law or
otherwise) of the amounts otherwise Indemnifiable hereunder.
14. Specific Performance. The parties recognize that if any
provision of this Agreement is violated by the Company, Indemnitee
may be without an adequate remedy at law. Accordingly, in the event
of any such violation, the Indemnitee shall be entitled, if
Indemnitee so elects, to institute proceedings, either at law or in
equity, to obtain damages, to enforce specific performance, to
enjoin such violation, or to obtain any relief or any
combination of the foregoing as Indemnitee may elect to pursue.
15. Binding Effect, Etc. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company),
assigns, spouses, heirs, and personal and legal representatives.
This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of the
Company or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be
severable if any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court
of competent jurisdiction to be invalid, void or other wise
unenforceable, and the remaining provisions shall remain enforceable
to the fullest extent permitted by law.
17. Governing Law. This Agreement shall be governed by, and be
construed and enforced in accordance with, the laws of the State of
New York applicable to contracts made and to be performed in such
state without giving effect to the principles of conflicts of laws.
Executed this 19th day of November, 1996.
CHYRON CORPORATION
/s/Michael Wellesley-Wesley
Michael Wellesley-Wesley
Chief Executive Officer
/s/Patricia Lampe
Patricia Lampe
Indemnification Agreement: Chyron Corporation (New York)
AGREEMENT, effective as of November 19, 1996 between Chyron
Corporation, a New York corporation (the "Company"), and Wesley W.
Lang Jr. (the "Indemnitee").
WHEREAS, it is essential to the Company to remain and attract as
directors and officers the most capable persons available; and
WHEREAS, Indemnitee is a director or officer of the Company; and
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and officers of public companies in today's environment; and
WHEREAS, the By-Laws of the Company provide: "The Corporation shall
indemnify any person to the full extent permitted, and in the manner
provided, by the New York Business Corporation Law ["BCL"], as the
same now exists or may hereafter be amended" and
WHEREAS, this Agreement satisfies the provision of Section 721 of
the BCL: and
WHEREAS, in recognition of the fact that the Indemnitee continues to
serve as a director or officer of the Company in part in reliance on
the aforesaid By-Laws and Indemnitee's need for substantial
protection against personal liability in order to enhance
Indemnitee's continued service to the Company in an effective
manner, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such By-Laws will be
available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such By-Laws or any change in the
composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), and due to the potential
inadequacy of the Company's directors' and officers' liability
insurance coverage, the Company wishes to provide in this Agreement
for the indemnification of, and the advancing of expenses to,
Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of
Indemnitee under the Company's directors' and officers' liability
insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to service the Company directly or, in its request, with
another enterprise, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Certain Definitions.
(a) Approved Law Firm: shall mean any law firm (i) located in New
York City and (ii) rated "av" by Martindale-Hubbel Law Directory.
(b) Board of Directors: shall mean the Board of Directors of the
Company.
(c) Change in Control: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than any
stockholder (and/or affiliate of such stockholder) on the date of
this Agreement or a trustee or other fiduciary holding securities
under an employee benefit plan of the Company in substantially the
same portions as their ownership of stock of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly of securities of the Company
representing 15 percent or more of the totaling voting power
represented by the Company's then outstanding Voting Securities
(such person being hereinafter referred to as an "Acquiring
Person"), or (ii) during any 24-consecutive-month period,
individuals who at the beginning of such period constitute the
Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the shareholders
of the Company approve a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which
would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities
of the surviving entry) at least 80 percent of the total voting
power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all the
Company's assets.
(d) Claim: shall mean any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation, whether
conducted by the company or any other party, that Indemnitee in
good faith believes might lead to the institution of any such
action, suite or proceeding, whether civil, criminal,
administrative, investigative or other.
(e) Expenses: shall include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, being a witness in or
participate in, any Claim relating to any Indemnifiable Event,
together with interest, computed at the Company's average cost of
funds for short-term borrowings, accrued from the date of incurrence
of such expense to the date Indemnitee receives reimbursement
therefore.
(f) Indemnifiable Event: shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee,
agent or fiduciary of the Company, or is or was serving at the
request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation of any type or kind,
domestic or foreign, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of anything done or
not done by Indemnitee in such capacity. Without limitation of any
indemnification provided hereunder, an Indemnitee serving (i)
another corporation, partnership, joint venture or trust of which 10
percent or more of the voting power or residual economic interest is
held, directly or indirectly, by the Company, or (ii) any employee
benefit plan of the Company or an entity referred to in clause
(i), in any capacity shall be deemed to be doing so at the request
of the Company.
(g) Reviewing Party: shall be (i) the Board of Directors acting by
quorum consisting of directors who are not parties to the particular
Claim with respect to which Indemnitee is seeking indemnification,
or (ii) if such a quorum is not obtainable or, even if obtainable,
if a quorum of disinterested directors so directs, (A) the Board of
Directors upon the opinion in writing of independent legal counsel
that indemnification is proper in the circumstances because the
applicable standard of conduct set forth in Section 2 of this
Agreement and in Section 721 of the BCL has been met by the
Indemnitee or (B) the shareholders upon a finding that the
Indemnitee has met the applicable standard of conduct referred to in
clause (ii) (A) of this definition.
(h) Voting Securities: shall mean any securities of the Company
which vote generally in the election of the directors.
2. Basic Indemnification Arrangement.
If Indemnitee was, is or becomes at any time a party to, or witness
or other participant in, or is threatened to be made a party to, or
witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 days after written
demand is presented to the Company, against any and all Expenses,
judgements, fines (including excise taxes assessed on an Indemnitee
with respect to an employee benefit plan), penalties and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with, or in respect of, such
Expenses, judgements, fines, penalties or amounts paid in
settlement) of such Claim. If so requested by Indemnitee, the
Company shall advance (within two business days of such request) any
and all Expenses to Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary; (i)
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement if a judgement or other final adjudication adverse to the
Indemnitee establishes that Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or
that Indemnitee personally gained in fact a financial profit or
other advantage to which Indemnitee was not legally entitled and
(ii) prior to a Change in Control Indemnitee shall not be entitled
to indemnification pursuant to this Agreement in connection
with any Claim initiated by Indemnitee against the Company or any
director or officer of the Company unless the Company has jointed in
or consented to the initiation of such Claim.
3. Payment.
Notwithstanding the provision of Section 2, the obligations of the
Company under Section 2 (which shall in no event be deemed to
preclude any right to indemnification to which Indemnitee may be
entitled under Section 723(a) of the BCL) shall be subject to the
condition that the Reviewing Party shall have authorized such
indemnification in the specific case by having determined that
Indemnitee is permitted to be indemnified under the applicable
standard of conduct set forth in Section 2 and applicable law. The
Company shall promptly call a meeting of the Board of Directors with
respect to a Claim and agrees to use its best efforts to facilitate
a prompt determination by the Receiving Party with respect to the
Claim. Indemnitee shall be afforded the opportunity to make
submissions to the Reviewing Party with respect to the Claim. The
obligation of the company to make an Expense Advance pursuant to
Section 2 shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under Section 2 and applicable
law, the Company shall be entitled to be reimbursed by Indemnitee
(who hereby agrees and undertakes to the full extent required by
paragraph (a) of Section 725 of the BCL to reimburse the Company)
for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced legal proceedings in a court of competent
jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the
Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee
shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). If there has been no determination by the
Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or
in part under applicable law, Indemnitee shall have the right to
commence litigation in any court in the State of New York having
subject matter jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or challenging any
such determination by the Reviewing Party or any aspect thereof, and
the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Indemnitee.
4. Change in Control.
If there is a Change in Control of the Company (other than a Change
in Control which has been approved by a majority of the Board of
Directors who were directors immediately prior to such Change in
Control) then (i) all determinations by the Company pursuant to the
first sentence of Section 3 hereof and Section 723(b) of the BCL
shall be made pursuant to subparagraph (1) or (2)(A) of such Section
723(b) and (ii) with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or By-
law of the Company now or hereinafter in effect relating to Claims
for Indemnifiable Events (including, but not limited to, any option
to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of
the BCL) the Company (including the Board of Directors) shall seek
legal advice from (and only from) special, independent counsel
selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld), and who has not otherwise
performed services for the Company (or any subsidiary of the
Company) or the Acquiring Person (or any affiliate or associate of
such Acquiring Person) within the last five years (other than in
connection with such matters) or indemnitee. Unless Indemnitee has
theretofore selected counsel pursuant to this Section 4 and such
counsel has been approved by the Company, any Approved Law Firm
shall be deemed to satisfy the requirements set forth above. Such
counsel, among otherthings, shall render its written opinion to the
Company, the Board of Directors and Indemnitee as to whether and to
what extent the Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable
fees of the special, independent counsel referred to above and to
fully indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising our of or
relating to this Agreement or its engagement pursuant hereto. As
used in this Section 4, the terms "affiliate" and "associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended and in effect on the date of this Agreement.
5. Indemnification for Additional Expenses.
The Company shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee, shall
(within two business days of such request) advance such expenses to
Indemnitee, which are incurred by Indemnitee in connection with
any claim asserted or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under
this Agreement or any other agreement or By-law of the Company now
or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery under any directors' and officers' liability
insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, advance expenses payment or insurance recovery, as
the case may be.
6. Partial Indemnity, Etc.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the
Expenses, judgements, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the
portion thereto to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee shall be
indemnified, to the extent permitted by law, against all Expenses
incurred in connection with such Indemnifiable Event. In connection
with any determination by the Reviewing Party or otherwise as to
whether Indemnitee is entitled to be indemnified hereunder, the
burden of proof shall, to the extent permitted by law, be on the
Company to establish that Indemnitee is not so entitled.
7. Presumption.
For purposes of this Agreement, the termination of any claim,
action, suite or proceeding, whether civil or criminal, by judgment,
order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere or its equivalent,
shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that
a court has determined that indemnification is not permitted by
applicable law.
8. Nonexclusivity, Etc.
The rights of the Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the By-laws of the Company,
the BCL or otherwise. To the extent that a change in the BCL
(whether by statue or judicial decision) permits greater
indemnification by agreement than would be afforded currently under
the By-laws of the Company and this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.
9. Liability Insurance
To the extent the Company maintains an insurance policy or policies
providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for
any director or officer of the Company.
10. Period of Limitations. No legal action shall be brought and
no cause of action shall be asserted by or on behalf of the Company
or any affiliate of the Company against Indemnitee, Indemnitee's
spouse, heirs, executors or personal or legal representatives after
the expiration of two years from the date of accrual of such cause
of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted
by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter
period shall govern.
11. Amendments, Etc. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all
papers required and shall do everything that may be necessary to
secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce
such rights.
13. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any
claim made against Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance policy, By-law or
otherwise) of the amounts otherwise Indemnifiable hereunder.
14. Specific Performance. The parties recognize that if any
provision of this Agreement is violated by the Company, Indemnitee
may be without an adequate remedy at law. Accordingly, in the event
of any such violation, the Indemnitee shall be entitled, if
Indemnitee so elects, to institute proceedings, either at law or in
equity, to obtain damages, to enforce specific performance, to
enjoin such violation, or to obtain any relief or any
combination of the foregoing as Indemnitee may elect to pursue.
15. Binding Effect, Etc. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company),
assigns, spouses, heirs, and personal and legal representatives.
This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of the
Company or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be
severable if any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court
of competent jurisdiction to be invalid, void or other wise
unenforceable, and the remaining provisions shall remain enforceable
to the fullest extent permitted by law.
17. Governing Law. This Agreement shall be governed by, and be
construed and enforced in accordance with, the laws of the State of
New York applicable to contracts made and to be performed in such
state without giving effect to the principles of conflicts of laws.
Executed this 19th day of November, 1996.
CHYRON CORPORATION
/s/Michael Wellesley-Wesley
Michael Wellesley-Wesley
Chief Executive Officer
/s/Wesley W. Lang, Jr.
Wesley W. Lang, Jr.
Indemnification Agreement: Chyron Corporation (New York)
AGREEMENT, effective as of November 19, 1996 between Chyron
Corporation, a New York corporation (the "Company"), and Eugene Mr.
Weber (the "Indemnitee").
WHEREAS, it is essential to the Company to remain and attract as
directors and officers the most capable persons available; and
WHEREAS, Indemnitee is a director or officer of the Company; and
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and officers of public companies in today's environment; and
WHEREAS, the By-Laws of the Company provide: "The Corporation shall
indemnify any person to the full extent permitted, and in the manner
provided, by the New York Business Corporation Law ["BCL"], as the
same now exists or may hereafter be amended" and
WHEREAS, this Agreement satisfies the provision of Section 721 of
the BCL: and
WHEREAS, in recognition of the fact that the Indemnitee continues to
serve as a director or officer of the Company in part in reliance on
the aforesaid By-Laws and Indemnitee's need for substantial
protection against personal liability in order to enhance
Indemnitee's continued service to the Company in an effective
manner, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such By-Laws will be
available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such By-Laws or any change in the
composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), and due to the potential
inadequacy of the Company's directors' and officers' liability
insurance coverage, the Company wishes to provide in this Agreement
for the indemnification of, and the advancing of expenses to,
Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of
Indemnitee under the Company's directors' and officers' liability
insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to service the Company directly or, in its request, with
another enterprise, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Certain Definitions.
(a) Approved Law Firm: shall mean any law firm (i) located in New
York City and (ii) rated "av" by Martindale-Hubbel Law Directory.
(b) Board of Directors: shall mean the Board of Directors of the
Company.
(c) Change in Control: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than any
stockholder (and/or affiliate of such stockholder) on the date of
this Agreement or a trustee or other fiduciary holding securities
under an employee benefit plan of the Company in substantially the
same portions as their ownership of stock of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly of securities of the Company
representing 15 percent or more of the totaling voting power
represented by the Company's then outstanding Voting Securities
(such person being hereinafter referred to as an "Acquiring
Person"), or (ii) during any 24-consecutive-month period,
individuals who at the beginning of such period constitute the
Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least two-
thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the shareholders
of the Company approve a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which
would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities
of the surviving entry) at least 80 percent of the total voting
power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all the
Company's assets.
(d) Claim: shall mean any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation, whether
conducted by the company or any other party, that Indemnitee in
good faith believes might lead to the institution of any such
action, suite or proceeding, whether civil, criminal,
administrative, investigative or other.
(e) Expenses: shall include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, being a witness in or
participate in, any Claim relating to any Indemnifiable Event,
together with interest, computed at the Company's average cost of
funds for short-term borrowings, accrued from the date of incurrence
of such expense to the date Indemnitee receives reimbursement
therefore.
(f) Indemnifiable Event: shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee,
agent or fiduciary of the Company, or is or was serving at the
request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation of any type or kind,
domestic or foreign, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of anything done or
not done by Indemnitee in such capacity. Without limitation of any
indemnification provided hereunder, an Indemnitee serving (i)
another corporation, partnership, joint venture or trust of which 10
percent or more of the voting power or residual economic interest is
held, directly or indirectly, by the Company, or (ii) any employee
benefit plan of the Company or an entity referred to in clause (i),
in any capacity shall be deemed to be doing so at the request of the
Company.
(g) Reviewing Party: shall be (i) the Board of Directors acting by
quorum consisting of directors who are not parties to the particular
Claim with respect to which Indemnitee is seeking indemnification,
or (ii) if such a quorum is not obtainable or, even if obtainable,
if a quorum of disinterested directors so directs, (A) the Board of
Directors upon the opinion in writing of independent legal counsel
that indemnification is proper in the circumstances because the
applicable standard of conduct set forth in Section 2 of this
Agreement and in Section 721 of the BCL has been met by the
Indemnitee or (B) the shareholders upon a finding that the
Indemnitee has met the applicable standard of conduct referred to in
clause (ii) (A) of this definition.
(h) Voting Securities: shall mean any securities of the Company
which vote generally in the election of the directors.
2. Basic Indemnification Arrangement.
If Indemnitee was, is or becomes at any time a party to, or witness
or other participant in, or is threatened to be made a party to, or
witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 days after written
demand is presented to the Company, against any and all Expenses,
judgements, fines (including excise taxes assessed on an Indemnitee
with respect to an employee benefit plan), penalties and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with, or in respect of, such
Expenses, judgements, fines, penalties or amounts paid in
settlement) of such Claim. If so requested by Indemnitee, the
Company shall advance (within two business days of such request) any
and all Expenses to Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary; (i)
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement if a judgement or other final adjudication adverse to the
Indemnitee establishes that Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or
that Indemnitee personally gained in fact a financial profit or
other advantage to which Indemnitee was not legally entitled and
(ii) prior to a Change in Control Indemnitee shall not be entitled
to indemnification pursuant to this Agreement in connection
with any Claim initiated by Indemnitee against the Company or any
director or officer of the Company unless the Company has jointed in
or consented to the initiation of such Claim.
3. Payment.
Notwithstanding the provision of Section 2, the obligations of the
Company under Section 2 (which shall in no event be deemed to
preclude any right to indemnification to which Indemnitee may be
entitled under Section 723(a) of the BCL) shall be subject to the
condition that the Reviewing Party shall have authorized such
indemnification in the specific case by having determined that
Indemnitee is permitted to be indemnified under the applicable
standard of conduct set forth in Section 2 and applicable law. The
Company shall promptly call a meeting of the Board of Directors with
respect to a Claim and agrees to use its best efforts to facilitate
a prompt determination by the Receiving Party with respect to the
Claim. Indemnitee shall be afforded the opportunity to make
submissions to the Reviewing Party with respect to the Claim. The
obligation of the company to make an Expense Advance pursuant to
Section 2 shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under Section 2 and applicable
law, the Company shall be entitled to be reimbursed by Indemnitee
(who hereby agrees and undertakes to the full extent required by
paragraph (a) of Section 725 of the BCL to reimburse the Company)
for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced legal proceedings in a court of competent
jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the
Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee
shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). If there has been no determination by the
Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or
in part under applicable law, Indemnitee shall have the right to
commence litigation in any court in the State of New York having
subject matter jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or challenging any
such determination by the Reviewing Party or any aspect thereof, and
the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Indemnitee.
4. Change in Control.
If there is a Change in Control of the Company (other than a Change
in Control which has been approved by a majority of the Board of
Directors who were directors immediately prior to such Change in
Control) then (i) all determinations by the Company pursuant to the
first sentence of Section 3 hereof and Section 723(b) of the BCL
shall be made pursuant to subparagraph (1) or (2)(A) of such Section
723(b) and (ii) with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or By-
law of the Company now or hereinafter in effect relating to Claims
for Indemnifiable Events (including, but not limited to, any option
to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of
the BCL) the Company (including the Board of Directors) shall seek
legal advice from (and only from) special, independent counsel
selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld), and who has not otherwise
performed services for the Company (or any subsidiary of the
Company) or the Acquiring Person (or any affiliate or associate of
such Acquiring Person) within the last five years (other than in
connection with such matters) or indemnitee. Unless Indemnitee has
theretofore selected counsel pursuant to this Section 4 and such
counsel has been approved by the Company, any Approved Law Firm
shall be deemed to satisfy the requirements set forth above. Such
counsel, among otherthings, shall render its written opinion to the
Company, the Board of Directors and Indemnitee as to whether and to
what extent the Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees
of the special, independent counsel referred to above and to fully
indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising our of or
relating to this Agreement or its engagement pursuant hereto. As
used in this Section 4, the terms "affiliate" and "associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended and in effect on the date of this Agreement.
5. Indemnification for Additional Expenses.
The Company shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee, shall
(within two business days of such request) advance such expenses to
Indemnitee, which are incurred by Indemnitee in connection with
any claim asserted or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under
this Agreement or any other agreement or By-law of the Company now
or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery under any directors' and officers' liability
insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, advance expenses payment or insurance recovery, as
the case may be.
6. Partial Indemnity, Etc.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the
Expenses, judgements, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the
portion thereto to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee shall be
indemnified, to the extent permitted by law, against all Expenses
incurred in connection with such Indemnifiable Event. In connection
with any determination by the Reviewing Party or otherwise as to
whether Indemnitee is entitled to be indemnified hereunder, the
burden of proof shall, to the extent permitted by law, be on the
Company to establish that Indemnitee is not so entitled.
7. Presumption.
For purposes of this Agreement, the termination of any claim,
action, suite or proceeding, whether civil or criminal, by judgment,
order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere or its equivalent,
shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that
a court has determined that indemnification is not permitted by
applicable law.
8. Nonexclusivity, Etc.
The rights of the Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the By-laws of the Company,
the BCL or otherwise. To the extent that a change in the BCL
(whether by statue or judicial decision) permits greater
indemnification by agreement than would be afforded currently under
the By-laws of the Company and this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.
9. Liability Insurance
To the extent the Company maintains an insurance policy or policies
providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for
any director or officer of the Company.
10. Period of Limitations. No legal action shall be brought and
no cause of action shall be asserted by or on behalf of the Company
or any affiliate of the Company against Indemnitee, Indemnitee's
spouse, heirs, executors or personal or legal representatives after
the expiration of two years from the date of accrual of such cause
of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted
by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter
period shall govern.
11. Amendments, Etc. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all
papers required and shall do everything that may be necessary to
secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce
such rights.
13. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any
claim made against Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance policy, By-law or
otherwise) of the amounts otherwise Indemnifiable hereunder.
14. Specific Performance. The parties recognize that if any
provision of this Agreement is violated by the Company, Indemnitee
may be without an adequate remedy at law. Accordingly, in the event
of any such violation, the Indemnitee shall be entitled, if
Indemnitee so elects, to institute proceedings, either at law or in
equity, to obtain damages, to enforce specific performance, to
enjoin such violation, or to obtain any relief or any
combination of the foregoing as Indemnitee may elect to pursue.
15. Binding Effect, Etc. This Agreement shall be binding upon,
inure to the benefit of, and be hereto and their respective
successors (including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of
the business and/or assets of the Company), assigns, spouses, heirs,
and personal and legal representatives. This Agreement shall
continue in effect regardless of whether Indemnitee continues to
serve as an officer or director of the Company or of any other
enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be
severable if any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court
of competent jurisdiction to be invalid, void or other wise
unenforceable, and the remaining provisions shall remain enforceable
to the fullest extent permitted by law.
17. Governing Law. This Agreement shall be governed by, and be
construed and enforced in accordance with, the laws of the State of
New York applicable to contracts made and to be performed in such
state without giving effect to the principles of conflicts of laws.
Executed this 19th day of November, 1996.
CHYRON CORPORATION
/s/Michael Wellesley-Wesley
Michael Wellesley-Wesley
Chief Executive Officer
/s/Eugene M. Weber
Eugene M. Weber
Indemnification Agreement: Chyron Corporation (New York)
AGREEMENT, effective as of November 19, 1996 between Chyron
Corporation, a New York corporation (the "Company"), and Michael
Wellesley-Wesley (the "Indemnitee").
WHEREAS, it is essential to the Company to remain and attract as
directors and officers the most capable persons available; and
WHEREAS, Indemnitee is a director or officer of the Company; and
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors
and officers of public companies in today's environment; and
WHEREAS, the By-Laws of the Company provide: "The Corporation shall
indemnify any person to the full extent permitted, and in the manner
provided, by the New York Business Corporation Law ["BCL"], as the
same now exists or may hereafter be amended" and
WHEREAS, this Agreement satisfies the provision of Section 721 of
the BCL: and
WHEREAS, in recognition of the fact that the Indemnitee continues to
serve as a director or officer of the Company in part in reliance on
the aforesaid By-Laws and Indemnitee's need for substantial
protection against personal liability in order to enhance
Indemnitee's continued service to the Company in an effective
manner, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such By-Laws will be
available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such By-Laws or any change in the
composition of the Company's Board of Directors or any acquisition
transaction relating to the Company), and due to the potential
inadequacy of the Company's directors' and officers' liability
insurance coverage, the Company wishes to provide in this Agreement
for the indemnification of, and the advancing of expenses to,
Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of
Indemnitee under the Company's directors' and officers' liability
insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to service the Company directly or, in its request, with
another enterprise, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Certain Definitions.
(a) Approved Law Firm: shall mean any law firm (i) located in New
York City and (ii) rated "av" by Martindale-Hubbel Law Directory.
(b) Board of Directors: shall mean the Board of Directors of the
Company.
(c) Change in Control: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than any
stockholder (and/or affiliate of such stockholder) on the date of
this Agreement or a trustee or other fiduciary holding securities
under an employee benefit plan of the Company in substantially the
same portions as their ownership of stock of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly of securities of the Company
representing 15 percent or more of the totaling voting power
represented by the Company's then outstanding Voting Securities
(such person being hereinafter referred to as an "Acquiring
Person"), or (ii) during any 24-consecutive-month period,
individuals who at the beginning of such period constitute the
Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the shareholders
of the Company approve a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which
would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities
of the surviving entry) at least 80 percent of the total voting
power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all the
Company's assets.
(d) Claim: shall mean any threatened, pending or completed action,
suit or proceeding, or any inquiry or investigation, whether
conducted by the company or any other party, that Indemnitee in
good faith believes might lead to the institution of any such
action, suite or proceeding, whether civil, criminal,
administrative, investigative or other.
(e) Expenses: shall include attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with
investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, being a witness in or
participate in, any Claim relating to any Indemnifiable Event,
together with interest, computed at the Company's average cost of
funds for short-term borrowings, accrued from the date of incurrence
of such expense to the date Indemnitee receives reimbursement
therefore.
(f) Indemnifiable Event: shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee,
agent or fiduciary of the Company, or is or was serving at the
request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation of any type or kind,
domestic or foreign, partnership, joint venture, trust, employee
benefit plan or other enterprise, or by reason of anything done or
not done by Indemnitee in such capacity. Without limitation of any
indemnification provided hereunder, an Indemnitee serving (i)
another corporation, partnership, joint venture or trust of which 10
percent or more of the voting power or residual economic interest is
held, directly or indirectly, by the Company, or (ii) any employee
benefit plan of the Company or an entity referred to in clause (i),
in any capacity shall be deemed to be doing so at the request of the
Company.
(g) Reviewing Party: shall be (i) the Board of Directors acting by
quorum consisting of directors who are not parties to the particular
Claim with respect to which Indemnitee is seeking indemnification,
or (ii) if such a quorum is not obtainable or, even if obtainable,
if a quorum of disinterested directors so directs, (A) the Board of
Directors upon the opinion in writing of independent legal counsel
that indemnification is proper in the circumstances because the
applicable standard of conduct set forth in Section 2 of this
Agreement and in Section 721 of the BCL has been met by the
Indemnitee or (B) the shareholders upon a finding that the
Indemnitee has met the applicable standard of conduct referred to in
clause (ii) (A) of this definition.
(h) Voting Securities: shall mean any securities of the Company
which vote generally in the election of the directors.
2. Basic Indemnification Arrangement.
If Indemnitee was, is or becomes at any time a party to, or witness
or other participant in, or is threatened to be made a party to, or
witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 days after written
demand is presented to the Company, against any and all Expenses,
judgements, fines (including excise taxes assessed on an Indemnitee
with respect to an employee benefit plan), penalties and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with, or in respect of, such
Expenses, judgements, fines, penalties or amounts paid in
settlement) of such Claim. If so requested by Indemnitee, the
Company shall advance (within two business days of such request) any
and all Expenses to Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary; (i)
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement if a judgement or other final adjudication adverse to the
Indemnitee establishes that Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or
that Indemnitee personally gained in fact a financial profit or
other advantage to which Indemnitee was not legally entitled and
(ii) prior to a Change in Control Indemnitee shall not be entitled
to indemnification pursuant to this Agreement in connection
with any Claim initiated by Indemnitee against the Company or any
director or officer of the Company unless the Company has jointed in
or consented to the initiation of such Claim.
3. Payment.
Notwithstanding the provision of Section 2, the obligations of the
Company under Section 2 (which shall in no event be deemed to
preclude any right to indemnification to which Indemnitee may be
entitled under Section 723(a) of the BCL) shall be subject to the
condition that the Reviewing Party shall have authorized such
indemnification in the specific case by having determined that
Indemnitee is permitted to be indemnified under the applicable
standard of conduct set forth in Section 2 and applicable law. The
Company shall promptly call a meeting of the Board of Directors with
respect to a Claim and agrees to use its best efforts to facilitate
a prompt determination by the Receiving Party with respect to the
Claim. Indemnitee shall be afforded the opportunity to make
submissions to the Reviewing Party with respect to the Claim. The
obligation of the company to make an Expense Advance pursuant to
Section 2 shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under Section 2 and
applicable law, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees and undertakes to the full extent
required by paragraph (a) of Section 725 of the BCL to reimburse the
Company) for all such amounts theretofore paid; provided, however,
that if Indemnitee has commenced legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee
should be indemnified under applicable law, any determination made
by the Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee
shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). If there has been no determination by the
Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or
in part under applicable law, Indemnitee shall have the right to
commence litigation in any court in the State of New York having
subject matter jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or challenging any
such determination by the Reviewing Party or any aspect thereof, and
the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and
Indemnitee.
4. Change in Control.
If there is a Change in Control of the Company (other than a Change
in Control which has been approved by a majority of the Board of
Directors who were directors immediately prior to such Change in
Control) then (i) all determinations by the Company pursuant to the
first sentence of Section 3 hereof and Section 723(b) of the BCL
shall be made pursuant to subparagraph (1) or (2)(A) of such Section
723(b) and (ii) with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or By-
law of the Company now or hereinafter in effect relating to Claims
for Indemnifiable Events (including, but not limited to, any option
to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of
the BCL) the Company (including the Board of Directors) shall seek
legal advice from (and only from) special, independent counsel
selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld), and who has not otherwise
performed services for the Company (or any subsidiary of the
Company) or the Acquiring Person (or any affiliate or associate of
such Acquiring Person) within the last five years (other than in
connection with such matters) or indemnitee. Unless Indemnitee has
theretofore selected counsel pursuant to this Section 4 and such
counsel has been approved by the Company, any Approved Law Firm
shall be deemed to satisfy the requirements set forth above. Such
counsel, among otherthings, shall render its written opinion to the
Company, the Board of Directors and Indemnitee as to whether and to
what extent the Indemnitee would be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees
of the special, independent counsel referred to above and to fully
indemnify such counsel against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising our of or
relating to this Agreement or its engagement pursuant hereto. As
used in this Section 4, the terms "affiliate" and "associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended and in effect on the date of this Agreement.
5. Indemnification for Additional Expenses.
The Company shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee, shall
(within two business days of such request) advance such expenses to
Indemnitee, which are incurred by Indemnitee in connection with
any claim asserted or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under
this Agreement or any other agreement or By-law of the Company now
or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery under any directors' and officers' liability
insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, advance expenses payment or insurance recovery, as
the case may be.
6. Partial Indemnity, Etc.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the
Expenses, judgements, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the
portion thereto to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent
that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, Indemnitee shall be
indemnified, to the extent permitted by law, against all Expenses
incurred in connection with such Indemnifiable Event. In connection
with any determination by the Reviewing Party or otherwise as to
whether Indemnitee is entitled to be indemnified hereunder, the
burden of proof shall, to the extent permitted by law, be on the
Company to establish that Indemnitee is not so entitled.
7. Presumption.
For purposes of this Agreement, the termination of any claim,
action, suite or proceeding, whether civil or criminal, by judgment,
order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere or its equivalent,
shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that
a court has determined that indemnification is not permitted by
applicable law.
8. Nonexclusivity, Etc.
The rights of the Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the By-laws of the Company,
the BCL or otherwise. To the extent that a change in the BCL
(whether by statue or judicial decision) permits greater
indemnification by agreement than would be afforded currently under
the By-laws of the Company and this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change.
9. Liability Insurance
To the extent the Company maintains an insurance policy or policies
providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for
any director or officer of the Company.
10. Period of Limitations. No legal action shall be brought and
no cause of action shall be asserted by or on behalf of the Company
or any affiliate of the Company against Indemnitee, Indemnitee's
spouse, heirs, executors or personal or legal representatives after
the expiration of two years from the date of accrual of such cause
of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted
by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter
period shall govern.
11. Amendments, Etc. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all
papers required and shall do everything that may be necessary to
secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce
such rights.
13. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any
claim made against Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance policy, By-law or
otherwise) of the amounts otherwise Indemnifiable hereunder.
14. Specific Performance. The parties recognize that if any
provision of this Agreement is violated by the Company, Indemnitee
may be without an adequate remedy at law. Accordingly, in the event
of any such violation, the Indemnitee shall be entitled, if
Indemnitee so elects, to institute proceedings, either at law or in
equity, to obtain damages, to enforce specific performance, to
enjoin such violation, or to obtain any relief or any
combination of the foregoing as Indemnitee may elect to pursue.
15. Binding Effect, Etc. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company),
assigns, spouses, heirs, and personal and legal
representatives. This Agreement shall continue in effect regardless
of whether Indemnitee continues to serve as an officer or director
of the Company or of any other enterprise at the Company's request.
16. Severability. The provisions of this Agreement shall be
severable if any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court
of competent jurisdiction to be invalid, void or other wise
unenforceable, and the remaining provisions shall remain enforceable
to the fullest extent permitted by law.
17. Governing Law. This Agreement shall be governed by, and be
construed and enforced in accordance with, the laws of the State of
New York applicable to contracts made and to be performed in such
state without giving effect to the principles of conflicts of laws.
Executed this 19th day of November, 1996.
CHYRON CORPORATION
/s/Daniel DeWolf
Daniel DeWolf
Secretary
/s/Michael Wellesley-Wesley
Michael Wellesely-Wesley
CERTIFICATE OF AMENDMENT
OF THE CERTIFICATE OF INCORPORATION
OF CHYRON CORPORATION
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
THE UNDERSIGNED, being the President and the Secretary of Chyron
Corporation ("the Corporation") do hereby certify as follows:
1. The name of the Corporation is Chyron Corporation. The name under
which the Corporation was formed is The Computer Exchange, Inc.
2. The Certificate of Incorporation of the Corporation was filed by the
Department of State on April 8, 1966.
3. (a) The Certificate of Incorporation is amended to effect a reverse
stock split (the "Slit") of shares of common stock of the Corporation,
par value $.01 per share, (the "Common Stock") on the basis of issuing
one (1) share of Common Stock in exchange for each three (3) shares of
Common Stock.
(b) To effect the foregoing, Paragraph FOURTH (a) of the Certificate
of Incorporation is hereby amended to read as follows:
"(a) The aggregate number of shares which the Corporation
shall have authority to issue is 151,000,000 of which 1,000,000
shares shall be Preferred Stock issuable in series, of par value
of $1.00 per share, and 150,000,000 shares shall be Common
Stock of the par value of $.01 per share.
(b) Except as hereinafter set forth and subject to
limitations prescribed by law, including the provisions of
Section 1123(a)(6) of the United States Bankruptcy Code,
11 U.S.C. Section 101 et seq. the Board of Directors of the
Corporation is authorized to provide for the issuance of shares
of Preferred Stock in one or more series, to establish the
number of shares in each series, to fix the designation,
relative rights, preferences and limitations of the shares of
such series and to cause to be filed in the Department of
State of New York, such certificates as may be required in
connection therewith by the Business Corporation Law of
New York.
<PAGE>
4. Prior to the Split, there are 97,147,241 shares of Common Stock
issued and 52,852,759 of unissued shares of Common Stock. Pursuant to
the Split, each three (3) previously outstanding issued shares of
Common Stock, par value $.01 per share, of the Corporation shall
thereby and thereupon be reclassified into one (1) validly issued,
fully paid, and nonassessable share of Common Stock, par value $.01 per
share, of the Corporation. In lieu of receiving fractional shares, a
shareholder shall receive cash. As result of the Split, there will be
33,382,413 shares of Common Stock issued and 116,617,587 unissued
shares of Common Stock.
5. This Amendment to the Certificate of Incorporation of the
Corporation was authorized by vote of the Board of Directors followed
by the affirmative vote of the holders of a majority of all outstanding
shares entitled to vote thereon at a special meeting of the
shareholders of the Corporation duly called and held on the 24th day
of January, 1997, a quorum being present.
IN WITNESS WHEREOF, we have signed this Certificate on the 7th day of
February, 1997 and we affirm the statements contained therein as true
under penalties of perjury.
/s/ Isaac Hersly /s/ Daniel I. DeWolf
Isaac Hersly Daniel I. DeWolf
President Secretary
</TABLE>
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] DEC-31-1996
[CASH] 4,555
[SECURITIES] 0
[RECEIVABLES] 25,237
[ALLOWANCES] 0
[INVENTORY] 23,502
[CURRENT-ASSETS] 63,000
[PP&E] 12,701
[DEPRECIATION] 0
[TOTAL-ASSETS] 91,403
[CURRENT-LIABILITIES] 21,133
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 324
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 91,403
[SALES] 82,608
[TOTAL-REVENUES] 0
[CGS] 39,941
[TOTAL-COSTS] 27,602
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 1,666
[INCOME-PRETAX] 13,399
[INCOME-TAX] 4,745
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 8,654
[EPS-PRIMARY] 0.27
[EPS-DILUTED] 0
</TABLE>
