SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by the Registrant[X]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CHYRON CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
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4) Date Filed:
CHYRON CORPORATION
5 Hub Drive
Melville, New York 11747
(516) 845-2000
April 7, 1999
Dear Shareholders:
On behalf of the Board of Directors and management of Chyron Corporation
(the "Company"), I cordially invite you to attend the Annual Meeting of
Shareholders to be held on Wednesday, May 12, 1999, at 9:30 a.m., at Loews
New York Hotel, located at 569 Lexington Avenue, New York, New York 10022.
The matters to be acted upon at the meeting are fully described in the
attached Notice of Annual Meeting of Shareholders and Proxy Statement. In
addition, the directors and executive officers of the Company will be
present to respond to any questions that you may have. Accompanying the
attached Proxy Statement is the Company's Annual Report for 1998. This
report describes the financial and operational activities of the Company.
Whether or not you plan to attend the annual meeting, please complete, sign
and date the enclosed proxy card and return it in the accompanying envelope
as promptly as possible. If you attend the Annual Meeting, and I hope you
will, you may vote your shares in person even if you have
previously mailed in a proxy card.
We look forward to greeting our shareholders at the meeting.
Sincerely,
/s/Edward Grebow
Edward Grebow
President, Chief Executive Officer
and Director
CHYRON CORPORATION
5 Hub Drive
Melville, New York 11747
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 1999
TO THE SHAREHOLDERS OF
CHYRON CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Chyron Corporation, a New York corporation (hereinafter
"Company"), will be held at Loews New York Hotel, located at 569 Lexington
Avenue, New York, New York 10022, on Wednesday, May 12, 1999, at 9:30 a.m.,
for the following purposes:
1. To elect nine (9) directors of the Company to hold office until the
next Annual Meeting or until their respective successors are duly
elected and qualified;
2. To consider and act upon a proposal to adopt the Chyron 1999
Incentive Compensation Plan (the "Incentive Compensation Plan" or
"the 1999 Plan"); and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on March 24, 1999 as
the record date for the determination of shareholders entitled to notice of,
and to vote at, the Annual Meeting or any adjournments thereof.
Representation of at least a majority of all outstanding shares of Common
Stock is required to constitute a quorum. Accordingly, it is important that
your stock be represented at the meeting. The list of shareholders entitled
to vote at the Annual Meeting will be available for examination by any
shareholder at the Company's offices at 5 Hub Drive, Melville, New York,
11747, for ten (10) days prior to May 12, 1999.
Whether or not you plan to attend the Annual Meeting, please complete, date
and sign the enclosed proxy card and mail it promptly in the self-addressed
envelope enclosed for your convenience. You may revoke your proxy at
anytime before it is voted.
By Order of the Board of Directors,
/s/Daniel I. DeWolf
Daniel I. DeWolf,
Secretary
Melville, New York
April 7, 1999
YOUR VOTE IS IMPORTANT, ACCORDINGLY, WE URGE YOU TO DATE, SIGN AND RETURN
THE ENCLOSED PROXY CARD REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE
MEETING.
CHYRON CORPORATION
TABLE OF CONTENTS
Page
INFORMATION CONCERNING VOTE 1
ELECTION OF THE BOARD OF DIRECTORS 2
EXECUTIVE COMPENSATION AND OTHER INFORMATION 5
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION 10
STOCK PERFORMANCE CHART 11
PROPOSAL TO ADOPT THE 1999 INCENTIVE
COMPENSATION PLAN 12
OTHER MATTERS ARISING AT THE ANNUAL MEETING 13
PRINCIPAL SHAREHOLDERS 13
INDEMNIFICATION OF DIRECTORS AND OFFICERS 16
SHAREHOLDER PROPOSALS 16
COST OF SOLICITATION OF PROXIES 16
INDEPENDENT PUBLIC ACCOUNTANTS 16
SECTION 16(a) REPORTING DELINQUENCIES 17
ANNUAL REPORT ON FORM 10-K 17
EXHIBIT 1 18
CHYRON CORPORATION
5 Hub Drive
Melville, New York 11747
PROXY STATEMENT
For Annual Meeting of Shareholders
to be Held on May 12, 1999
Approximate Mailing Date of Proxy Statement and Form of Proxy: April 7,
1999.
INFORMATION CONCERNING VOTE
General
This Proxy Statement and the enclosed form of proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of
Chyron Corporation, a New York corporation (hereinafter, the "Company"), for
use at the annual meeting of shareholders to be held on Wednesday, May 12,
1999, at 9:30 a.m., and at any and all adjournments thereof (the "Annual
Meeting"), with respect to the matters referred to in the accompanying
notice. The Annual Meeting will be held at Loews New York Hotel, located
at 569 Lexington Avenue, New York, New York 10022.
Voting Rights and Outstanding Shares
Only shareholders of record at the close of business on March 24, 1999 are
entitled to notice of and to vote at the Annual Meeting. As of the close
of business on March 12, 1999, 32,058,026 shares of common stock, par value
$.01 per share (the "Common Stock"), of the Company were issued and
outstanding. Each share of Common Stock entitles the record holder thereof
to one (1) vote on all matters properly brought before the Annual Meeting.
Revocability of Proxies
A shareholder who executes and mails a proxy in the enclosed return envelope
may revoke such proxy at any time prior to its use by notice in writing to
the Secretary of the Company, at the above address, or by revocation in
person at the Annual Meeting. Unless so revoked, the shares represented by
duly executed proxies received by the Company prior to the Annual Meeting
will be presented at the Annual Meeting and voted in accordance with the
shareholder's instructions marked thereon. If no instructions are marked
thereon, proxies will be voted (1) FOR the election as directors of the
nominees named below under the caption "ELECTION OF THE BOARD OF
DIRECTORS," and (2) FOR the adoption of the Company's 1999 Incentive
Compensation Plan as discussed under the caption "PROPOSAL TO ADOPT THE 1999
INCENTIVE COMPENSATION PLAN." In their discretion, the proxies are
authorized to consider and vote upon such matters incident to the conduct
of the Annual Meeting and upon such other business matters or proposals as
may properly come before the Annual Meeting that the Board of Directors of
the Company does not know a reasonable time prior to this solicitation will
be presented at the Annual Meeting.
Voting Procedures
All votes shall be tabulated by the inspector of elections appointed for the
Annual Meeting, who shall separately tabulate affirmative and negative
votes, abstentions and broker non-votes. The presence of a quorum for the
Annual Meeting, defined here as a majority of the votes entitled to be cast
at the Annual Meeting, is required. Votes withheld from director nominees
and abstentions will be counted in determining whether a quorum has been
reached. Broker-dealer non-votes are not counted for quorum purposes.
Assuming a quorum has been reached, a determination must be made as to the
results of the vote on each matter submitted for shareholder approval.
Director nominees must receive a plurality of the votes cast at the Annual
Meeting, which means that a vote withheld from a particular nominee or
nominees will not affect the outcome of the Annual Meeting. The adoption
of the Company's 1999 Incentive Compensation Plan must be approved by a
majority of the votes cast at the Annual Meeting. Abstentions are not
counted in determining the number of votes cast in connection with the
adoption of the Company's Incentive Compensation Plan.
ELECTION OF THE BOARD OF DIRECTORS
The Board of Directors has nominated nine (9) persons to be elected as
Directors at the Annual Meeting and to hold office until the next annual
meeting or until their successors have been duly elected and qualified. It
is intended that each proxy received by the Company will be voted FOR the
election, as directors of the Company, of the nominees listed below, unless
authority is withheld by the shareholder executing such proxy. Shares may
not be voted cumulatively. Each of such nominees has consented to being
nominated and to serve as a director of the Company if elected. If any
nominee should become unavailable for election or unable to serve, it is
intended that the proxies will be voted for a substitute nominee designated
by the Board of Directors. At the present time, the Board of Directors
knows of no reason why any nominee might be unavailable for election or
unable to serve. The proxies cannot be voted for a greater number of
persons than the number of nominees named herein.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
Director Nominees
The following table sets forth certain information with respect to the
nominees for directors:
Name Company Position and Director of the
Offices Held Company Since
Charles M. Diker Director, Member of
the Audit Committee,
Member of the
Compensation and Stock
Option Committee September, 1995
Joseph A. Flaherty Director October, 1998
Edward Grebow President and Chief
Executive Officer,
Director June, 1997
Donald P. Greenberg Director September, 1996
Roger Henderson Executive Vice President,
Director February, 1999
Alan J. Hirschfield Director, Member of
the Audit Committee July, 1995
Wesley W. Lang, Jr. Director, Member of
the Compensation and
Stock Option
Committee July, 1995
Eugene M. Weber Director, Member of
the Audit Committee July, 1995
Michael I. Wellesley-Wesley Chairman of the Board,
Member of the Compensation
and Stock Option
Committee May, 1995
Charles M. Diker, age 64, is a non-managing principal with the investment
management company of Weiss, Peck & Greer, L.L.C. ("Weiss, Peck & Greer")
and has been associated with such company since 1976. Mr. Diker is the
Chairman of the Board of Directors of Cantel Industries, Inc. ("Cantel"),
a manufacturer of infection control equipment and distributor of diagnostic
devices. Mr. Diker is also a member of the Board of Directors of Data
Broadcasting Corporation ("DBC"), a provider of various financial data and
proprietary information, BeautiControl Cosmetics, Inc., an international
direct sales skin care, cosmetics, health and image company, International
Specialty Products Inc., a manufacturer of specialty chemicals, and AMF
Bowling Inc., an operator of bowling centers.
Joseph A. Flaherty, age 68, is Senior Vice President, Technology for CBS
Corporation, where he is responsible for new television technologies. He has
held such position since 1990. He has been a major force behind the
development and introduction of digital TV and HDTV in the U.S., and directs
all CBS national and international technical standard activities. This
election marks his first to a corporate board of directors. Dr. Flaherty
is a frequent lecturer on television technology and has published over 100
technical articles.
Edward Grebow, age 49, is President and Chief Executive Officer of the
Company and has held such positions since June 1997. Prior to joining
Chyron, Mr. Grebow was President of TELE-TV Systems, a joint venture of Bell
Atlantic, NYNEX and Pacific Telesis, from July 1995 through June 1997. From
February 1988 to July 1995 Mr. Grebow was Senior Vice President Operations
and Administration at CBS, Inc. Prior to his position at CBS, Inc., Mr.
Grebow served as Executive Vice President of the Bowery Savings Bank from
1985 to 1988 and Vice President of JP Morgan & Co. Inc. from 1972 to 1985.
Mr. Grebow is a member of the Board of Trustees of The George Washington
University.
Donald P. Greenberg, age 65, is the Jacob Gould Schurman Professor of
Computer Graphics and Founding Director, Program of Computer Graphics, at
Cornell University. He has been a professor at Cornell University since
1968. He is also a member of the Board of Directors of DBC and PCA
International, an operator of portrait studios.
Roger Henderson, age 42, is Executive Vice President of the Company and has
held such position since May 1996. He also serves as the Managing Director
of Pro-Bel since April 1996. From 1987 to March 1996, he was Software
Director of Pro-Bel and Managing Director of Pro-Bel Software Ltd.
Alan J. Hirschfield, age 63, is Co-Chairman of the Board of Directors and
Co-Chief Executive Officer of DBC and has held such positions since June
1992. Prior to his current positions, he served as Chief Executive Officer
of Twentieth Century-Fox Film Corp., from 1980 to 1985, and Columbia
Pictures Entertainment Inc., from 1973 to 1978. Mr. Hirschfield is also a
member of the Board of Directors of Cantel.
Wesley W. Lang, Jr., age 41, is a Managing Director with the investment
management company of Weiss, Peck & Greer, L.L.C. and has been associated
with such company since 1985. Weiss, Peck & Greer manages, directly or
indirectly, the following funds: WPG Corporate Development Associates IV,
L.L.C., WPG PE Fund Advisor, L.P. and WPG Venture Partners III, L.P. These
funds are shareholders of the Company.
Eugene M. Weber, age 48, is the President of Bluewater Capital Management,
Inc., an investment consulting firm. From 1994 to 1995, Mr. Weber was an
independent consultant to Westpool Investment Trust plc, a shareholder of
the Company and from 1983 to 1994 he was with Weiss, Peck & Greer, L.L.C.,
becoming a partner in 1987.
Michael I. Wellesley-Wesley, age 46, is Chairman of the Board of Directors
and formerly held the position of Chief Executive Officer of the Company
from July 1995 through June 1997. From 1992 until 1995, he was a Director
and Executive Vice President of DBC and from 1990 until 1992 he was a
consultant to that corporation's predecessor. Mr. Wellesley-Wesley was an
executive director of Stephen Rose & Partners Ltd., a London-based
investment banking firm, from 1980 to 1990.
Committees of the Board of Directors and Meeting Attendance
The Board of Directors held six (6) meetings during fiscal year 1998. The
Board of Directors appointed a Compensation and Stock Option Committee (the
"Compensation Committee") and an Audit Committee. Each director attended at
least 75% of the meetings of the Board of Directors and the committees on
which he served.
The Compensation Committee is authorized to review and make recommendations
to the Board of Directors on all matters regarding the remuneration of the
Company's executive officers, including the administration of the Company's
compensation plans. The current members of the Committee are Messrs. Diker,
Lang and Wellesley-Wesley. The Committee held two (2) meetings during
fiscal year 1998.
The Audit Committee is responsible for making recommendations to the Board
of Directors as to the selection of the Company's independent auditor,
maintaining communication between the Board and the independent auditor,
reviewing the annual audit report submitted by the independent auditor and
determining the nature and extent of problems, if any, presented by such
audit warranting consideration by the Board. The current members of the
Audit Committee are Messrs. Diker, Hirschfield and Weber. The Committee
held two (2) meetings during fiscal year 1998.
Executive Officers
In addition to Messrs. Grebow and Henderson, the executive officers of the
Company are as follows:
Roi Agneta - Executive Vice President, age 52. Mr. Agneta was appointed
Executive Vice President of Strategic Planning in May 1996. From October
1995 to May 1996, Mr. Agneta was Vice President of the Company. From 1974
to 1993, he held several executive management positions at the Company,
including Vice President of Engineering and Corporate Marketing. From 1993
to October 1995, he held several senior management positions with Dynatech
Corporation's Video Group, including General Manager, Production Business
Unit.
Dawn R. Johnston - Senior Vice President and Chief Financial Officer, age
46. Ms. Johnston joined the Company in September 1998 as the Company's
Senior Vice President and Chief Financial Officer. Prior to joining Chyron,
she held the position of Vice President of Finance at Cardion, Inc., a
Siemens Company, from 1996-1998. From 1993 to 1996, she was the Chief
Financial Officer at Frequency Electronics, Inc. From 1983 to 1993 she was
a Senior Audit Manager with PricewaterhouseCoopers.
James M. Paul - Senior Vice President, Human Resources, age 55. Mr. Paul
joined the Company as Senior Vice President, Human Resources in October
1997. From February 1995 through September 1997 he held the position of
Senior Vice President, Human Resources with TELE-TV. From 1993 to 1995, Mr.
Paul was Human Resource Director for Bell Atlantic Information and Video
Services. From 1975 to 1993 he held several management positions at PRC
Inc., a subsidiary of Black and Decker Corporation, including Vice
President, Human Resource Policy and Programs and Vice President of Human
Resources for the Commercial and International Group.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table
The following table sets forth the cash and noncash compensation awarded to
or earned by all Chief Executive Officers who served in that position during
fiscal year 1998 and, the most highly compensated executive officers of the
Company who held such positions at the end of fiscal year 1998, and received
in excess of $100,000 in annual salary and bonus.
Summary Compensation Table
Annual Compensation(1) Long Term Compensation
Name and Principal Position Securities
Underlying All Other
Year Salary Bonus Options(2) Compensation(3)
Edward Grebow
President, CEO and Director
1998 $400,000 $103,500 (4) 50,000 $11,331
1997 215,385 105,000 700,000 474
Roi Agneta
Executive Vice President, Strategic Planning
1998 164,066 23,000 20,000 3,305
1997 158,146 30,000 20,000 2,195
1996 156,105 31,320 50,000 1,021
Roger Henderson
Executive Vice President, Managing Director Pro-Bel and Director
1998 154,284 31,025 (5) 35,000
1997 131,040 26,200 25,000
1996 88,329 16,900 50,000
James M. Paul
Senior Vice President, Human Resources
1998 150,000 24,000 25,000 1,137
(1) Other Annual Compensation has been excluded since such amounts do not
exceed the lesser of $50,000 or 10% of the total annual base salary and
bonus disclosed in this table for the respective officer.
(2) 1998 excludes any previously issued options that were canceled and
reissued on December 14, 1998 pursuant to the Board Resolution.
(3) All other compensation includes Company contributions under the
Company's 401(k) plan. In addition, for Mr. Grebow includes amounts paid
with respect to term life insurance of $10,301 for 1998.
(4) For 1998, one half of Mr. Grebow's bonus was paid in 28,463 shares of
restricted stock and the balance of $51,750 was paid in cash.
(5) For 1998, one tenth of Mr. Henderson's bonus was paid in 1,550 shares
of restricted stock and the balance of $27,923 was paid in cash.
Stock Option Grants
Set forth below is information on grants of stock options under the
Company's 1995 Long-Term Incentive Plan (the "1995 Plan") for the named
executive officers for the period January 1, 1998 to December 31, 1998.
Individual Grants(1) Grant Value
Percent of
Number of Total
Securities Options Grant
Underlying Granted to Exercise Date
Options Employees in Price Expiration Present
Granted(2) Fiscal Year Per Share Date Value
Edward Grebow 50,000 7.5% $2.00 10/28/08 $43,500
Roi Agneta 20,000 3.0% $2.00 10/28/08 17,400
Roger Henderson 35,000 5.2% $2.00 10/28/08 30,450
Dawn R. Johnston 25,000 3.7% $2.00 10/28/08 21,750
James M. Paul 25,000 3.7% $2.00 10/28/08 21,750
(1) Excludes any previously issued options that were canceled and reissued
on December 14, 1998 pursuant to the Board resolution.
(2) All options reported above were awarded under the 1995 Plan. The
Company has not granted any stock appreciation rights.
"Grant Date Present Value" is determined under the Black-Scholes pricing
model, a widely recognized method of determining the present value of
options. The factors used in this model are as follows: stock price -
$2.00; exercise price - $2.00; dividend yield - 0.0%; volatility -50%;
risk-free rate of return - 4.13% and option terms of 4-5 years. The actual
value, if any, an executive officer may realize will depend on the extent
to which conditions as to exercisability of the option are satisfied and the
excess of the stock price over the exercise price on the date the option is
exercised. There is no assurance that the value realized by an executive
officer will be consistent with the value estimated by the Black-Scholes
model. The estimated values under the model are based on assumptions
regarding interest rates, stock price volatility and future dividend yield.
The model is used for valuing market traded options and is not directly
applicable to valuing stock options granted under the 1995 Plan which cannot
be transferred.
The purpose of the 1995 Plan, among other things, was to retain and motivate
key employees by enabling such employees to own shares of company stock.
During 1998, however, it was determined that the objectives of the plan were
not being achieved due to the fact that all stock options that were then
outstanding had an exercise price greater than the market value of the
common stock. Therefore, the Compensation Committee believed that it was in
the best interests of the Company to cancel the stock options that were
previously granted and to issue new stock options in a manner that will
incentivize such employees. Therefore, on December 14, 1998, pursuant to a
board resolution, the Company offered certain option holders (including the
executive officers) who held stock options issued prior to September 30,
1998, and were current employees of the Company, the opportunity to exchange
those existing options (which ranged in exercise price from $2.50 to
$16.125) for new options. As a result, options to purchase approximately
0.9 million shares of Common Stock were reissued with the following terms:
(a) fifty percent of such new stock options were granted with an exercise
price equal to the higher of (i) the closing price of the Common Stock on
December 14, 1998, or (ii) the average closing price of the Common Stock for
the 90 trading days prior to December 14, 1998 (the "Repricing Formula");
all of such stock options have a term of ten years and shall vest in equal
installments over three years, commencing on December 15, 1999; and (b) the
remaining fifty percent of such new stock options were granted with an
exercise price in accordance with the Repricing Formula; all of such stock
options also have a term of ten years but such stock options shall vest in
their entirety on December 15, 2003; provided, however, that such options
shall vest earlier upon the occurrence of the following: (i) one-third of
such stock options shall vest if the Company reports an earnings per share
of at least $0.16 in any given fiscal year ("Base Year"), (ii) an additional
one-third of such stock options shall vest if the Company reports an
earnings per share of at least $0.20 in any fiscal year subsequent to the
Base Year (the "Second Year"), and (iii) the final one-third of such stock
options shall vest if the Company reports earnings per share of $0.25 in any
fiscal year subsequent to the Second Year.
In addition, pursuant to the Board resolution, the options previously
granted to Mr. Grebow were canceled and reissued with the following terms:
(a) 250,000 options with an exercise price in accordance with the Repricing
Formula that vest in three equal installments on the date of the grant and
on the first and second anniversary of the date of grant; (b) 250,000
options with an exercise price in accordance with the Repricing formula that
will vest in their entirety on the fifth anniversary of the date of the
grant provided, however, that such options shall vest earlier upon the
occurrence of the following: (i) one-third if the Company reports earnings
per share of at least $0.16 in any given fiscal year ("Base Year"), (ii) an
additional one-third if the Company reports earnings per share of at least
$0.20 in any given fiscal year subsequent to the Base Year (the "Second
Year"), and (iii) the final one-third if the Company reports earnings per
share of at least $0.25 in any given fiscal year subsequent to the Second
Year; (c) 200,000 options at $2.00 per share that will vest in their
entirety on the fifth anniversary of the date of the grant provided,
however, as long as Mr. Grebow is an employee of the Company, that such
options shall vest earlier as follows: (i) 100,000 of such options if the
average closing price per share of Common Stock of the Company as reported
by the New York Stock Exchange ("NYSE") for any consecutive 30 trading days
is $3.333 or greater; (ii) the remaining 100,000 options shall vest if the
average closing price per share of Common Stock of the Company as reported
by the NYSE for any consecutive 30 trading days is $4.444 or greater; or
(iii) all 200,000 options (or any unvested options) if the Company's
earnings per share from operations for any fiscal year equals or exceeds
$0.66. All of such options have a term of ten years.
Option Repricing
Number of Market Exercise Length of
securities price of price of original option
underlying stock at stock at New term remaining
options time of time of exercise at date of
Date repriced repricing repricing price repricing
Edward Grebow
12/14/98 500,000 $ 2.00 $ 4.250 $ 2.125 77 months
200,000 $ 2.00 $ 4.250 $ 2.000 77 months
Roi Agneta
12/14/98 50,000 $ 2.00 $ 5.625 $ 2.125 24 months
20,000 $ 2.00 $ 5.375 $ 2.125 107 months
Roger Henderson
12/14/98 50,000 $ 2.00 $ 5.875 $ 2.125 39 months
25,000 $ 2.00 $ 5.375 $ 2.125 107 months
James M. Paul
12/14/98 25,000 $ 2.00 $ 5.375 $ 2.125 107 months
Pension Plans
The Company maintains a domestic, qualified non-contributory defined benefit
pension plan (the "U.S. Pension Plan") for all employees of Chyron
Corporation. Under the U.S. Pension Plan, a participant retiring at normal
retirement age receives a pension benefit equal to the sum of: (i) 25% of
his or her average monthly total compensation up to the level of social
security covered compensation plus 38% of such earnings in excess of social
security covered earnings for years of service prior to July 1, 1998 and
(ii) 32% of his or her average monthly base compensation up to the level of
social security covered compensation plus 48% of such earnings in excess of
social security covered earnings for years of service subsequent to July 1,
1998. A participant's average monthly compensation is his or her monthly
compensation averaged during the five consecutive years during the ten-year
period prior to his or her termination that produces the highest average
monthly compensation.
Participants in the U.S. Pension Plan vest according to the following
schedule:
Employees Hired Prior to Employees Hired On or After
July 1, 1998 July 1, 1998
Years of Service Amount Vested Years of Service Amount Vested
Less than 2 0% Less than 5 0%
2 20% 5 or more 100%
3 40%
4 60%
5 or more 100%
As of December 31, 1998, the number of years of service for the named
executive officers is as follows: Mr. Grebow, 1 year; Mr. Agneta, 3 years;
Ms. Johnston, 0 years; and Mr. Paul, 1 year.
The following table shows the aggregate annual benefits under the U.S.
Pension Plan as now in effect that would be currently payable to
participants retiring at age sixty-five on a single-life basis under various
assumptions as to salary and years of service. Benefits under the U.S.
Pension Plan are payable in the form of a monthly, lifetime annuity
commencing on the later of normal retirement age or the participant's date
of retirement, or, at the participant's election, in a lump sum or
installment payments. The amounts shown reflect the level of social
security covered compensation for a participant reaching age sixty-five in
1998. In addition, the participant is entitled to receive social security
benefits. The Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code of 1986, as amended, limit the annual retirement
benefit that may be paid out of funds accumulated under a qualified pension
plan. The current maximum annual benefit payable under the U.S. Pension
Plan is $130,000. This maximum is proportionately reduced for years of plan
participation less than ten. Compensation in excess of $160,000 may not be
taken into account in the determination of benefits under the U.S. Pension
Plan.
U.S. Pension Plan Table
Highest Consecutive Five-Year Years of Credited Service at
Average Compensation During Retirement at Age 65
the Last Ten Years of Employment
10 20 30 35
$ 50,000 $ 5,400 $10,900 $16,300 $19,000
$100,000 $12,300 $24,600 $36,900 $43,000
$150,000 $19,100 $38,300 $57,400 $67,000
$160,000 $20,500 $41,000 $61,600 $71,800
The Company's U.K. subsidiary, Pro-Bel, has a non-contributory defined
benefit pension plan (the "U.K. Pension Plan") covering all permanent
employees of Pro-Bel. Under the U.K. Pension Plan, a participant retiring
after working 40 years with Pro-Bel will receive 66.66% of his or her basic
earnings averaged over the last thirty-six (36) months of employment in
addition to the U.K.'s basic and earnings related pension. Under U.K.
legislation, benefits vest on a pro rata basis following completion of two
(2) years membership. Spouses' pension of 50% of the members pension are
payable on the death of the plan member whether in service or following
retirement. As of December 31, 1998, Mr. Henderson, a participant in the
U.K. Pension Plan, has 20 years of credited service.
Directors' Compensation
Directors of the Company who are also salaried officers or employees of the
Company do not receive special or additional compensation for serving on the
Board of Directors or any of its committees. Each director who is not a
salaried officer or employee of the Company receives an annual fee of
$5,000, plus $1,000 for attending each meeting of the Board of Directors and
$500 for attending each committee meeting. In addition, each non-employee
director receives options, to purchase 5,000 shares of Common Stock at an
exercise price equal to the market value on the last trading day of each
July.
Employment Contracts and Termination of Employment
and Change-In-Control Arrangements
The Company has an employment agreement with Mr. Edward Grebow, President
and Chief Executive Officer. The agreement runs until June 4, 2000 and
contains an automatic renewal provision for successive one (1) year terms
unless terminated by the Company or Mr. Grebow. Mr. Grebow currently
receives a base salary of $414,000 and is eligible to receive an additional
bonus of up to 50% of his base salary, of which $50,000 is guaranteed. If
the agreement is terminated with cause then Mr. Grebow is entitled only to
receive that portion of his base salary and guaranteed bonus owed through
date of termination. If he is terminated without cause prior to the end of
the first two years of employment, Mr. Grebow is entitled to a severance
payment equal to eighteen months of his base salary plus the pro-rata
portion of his guaranteed bonus for such period and additionally, all
options granted to Mr. Grebow that have not vested at date of termination
shall immediately vest. If the agreement is terminated without cause or Mr.
Grebow resigns for good reason during the third-year of the employment term,
Mr. Grebow is entitled to receive a severance payment equal to his entire
base salary and the pro-rata portion of his guaranteed bonus for a period
of twelve months and all options granted which have not vested at the date
of termination shall immediately vest. In the event of a change-in control
of the Company, the Company shall pay Mr. Grebow all compensation due under
his employment agreement through the remainder of the employment term and
all options that were not vested shall vest immediately. The agreement also
contains certain restrictions on competition.
The Company has an employment agreement with Mr. Roger Henderson, Executive
Vice President and Managing Director, Pro-Bel, which is in effect until
November 30, 2001. Under the agreement, Mr. Henderson is entitled to receive
a base salary of 102,000 British pounds sterling ($170,000 at the exchange
rate at December 31, 1998). If the agreement is terminated with cause, Mr.
Henderson is entitled only to receive that portion of his base salary owed
through date of termination. If the agreement is terminated without cause,
Mr. Henderson is entitled to receive his salary through November 30, 2001.
If the contract is not renewed upon expiration, Mr. Henderson is entitled
to twelve months of salary. The agreement also contains certain restrictions
on competition.
The Company has an employment agreement with Mr. Paul, Senior Vice
President, Human Resources, which runs until June 30, 2001. Mr. Paul is
entitled to receive an annual base salary of $150,000 and is eligible for
a bonus of up to 20% of his base salary subject to the achievement of
certain annual performance criteria which can be increased at the discretion
of the Chief Executive Officer. If the agreement is terminated with cause,
Mr. Paul is entitled only to receive that portion of his base salary owed
through date of termination. If the agreement is terminated without cause,
Mr. Paul will be entitled to his base salary and bonus for the lesser of
eighteen months or the balance of his employment term. In addition, all
options granted which have not vested at the date of termination shall
immediately vest. The agreement also contains certain restrictions on
competition.
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
It is the duty of the Compensation Committee to develop, administer, and
review the Company's compensation plans, programs, and policies, to monitor
the performance and compensation of executive officers and other key
employees and to make appropriate recommendations and reports to the Board
of Directors relating to executive compensation.
The Company's compensation program is intended to motivate, retain and
attract management, linking incentives to financial performance and enhanced
shareholder value. The program's fundamental philosophy is to tie the
amount of compensation "at risk" for an executive to his or her contribution
to the Company's success in achieving superior performance objectives.
The compensation program currently consists of two components: (1) a base
salary and (2) the potential for an annual cash bonus of up to 50% of base
salary for the Chief Executive Officer, and up to 25% of base salary for the
other executive officers, based upon the satisfaction of certain performance
criteria set annually by the Compensation Committee for each position. The
criteria may relate to overall Company performance, the individual
executive's performance or a combination of the two, depending upon the
particular position at issue. The second component constitutes the "at
risk" portion of the compensation program. Additionally, employees
(including executive officers) are eligible to receive awards pursuant to
the Company's long-term incentive plan.
All amounts paid or accrued during fiscal year 1998 under the
above-described compensation program are included in the table found in the
section captioned "Summary Compensation Table."
The Compensation and Stock Option Committee
Respectfully submitted,
Charles M. Diker, Wesley W. Lang, Jr., and
Michael I. Wellesley-Wesley
April 7, 1999
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the cumulative
total shareholder return on the Common Stock during the five fiscal years
ended December 31, 1998 with the cumulative total return on the Russell 2000
Index and a peer group selected by the Company consisting of businesses
engaged in supplying equipment to the broadcast and video industry. The
comparison assumes $100 was invested on December 31, 1993 in the Common
Stock and in each of the foregoing indices and assumes reinvestment of
dividends.
The businesses included in the Company-selected peer group are: Avid
Technology Inc., Carlton Communications Plc, Leitch Technology Corp.,
Philips Electronics NV, Sony Corp., Tektronix Inc. The returns of each
component issuer in the foregoing group have been weighted according to the
respective issuer's stock market capitalization.
[PERFORMANCE CHART APPEARS HERE]
Chyron Peer Group Russell 2000
December 31, 1993 $100 $100 $100
Year ended December 31, 1994 73 118 98
Year ended December 31, 1995 400 133 126
Year ended December 31, 1996 418 147 147
Year ended December 31, 1997 215 201 180
Year ended December 31, 1998 91 188 179
On February 7, 1997 the Company effected a one-for-three reverse stock split
of its Common Stock. The table above reflects the one-for-three reverse
stock split. On March 12, 1999, 32,058,026 shares of Common Stock were
outstanding.
PROPOSAL TO ADOPT THE 1999 INCENTIVE COMPENSATION PLAN
Upon recommendation of the Board of Directors of the Company, the Board is
hereby submitting to the shareholders of the Company for their approval the
proposed adoption of the 1999 Incentive Compensation Plan. The proposed plan
is included as Exhibit 1. The principal features of the Plan are described
below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
Summary of the Plan
The purpose of the 1999 Plan is to assist the Company in attracting,
retaining, and rewarding high-quality executives, employees, directors and
other persons who provide services to the Company, enabling such persons to
acquire or increase a proprietary interest in the Company and to strengthen
the mutuality of interests between such persons and to provide annual and
long-term incentives to expend their maximum efforts in the creation of
shareholder value. The 1999 Plan will be administered by the Compensation
Committee, consisting of two or more members of the Board of Directors
appointed by the Board. The 1999 Plan does not limit the availability of
awards to any particular class or classes of Eligible Employees. If an
award were to lapse or rights to an award otherwise were to terminate, the
shares subject to the award would be available for future awards to the
extent permitted by applicable federal securities laws. Awards granted under
the Plan are not transferable, except in the event of the participant's
death. In the event of a change in control, a right to exercise that was not
previously exercisable and vested shall become fully exercisable and vested
at the time of change in control. The total number of shares reserved and
available for delivery in connection with awards under the Plan shall be
1,500,000 plus the number of shares remaining available under the 1995 Plan.
Awards to Eligible Employees under the Plan will be made in the form of
stock options, stock appreciation rights ("SARs"), restricted stock,
restricted stock units ("RSUs") and annual incentive and performance awards.
A non-employee director will automatically be granted options at the close
of business on the last trading day of each July. The Compensation
Committee, in its sole discretion, designates whom is eligible to receive
awards, determines the form of each award, determines the number of shares
of stock subject to each award, establishes the exercise price of each award
and such other terms and conditions applicable to the award as the
Compensation Committee deems appropriate.
Stock option awards can be either incentive or non-incentive. In either
case, the exercise price of the option would not be less than the fair
market value of the underlying shares as of the date the award is granted.
Options would become exercisable at such times as may be established by the
Compensation Committee when granting the award. No stock option could be
exercised more than ten years after the date the option is granted.
A SAR allows the holder, upon exercise, to receive the excess of the fair
market value of one share of Common Stock of the Company on the date of
exercise over the grant price of the SAR. The Compensation Committee shall
determine the circumstances under which a SAR may be exercised, the month
of exercise and method of settlement. SARs may be awarded independently or
in tandem with other awards.
Restricted stock awards are awards of shares subject to such restrictions
as to transferability and risk of forfeiture as imposed by the Compensation
Committee, which restrictions may lapse separately under such circumstances
such as achievement of performance goals and/or future service requirements.
Except to the extent restricted under the terms of the 1999 Plan, any
employee granted restricted stock shall have all the rights of a shareholder
including the right to vote and receive dividends.
The Compensation Committee is authorized to grant RSUs to participants which
are rights to receive stock, cash, or a combination thereof at the end of
a specified deferral period. The Compensation Committee is also authorized
to grant stock as a bonus or to grant stock in lieu of obligations to pay
cash under the 1999 Plan or under other compensatory arrangements.
The Board of Directors of the Company may amend or terminate the 1999 Plan
at any time without the consent of shareholders, except that any amendment
or alteration to the Plan shall be subject to the approval of the
Corporation's shareholders not later than the annual meeting next following
such Board action if such shareholder approval is required by any federal
or state law or regulation or the rules of any stock exchange, provided
that, without the consent of an affected Participant, no such Board action
may materially and adversely affect the rights of such Participant under any
previously granted and outstanding award.
OTHER MATTERS ARISING AT THE ANNUAL MEETING
The matters referred to in the Notice of Annual Meeting and described in
this Proxy Statement are, to the knowledge of the Board of Directors, the
only matters that will be presented for consideration at the Annual Meeting.
If any other matters should properly come before the Annual Meeting, the
persons appointed by the accompanying proxy will vote on such matters in
accordance with their best judgment pursuant to the discretionary authority
granted to them in the proxy.
PRINCIPAL SHAREHOLDERS
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of March 16, 1999, certain information
about all persons who, to the Company's knowledge, were beneficial owners
of 5% or more of Common Stock of the Company(1).
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership(2) Class(2)(3)
Philip Greer (4) 10,367,965 32.02%
Weiss, Peck & Greer, L.L.C.
555 California Street
San Francisco, California 94104
WPG Corporate Development 6,112,095 18.90%
Associates IV, L.L.C.(5)
One New York Plaza
New York, New York 10004
WPG PE Fund Advisor, L.P.(6) 6,112,095 18.90%
One New York Plaza
New York, New York 10004
London Merchant Securities plc(7) 3,541,596 11.00%
Carlton House
33 Robert Adam Street
London, W1M 5AH
England
WPG Venture Partners III, L.P.(8) 2,781,675 8.65%
555 California Street
San Francisco, California 94104
Gill Cogan (9) 2,781,675 8.65%
Weiss, Peck & Greer, L.L.C.
555 California Street
San Francisco, California 94104
Security Ownership of Management
The following table sets forth, as of March 16, 1999, certain information
with respect to the beneficial ownership of each class of the Company's
equity securities by each director and the named executive officer of the
Company and all directors and executive officers of the Company as a
group(1).
Name of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership(2) Total(2)(3)
Wesley W. Lang(10) 7,601,290 23.54%
Michael I. Wellesley-Wesley(11) 2,912,462 9.08%
Charles M. Diker(12) 545,941 1.70%
Alan J. Hirschfield(13) 506,513 1.56%
Edward Grebow(14) 223,061 *
Roger Henderson(15) 36,298 *
Eugene M. Weber(16) 34,109 *
James M. Paul(17) 12,500 *
Donald P. Greenberg(18) 11,666 *
Roi Agneta 2,198 *
Joseph Flaherty 1,000 *
Dawn R. Johnston 0 *
All directors and executive 11,887,038 36.53%
officers as a group
(12 persons)
* Less than one percent (1%).
(1) These tables are based upon information supplied by Schedules 13D and
13G, if any, filed with the Securities and Exchange Commission (the
"SEC"). Unless otherwise indicated in the footnotes to the table and
subject to the community property laws where applicable, each of the
shareholders named in this table has sole voting and investment
power with respect to the shares shown as beneficially owned by
him/her. Applicable percentage of ownership is based on 32,058,026
shares of Common Stock, which were outstanding on March 12, 1999.
(2) Beneficial ownership is determined in accordance with the rules of
the SEC. In computing the number of shares beneficially owned by a
person and the percentage of ownership of that person, shares of
Common Stock subject to options held by that person that are
currently exercisable or exercisable within 60 days of March 12,
1999 are deemed outstanding. To the Company's knowledge, except as
set forth in the footnotes to this table and subject to applicable
community property laws, each person named in the table has sole
voting and investment power with respect to the shares set forth
opposite such person's name.
(3) In calculating the percent of the outstanding shares of Common Stock,
all shares issuable on exercise of stock options held by the
particular beneficial owner that are included in the column to the
left of this column are deemed to be outstanding.
(4) Mr. Greer is a General Partner of WPG PE Fund Advisor, L.P. ("PEA"),
WPG Venture Partners III, L.P. ("WPGVP") and WPG Private Equity
Partners Overseas, L.P. ("PEPO"). PEPO serves as the General Partner
of WPG Corporate Development Associates IV (Overseas), L.P. ("CDAO")
which beneficially owns 1,474,204 shares (which includes 45,832
shares which may be acquired upon the conversion of presently
convertible debentures). Mr. Greer disclaims beneficial ownership
of such shares, except to the extent of his interest in such
entities.
(5) Includes 188,564 shares which may be acquired upon the conversion of
presently convertible debentures.
(6) PEA serves as the Fund Investment Advisor of WPG Corporate
Development Associates IV, L.L.C. ("CDA"). PEA disclaims beneficial
ownership of such shares, except to the extent of its interest in
CDA.
(7) Includes 2,403,123 shares beneficially owned by Westpool Investment
Trust plc and 1,138,473 shares beneficially owned by Lion Investments
Limited (of which 75,020 shares and 35,685 shares, respectively, may
be acquired upon the conversion of presently convertible debentures).
These entities are wholly owned subsidiaries of London Merchant
Securities plc.
(8) WPGVP serves as the Managing Member of WPG Enterprise Fund II, L.L.C.
("WPGEF") and Weiss, Peck & Greer Venture Associates III, L.L.C.
("WPGVA"), which beneficially own 1,518,494 and 1,263,181 shares,
respectively (which include 46,634 and 39,334 shares, respectively,
which may be acquired upon the conversion of presently convertible
debentures).
(9) Mr. Cogan is a General Partner of WPGVP. Mr. Cogan disclaims
beneficial ownership of such shares, except to the extent of his
interest in WPGVP.
(10) Includes 14,999 shares that may be acquired upon the exercise of
presently exercisable options. Also Includes 7,586,298 shares
beneficially owned by CDA, CDAO, PEA, and PEPO . Mr. Lang is a
General Partner of PEA and PEPO. Mr. Lang disclaims beneficial
ownership of such shares (other than the options), except to the
extent of his interests in such entities.
(11) Shares are directly owned by Paris Investments Limited, an entity of
which Michael I. Wellesley-Wesley is the sole beneficiary.
(12) Mr. Diker directly owns 450,127 shares of Common Stock and is the
president of a Foundation which owns 40,000 shares of Common Stock.
Also includes 39,999 shares that may be acquired upon the exercise of
presently exercisable options and 15,815 shares that may be acquired
upon the conversion of presently convertible debentures.
(13) Includes 14,999 shares that may be acquired upon the exercise of
presently exercisable options and 15,408 shares that may be acquired
upon the conversion of presently convertible debentures.
(14) Includes 83,333 shares that may be acquired upon the exercise of
presently exercisable options and 12,165 shares that may be acquired
upon the conversion of presently convertible debentures. Also
includes 28,463 restricted shares granted as part of Mr. Grebow's
1998 fiscal year bonus in lieu of cash, pursuant to the terms of the
grant, such shares may not be sold for a period of one year from the
date of grant.
(15) Includes 1,158 shares as to which Mr. Henderson disclaims beneficial
ownership. Also includes 1,550 restricted shares granted as part of
Mr. Henderson's 1998 fiscal year bonus in lieu of cash, pursuant to
the terms of the grant, such shares may not be sold for a period of
one year from the date of grant.
(16) Includes 14,999 shares that may be acquired upon the exercise of
presently exercisable options and 8,110 shares that may be acquired
upon the conversion of presently convertible debentures.
(17) Includes 12,500 shares that may be acquired upon the exercise of
presently exercisable options.
(18) Includes 11,666 shares that may be acquired upon the exercise of
presently exercisable options.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has entered into indemnity agreements with each of its directors
and executive officers. The indemnity agreements provide that directors and
executive officers (the "Indemnities") will be indemnified and held harmless
to the fullest possible extent permitted by law including against all
expenses (including attorney's fees), judgments, fines, penalties and
settlement amounts paid or incurred by them in any action, suit or
proceeding on account of their services as director, officer, employee,
agent or fiduciary of the Company or as directors, officers, employees or
agents of any other company or entity at the request of the Company. The
Company will not, however, be obligated pursuant to the agreements to
indemnify or advance expenses to an indemnified party with respect to any
action (1) in which a judgment adverse to the Indemnitee establishes (a)
that the Indemnitee's acts were committed in bad faith or were the result
of active and deliberate dishonesty and, in either case, were material, or
(b) that the Indemnitee personally gained in fact a financial profit or
other advantage to which he or she was not legally entitled, or (2) which
the Indemnitee initiated, prior to a change in control of the company,
against the Company or any director or officer of the Company unless the
Company consented to the initiation of such claim. The indemnity agreements
require a Indemnitee to reimburse the Company for expenses advanced only to
the extent that it is ultimately determined that the director or executive
officer is not entitled, under Section 723(a) of the New York Business
Corporation Law and the indemnity agreement, to indemnification for such
expenses.
SHAREHOLDER PROPOSALS
A shareholder of the Company who wishes to present a proposal for action at
the Company's 2000 Annual Meeting of Shareholders must submit such proposal
to the Company, in accordance with Rule 14-8 under the Securities Exchange
Act of 1934. To be eligible for inclusion such proposal must be received by
the Company, no later than December 8, 1999.
COST OF SOLICITATION OF PROXIES
The solicitation of proxies pursuant to this Proxy Statement is made by and
on behalf of the Company's Board of Directors. The cost of such
solicitation will be paid by the Company. Such cost includes the
preparation, printing and mailing of the Notice of Annual Meeting, Proxy
Statement, Annual Report and form of proxy. The solicitation will be
conducted principally by mail, although directors, officers and employees
of the Company (at no additional compensation) may solicit proxies
personally or by telephone or telegram. Arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries for the
forwarding of proxy material to the beneficial owners of shares held of
record by such fiduciaries, and the Company may reimburse such persons for
their reasonable expenses in so doing.
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of PricewaterhouseCoopers LLP, which audited the Company's
1996, 1997 and 1998 financial statements, are expected to be present at the
Annual Meeting. They will have the opportunity to make a statement if they
so desire, and they are expected to be available to respond to appropriate
questions.
SECTION 16(a) REPORTING DELINQUENCIES
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who beneficially own
more than ten percent (10%) of a registered class of the Company's equity
securities, to file with the SEC and The New York Stock Exchange reports of
ownership and changes in ownership of Common Stock and other equity
securities of the Company. Executive officers, directors and greater than
ten percent (10%) beneficial owners are required by SEC regulation to
furnish the Company with copies of all Section 16(a) reports that they file.
Based solely upon a review of the copies of such reports furnished to the
Company or written representations that no other reports were required,
the Company believes that, during fiscal year 1998, all filing requirements
applicable to its executive officers, directors, and greater than ten
percent (10%) beneficial owners were met except that Mr. Weber was late in
filing one Form 4.
ANNUAL REPORT ON FORM 10-K
The Company will provide without charge to each person whose proxy is
solicited, upon the written request of any such person, a copy of the
Company's Annual Report on Form 10-K for the period January 1, 1998 through
December 31, 1998, filed with the SEC, 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 Cents ($0.20) per page or a minimum
charge of Five Dollars ($5.00). Such written requests should be directed
to Ms. Judy Lane, Chyron Corporation, 5 Hub Drive, Melville, New York
11747. Each such request must set forth a good faith representation that,
as of March 24, 1999, the person making the request was a beneficial owner
of securities entitled to vote at the Annual Meeting. The Company
incorporates herein the Annual Report by reference.
By Order of the Board of Directors,
/s/Daniel I. DeWolf
Daniel I. DeWolf
Secretary
Melville, New York
April 7, 1999
EXHIBIT 1
CHYRON CORPORATION
1999 Incentive Compensation Plan
1. Purpose. The purpose of this 1999 Incentive Compensation Plan (the
"Plan") is to assist Chyron Corporation, a New York corporation (the
"Corporation"), and its subsidiaries in attracting, retaining, and
rewarding high-quality executives, employees, directors and other persons
who provide services to the Corporation and/or its subsidiaries, enabling
such persons to acquire or increase a proprietary interest in the
Corporation to strengthen the mutuality of interests between such persons
and the Corporation's shareholders, and providing such persons with annual
and long-term performance incentives to expend their maximum efforts in the
creation of shareholder value. The Plan is also intended to qualify certain
compensation awarded under the Plan for tax deductibility under Code
Section 162(m) (as hereafter defined) to the extent deemed appropriate by
the Committee (or any successor committee) of the Board of Directors of the
Corporation.
2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof:
(a) "Annual Incentive Award" means a conditional right granted to a
Participant under Section 8(c) hereof to receive a cash payment, Stock or
other Award, unless otherwise determined by the Committee, after the end of
a specified fiscal year.
(b) "Award" means any Option, SAR (including Limited SAR), Restricted
Stock, RSU, Stock granted as a bonus or in lieu of another award, Dividend
Equivalent, Other Stock-Based Award, Performance Award or Annual Incentive
Award, together with any other right or interest granted to a Participant
under the Plan.
(c) "Beneficiary" means the person, persons, trust or trusts which have
been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which Awards
or other rights are transferred if and to the extent permitted under Section
11(b) hereof. If, upon a Participant's death, there is no designated
Beneficiary or surviving designated Beneficiary, then the term Beneficiary
means person, persons, trust or trusts entitled by will or the laws of
descent and distribution to receive such benefits.
(d) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 under the Exchange Act and any successor to such Rule.
(e) "Board" means the Corporation's Board of Directors.
(f) "Change in Control" means Change in Control as defined with related
terms in Section 9 of the Plan.
(g) "Change in Control Price" means the amount calculated in accordance
with Section 9(c) of the Plan.
(h) "Code" means the Internal Revenue Code of 1986, as amended from time
to time, including regulations thereunder and successor provisions and
regulations thereto.
(i) "Committee" means a committee of two or more directors designated by
the Board to administer the Plan; provided, however, that, unless otherwise
determined by the Board, the Committee shall consist solely of two or more
directors, each of whom shall be (i) a "non-employee director" within the
meaning of Rule 16b-3 under the Exchange Act, unless administration of the
Plan by "non-employee directors" is not then required in order for
exemptions under Rule 16b-3 to apply to transactions under the Plan, and
(ii) an "outside director" as defined under Code Section 162(m), unless
administration of the Plan by "outside directors" is not then required to
qualify for tax deductibility under Code Section 162(m).
(j) "Covered Employee" means an Eligible Person who is a Covered Employee
as specified in Section 8(e) of the Plan.
(k) "Dividend Equivalent" means a right, granted to a Participant under
Section 6(g), to receive cash, Stock, other Awards or other property equal
in value to dividends paid with respect to a specified number of shares of
Stock, or other periodic payments.
(l) "Effective Date" means __________________.
(m) "Eligible Person" means each Executive Officer and other officers and
employees of the Corporation or of any subsidiary, and other persons who
provide services to the Corporation or any of its subsidiaries including
directors of the Corporation. An employee on leave of absence may be
considered as still in the employ of the Corporation or a subsidiary for
purposes of eligibility for participation in the Plan.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, including rules thereunder and successor provisions and
rules thereto.
(o) "Executive Officer" means an executive officer of the Corporation as
defined under the Exchange Act.
(p) "Fair Market Value" means the fair market value of Stock, Awards or
other property as determined by the Committee or under procedures
established by the Committee. Unless otherwise determined by the Committee,
the Fair Market Value of Stock shall be the closing price of a share of
Stock, as quoted on the composite transactions table on the New York Stock
Exchange, on the date on which the determination of fair market value is
being made, or if no shares of Stock were traded on such date, then the last
trading date prior thereto.
(q) "Incentive Stock Option" or "ISO" means any Option intended to be and
designated as an incentive stock option within the meaning of Code Section
422 or any successor provision thereto.
(r) "Limited SAR" means a right granted to a Participant under Section
6(c) hereof.
(s) "Option" means a right, granted to a Participant under Section 6(b)
hereof, to purchase Stock or other Awards at a specified price during
specified time periods.
(t) "Other Stock-Based Awards" means Awards granted to a Participant under
Section 6(h) hereof.
(u) "Participant" means a person who has been granted an Award under the
Plan which remains outstanding, including a person who is no longer an
Eligible Person.
(v) "Performance Award" means a right, granted to a Participant under
Section 8 hereof, to receive Awards based upon performance criteria
specified by the Committee.
(w) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
and shall include a "group" as defined in Section 13(d) thereof.
(x) "Preexisting Plan(s)" means the Chyron 1995 Long Term Incentive Plan.
(y) "Qualified Member" means a member of the Committee who is a "Non-
Employee Director" within the meaning of Rule 16b-3(b)(3) and an "outside
director" within the meaning of Regulation 1.162-27 under Code Section
162(m).
(z) "Restricted Stock" means Stock granted to a Participant under Section
6(d) hereof, that is subject to certain restrictions and to a risk of
forfeiture.
(aa) "Restricted Stock Unit" or "RSU" means a right, granted to a
Participant under Section 6(e) hereof, to receive Stock, cash or a
combination thereof at the end of a specified deferral period.
(bb) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(cc) "Stock" means the Corporation's Common Stock, $0.01 par value per
share, and such other securities as may be substituted (or resubstituted)
for Stock pursuant to Section 11(c) hereof.
(dd) "Stock Appreciation Rights" or "SAR" means a right granted to a
Participant under Section 6(c) hereof.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the
Committee except to the extent the Board elects to administer the Plan, in
which case references herein to the "Committee" shall be deemed to include
references to the "Board". The Committee shall have full and final
authority, in each case subject to and consistent with the provisions of the
Plan, to select Eligible Persons to become Participants, grant Awards,
determine the type, number and other terms and conditions of, and all other
matters relating to, Awards, prescribe Award agreements (which need not be
identical for each Participant) and rules and regulations for the
administration of the Plan, construe and interpret the Plan and Award
agreements and correct defects, supply omissions or reconcile
inconsistencies therein, and to make all other decisions and determinations
as the Committee may deem necessary or advisable for the administration of
the Plan.
(b) Manner of Exercise of Committee Authority. At any time that a member
of the Committee is not a Qualified Member, any action of the Committee
relating to an Award granted or to be granted to a Participant who is then
subject to Section 16 of the Exchange Act in respect of the Corporation, or
relating to an Award intended by the Committee to qualify as "performance-
based compensation" within the meaning of Code Section 162(m) and
regulations thereunder, may be taken either (i) by a subcommittee,
designated by the Committee, composed solely of two or more Qualified
Members, or (ii) by the Committee but with each such member who is not a
Qualified Member abstaining or recusing himself or herself from such action;
provided, however, that, upon such abstention or recusal, the Committee
remains composed solely of two or more Qualified Members. Such action,
authorized by such a subcommittee or by the Committee upon the abstention
or recusal of such non-Qualified Member(s), shall be the action of the
Committee for purposes of the Plan. Any action of the Committee shall be
final, conclusive and binding on all persons, including the Corporation, its
subsidiaries, Participants, Beneficiaries, transferees under Section 11(b)
hereof or other persons claiming rights from or through a Participant, and
shareholders. The express grant of any specific power to the Committee, and
the taking of any action by the Committee, shall not be construed as
limiting any power or authority of the Committee. The Committee may
delegate to officers or managers of the Corporation or any subsidiary, or
committees thereof, the authority, subject to such terms as the Committee
shall determine, to perform such functions, including administrative
functions, as the Committee may determine, to the extent that such
delegation will not result in the loss of an exemption under Rule 16b-
3(d)(1) for Awards granted to Participants subject to Section 16 of the
Exchange Act in respect of the Corporation and will not cause Awards
intended to qualify as "performance-based compensation" under Code Section
162(m) to fail to so qualify. The Committee may appoint agents to assist
it in administering the Plan.
(c) Limitation of Liability. The Committee and each member thereof shall
be entitled to, in good faith, rely or act upon any report or other
information furnished to him or her by any executive officer, other officer
or employee of the Corporation or a subsidiary, the Corporation's
independent auditors, consultants or any other agents assisting in the
administration of the Plan. Members of the Committee and any officer or
employee of the Corporation or a subsidiary acting at the direction or on
behalf of the Committee shall not be personally liable for any action or
determination taken or made in good faith with respect to the Plan, and
shall, to the extent permitted by law, be fully indemnified and protected
by the Corporation with respect to any such action or determination.
4. Stock Subject to Plan.
(a) Overall Number of Shares Available for Delivery. Subject to
adjustment as provided in Section 11(c) hereof, the total number of shares
of Stock reserved and available for delivery in connection with Awards under
the Plan shall be (i) 1,500,000 plus (ii) the number of shares of Stock
remaining available under Preexisting Plan(s) immediately prior to the date
on which shareholders of the Corporation approve the adoption of the Plan,
plus (iii) the number of shares of Stock subject to awards under Preexisting
Plan(s) which become available in accordance with Section 4(c) hereof after
the date on which shareholders of the Corporation approve the adoption of
the Plan. Any shares of Stock delivered under the Plan shall consist of
authorized and unissued shares or treasury shares.
(b) Application of Limitation to Grants of Awards. No Award may be
granted if the number of shares of Stock to be delivered in connection with
such Award or, in the case of an Award relating to shares of Stock but
settleable only in cash (such as cash-only SARs), the number of shares to
which such Award relates, exceeds the number of shares of Stock remaining
available under the Plan minus the number of shares of Stock issuable in
settlement of or relating to then-outstanding Awards. The Committee may
adopt reasonable counting procedures to ensure appropriate counting, avoid
double counting (as, for example, in the case of tandem or substitute
awards) and make adjustments if the number of shares of Stock actually
delivered differs from the number of shares previously counted in connection
with an Award.
(c) Availability of Shares Not Delivered under Awards. Shares of Stock
subject to an Award under the Plan or award under any Preexisting Plan(s)
that are canceled, expired, forfeited, settled in cash or otherwise
terminated without a delivery of shares to the Participant, including
(i) the number of shares withheld in payment of any exercise or purchase
price of an Award or award or taxes relating to Awards or awards, and
(ii) the number of shares surrendered in payment of any exercise or purchase
price of an Award or award or taxes relating to any Award or award, will
again be available for Awards under the Plan, except that if any such shares
could not again be available for Awards to a particular Participant under
any applicable law or regulation, such shares shall be available exclusively
for Awards to Participants who are not subject to such limitation.
5. Eligibility; Per-Person Award Limitations. Awards may be granted
under the Plan only to Eligible Persons. In each fiscal year during any
part of which the Plan is in effect, an Eligible Person may not be granted
Awards relating to more than 450,000 shares of Stock, subject to adjustment
as provided in Section 11(c), under each of Sections 6(b), 6(c), 6(d), 6(e),
6(f), 6(g), 6(h), 8(b) and 8(c). In addition, the maximum cash amount that
may be earned under the Plan as a final Annual Incentive Award or other cash
annual Award in respect of any fiscal year by any one Participant shall be
$5 million, and the maximum cash amount that may be earned under the Plan
as a final Performance Award or other cash Award in respect of a performance
period other than an annual period by any one Participant on an annualized
basis shall be $5 million.
6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth
in this Section 6. In addition, the Committee may impose on any Award or
the exercise thereof, at the date of grant or thereafter (subject to
Section 11(e)), such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall determine, including
terms requiring forfeiture of Awards in the event of termination of
employment by the Participant and terms permitting a Participant to make
elections relating to his or her Award. The Committee shall retain full
power and discretion to accelerate, waive or modify, at any time, any term
or condition of an Award that is not mandatory under the Plan; provided,
however, that the Committee shall not have any discretion to accelerate,
waive or modify any term or condition of an Award that is intended to
qualify as "performance-based compensation" for purposes of Code Section
162(m) if such discretion would cause the Award not to so qualify. Except
in cases in which the Committee is authorized to require other forms of
consideration under the Plan, or to the extent other forms of consideration
must by paid to satisfy the requirements of state law, no consideration
other than services may be required for the grant (but not the exercise) of
any Award.
(b) Options. The Committee is authorized to grant Options to Participants
on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock purchasable
under an Option shall be determined by the Committee, provided that such
exercise price shall be not less than the Fair Market Value of a share of
Stock on the date of grant of such Option except as provided under Section
7(a) hereof.
(ii) Time and Method of Exercise. The Committee shall determine the time
or times at which or the circumstances under which an Option may be
exercised in whole or in part (including based on achievement of performance
goals and/or future service requirements), the methods by which such
exercise price may be paid or deemed to be paid, the form of such payment,
including, without limitation, cash, Stock, other Awards or awards granted
under other plans of the Corporation or any subsidiary, or other property
(including notes or other contractual obligations of Participants to make
payment on a deferred basis), and the methods by or forms in which Stock
will be delivered or deemed to be delivered to Participants. In no event
may an Option remain exercisable more than ten years following the date of
grant.
(iii)ISOs. The terms of any ISO granted under the Plan shall comply in all
respects with the provisions of Code Section 422. Anything in the Plan to
the contrary notwithstanding, no term of the Plan relating to ISOs
(including any SAR in tandem therewith) shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify either the Plan or any ISO under Code Section
422, unless the Participant has first requested the change that will result
in such disqualification.
(c) Stock Appreciation Rights. The Committee is authorized to grant SAR's
to Participants on the following terms and conditions:
(i) Right to Payment. A SAR shall confer on the Participant to whom it
is granted a right to receive, upon exercise thereof, the excess of (A) the
Fair Market Value of one share of Stock on the date of exercise (or, in the
case of a "Limited SAR," the Fair Market Value determined by reference to
the Change in Control Price, as defined under Section 9(c) hereof) over (B)
the grant price of the SAR as determined by the Committee provided that such
grant price shall not be less than the Fair Market Value of a share of Stock
on the date of grant of such SAR except as provided under Section 7(a)
hereof.
(ii) Other Terms. The Committee shall determine at the date of grant or
thereafter, the time or times at which and the circumstances under which a
SAR may be exercised in whole or in part (including based on achievement of
performance goals and/or future service requirements), the method of
exercise, method of settlement, form of consideration payable in settlement,
method by or forms in which Stock will be delivered or deemed to be
delivered to Participants, whether or not a SAR shall be in tandem or in
combination with any other Award, and any other terms and conditions of any
SAR. Limited SARs that may only be exercised in connection with a Change
in Control or other event as specified by the Committee may be granted on
such terms, not inconsistent with this Section 6(c), as the Committee may
determine. SARs and Limited SARs may be either freestanding or in tandem
with other Awards.
(d) Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability, risk of forfeiture and other restrictions,
if any, as the Committee may impose, which restrictions may lapse separately
or in combination at such times, under such circumstances (including based
on achievement of performance goals and/or future service requirements), in
such installments or otherwise, as the Committee may determine at the date
of grant or thereafter. Except to the extent restricted under the terms of
the Plan and any Award agreement relating to the Restricted Stock, a
Participant granted Restricted Stock shall have all of the rights of a
shareholder, including the right to vote the Restricted Stock and the right
to receive dividends thereon (subject to any mandatory reinvestment or other
requirement imposed by the Committee). During the restricted period
applicable to the Restricted Stock, subject to Section 11(b) below, the
Restricted Stock may not be sold, transferred, pledged, hypothecated,
margined or otherwise encumbered by the Participant.
(ii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment during the applicable restriction period,
Restricted Stock that is at that time subject to restrictions shall be
forfeited and reacquired by the Corporation; provided that the Committee may
provide, by rule or regulation or in any Award agreement, or may determine
in any individual case, that restrictions or forfeiture conditions relating
to Restricted Stock shall be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee may in other
cases waive in whole or in part the forfeiture of Restricted Stock.
(iii) Certificates for Stock. Restricted Stock granted under the Plan may
be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of the
Participant, the Committee may require that such certificates bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Corporation retain physical
possession of the certificates, and that the Participant deliver a stock
power to the Corporation, endorsed in blank, relating to the Restricted
Stock.
(iv) Dividends and Splits. As a condition to the grant of an Award of
Restricted Stock, the Committee may require or permit a Participant to elect
that any cash dividends paid on a share of Restricted Stock be automatically
reinvested in additional shares of Restricted Stock or applied to the
purchase of additional Awards under the Plan. Unless otherwise determined
by the Committee, Stock distributed in connection with a Stock split or
Stock dividend, and other property distributed as a dividend, shall be
subject to restrictions and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such Stock or other property has been
distributed.
(e) RSUs. The Committee is authorized to grant RSUs to Participants,
which are rights to receive Stock, cash, or a combination thereof at the end
of a specified deferral period, subject to the following terms and
conditions:
(i) Award and Restrictions. Satisfaction of an Award of RSUs shall occur
upon expiration of the deferral period specified for such RSUs by the
Committee (or, if permitted by the Committee, as elected by the
Participant). In addition, RSUs shall be subject to such restrictions
(which may include a risk of forfeiture) as the Committee may impose, if
any, which restrictions may lapse at the expiration of the deferral period
or at earlier specified times (including based on achievement of performance
goals and/or future service requirements), separately or in combination, in
installments or otherwise, as the Committee may determine. RSUs may be
satisfied by delivery of Stock, cash equal to the Fair Market Value of the
specified number of shares of Stock covered by the RSUs, or a combination
thereof, as determined by the Committee at the date of grant or thereafter.
(ii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment during the applicable deferral period or portion
thereof to which forfeiture conditions apply (as provided in the Award
agreement evidencing the RSUs), all RSUs that are at that time subject to
deferral (other than a deferral at the election of the Participant) shall
be forfeited; provided that the Committee may provide, by rule or regulation
or in any Award agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to RSUs shall be waived in
whole or in part in the event of terminations resulting from specified
causes, and the Committee may in other cases waive in whole or in part the
forfeiture of RSUs.
(iii) Dividend Equivalents. Unless otherwise determined by the Committee
at date of grant, Dividend Equivalents on the specified number of shares of
Stock covered by an Award of RSUs shall be either (A) paid with respect to
such RSUs at the dividend payment date in cash or in shares of unrestricted
Stock having a Fair Market Value equal to the amount of such dividends, or
(B) deferred with respect to such RSUs and the amount or value thereof
automatically deemed reinvested in additional RSUs, other Awards or other
investment vehicles, as the Committee shall determine or permit the
Participant to elect.
(f) Bonus Stock and Awards in Lieu of Obligations. The Committee is
authorized to grant Stock as a bonus, or to grant Stock or other Awards in
lieu of obligations to pay cash or deliver other property under the Plan or
under other plans or compensatory arrangements, provided that, in the case
of Participants subject to Section 16 of the Exchange Act, the amount of
such grants remains within the discretion of the Committee to the extent
necessary to ensure that acquisitions of Stock or other Awards are exempt
from liability under Section 16(b) of the Exchange Act. Stock or Awards
granted hereunder shall be subject to such other terms as shall be
determined by the Committee.
(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to a Participant, entitling the Participant to receive cash,
Stock, other Awards, or other property equal in value to dividends paid with
respect to a specified number of shares of Stock, or other periodic
payments. Dividend Equivalents may be awarded on a free-standing basis or
in connection with another Award. The Committee may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to
have been reinvested in additional Stock, Awards, or other investment
vehicles, and subject to such restrictions on transferability and risks of
forfeiture, as the Committee may specify.
(h) Annual Incentive and Performance Awards. The Committee is authorized
to make Annual Incentive Awards and Performance Awards payable in cash,
Shares, or other Awards, on terms and conditions established by the
Committee, subject to Section 8 in the event of Annual Incentive Awards or
Performance Awards intended to qualify as "performance-based compensation"
for purposes of Code Section 162(m).
(i) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, Stock, as deemed by the
Committee to be consistent with the purposes of the Plan, including, without
limitation, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Stock, purchase rights for Stock, Awards
with value and payment contingent upon performance of the Corporation or any
other factors designated by the Committee, and Awards valued by reference
to the book value of Stock or the value of securities of or the performance
of specified subsidiaries. The Committee shall determine the terms and
conditions of such Awards. Stock delivered pursuant to an Award in the
nature of a purchase right granted under this Section 6(h) shall be
purchased for such consideration, paid for at such times, by such methods,
and in such forms, including, without limitation, cash, Stock, other Awards,
or other property, as the Committee shall determine. Cash awards, as an
element of or supplement to any other Award under the Plan, may also be
granted pursuant to this Section 6(h).
7. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Award or any award granted under another plan of the
Corporation, any subsidiary, or any business entity to be acquired by the
Corporation or a subsidiary, or any other right of a Participant to receive
payment from the Corporation or any subsidiary. Such additional, tandem,
and substitute or exchange Awards may be granted at any time. If an Award
is granted in substitution or exchange for another Award or award, the
Committee shall require the surrender of such other Award or award in
consideration for the grant of the new Award. In addition, Awards may be
granted in lieu of cash compensation, including in lieu of cash amounts
payable under other plans of the Corporation or any subsidiary, in which the
value of Stock subject to the Award is equivalent in value to the cash
compensation (for example, RSUs or Restricted Stock), or in which the
exercise price, grant price or purchase price of the Award in the nature of
a right that may be exercised is equal to the Fair Market Value of the
underlying Stock minus the value of the cash compensation surrendered (for
example, Options granted with an exercise price "discounted" by the amount
of the cash compensation surrendered).
(b) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee; provided that in no event shall the term
of any Option or SAR exceed a period of ten years (or such shorter term as
may be required in respect of an ISO under Code Section 422).
(c) Form and Timing of Payment under Awards; Deferrals. Subject to the
terms of the Plan and any applicable Award agreement, payments to be made
by the Corporation or a subsidiary upon the exercise of an Option or other
Award or settlement of an Award may be made in such forms as the Committee
shall determine, including, without limitation, cash, Stock, other Awards
or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. The settlement of any Award may be
accelerated, and cash paid in lieu of Stock in connection with such
settlement, in the discretion of the Committee or upon occurrence of one or
more specified events (in addition to a Change in Control). Installment or
deferred payments may be required by the Committee (subject to Section 11(e)
of the Plan, including the consent provisions thereof in the case of any
deferral of an outstanding Award not provided for in the original Award
agreement) or permitted at the election of the Participant on terms and
conditions established by the Committee. Payments may include, without
limitation, provisions for the payment or crediting of reasonable interest
on installment or deferred payments or the grant or crediting of Dividend
Equivalents or other amounts in respect of installment or deferred payments
denominated in Stock.
(d) Exemptions from Section 16(b) Liability. It is the intent of the
Corporation that the grant of any Awards to or other transaction by a
Participant who is subject to Section 16 of the Exchange Act shall be exempt
from Section 16 pursuant to an applicable exemption (except for transactions
acknowledged in writing to be non-exempt by such Participant). Accordingly,
if any provision of this Plan or any Award agreement does not comply with
the requirements of Rule 16b-3 as then applicable to any such transaction,
such provision shall be construed or deemed amended to the extent necessary
to conform to the applicable requirements of Rule 16b-3 so that such
Participant shall avoid liability under Section 16(b).
8. Performance and Annual Incentive Awards.
(a) Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee.
The Committee may use such business criteria and other measures of
performance as it may deem appropriate in establishing any performance
conditions, and may exercise its discretion to reduce or increase the
amounts payable under any Award subject to performance conditions, except
as limited under Sections 8(b) and 8(c) hereof in the case of a Performance
Award or Annual Incentive Award intended to qualify under Code Section
162(m).
(b) Performance Awards Granted to Designated Covered Employees. If the
Committee determines that a Performance Award to be granted to an Eligible
Person who is designated by the Committee as likely to be a Covered Employee
should qualify as "performance-based compensation" for purposes of Code
Section 162(m), the grant, exercise and/or settlement of such Performance
Award shall be contingent upon achievement of preestablished performance
goals and other terms set forth in this Section 8(b).
(i) Performance Goals Generally. The performance goals for such
Performance Awards shall consist of one or more business criteria and a
targeted level or levels of performance with respect to each of such
criteria, as specified by the Committee consistent with this Section 8(b).
Performance goals shall be objective and shall otherwise meet the
requirements of Code Section 162(m) and regulations thereunder (including
Regulation 1.162-27 and successor regulations thereto), including the
requirement that the level or levels of performance targeted by the
Committee result in the achievement of performance goals being
"substantially uncertain." The Committee may determine that such Performance
Awards shall be granted, exercised and/or settled upon achievement of any
one performance goal or that two or more of the performance goals must be
achieved as a condition to grant, exercise and/or settlement of such
Performance Awards. Performance goals may differ for Performance Awards
granted to any one Participant or to different Participants.
(ii) Business Criteria. One or more of the following business criteria for
the Corporation, on a consolidated basis, and/or for specified subsidiaries
or business or geographical units of the Corporation (except with respect
to the total shareholder return and earnings per share criteria), shall be
used by the Committee in establishing performance goals for such Performance
Awards: (1) earnings per share; (2) increase in revenues or margin; (3)
increase in cash flow; (4) operating margin; (5) return on net assets,
return on assets, return on investment, return on capital, return on equity;
(6) economic value added; (7) direct contribution; (8) net income; pretax
earnings; pretax earnings before interest, depreciation and amortization
(EBITDA); pretax earnings after interest expense and before extraordinary
or special items; operating income; income before interest income or
expense, unusual items and income taxes (local, state or federal) and
excluding budgeted and actual bonuses which might be paid under any ongoing
bonus plans of the Corporation; (9) working capital; (10) management of
fixed costs or variable costs; (11) identification or consummation of
investment opportunities or completion of specified projects in accordance
with corporate business plans, including strategic mergers, acquisitions or
divestitures; (12) total shareholder return; (13) debt reduction; and (14)
any of the above goals determined on an absolute or relative basis or as
compared to the performance of a published or special index deemed
applicable by the Committee including, but not limited to, the Standard &
Poor's 500 Stock Index or a group of comparator companies. One or more of
the foregoing business criteria shall also be exclusively used in
establishing performance goals for Annual Incentive Awards granted to a
Covered Employee under Section 8(c) hereof.
(iii) Performance Period; Timing for Establishing Performance Goals.
Achievement of performance goals in respect of such Performance Awards shall
be measured over a performance period of up to ten years, as specified by
the Committee. Performance goals shall be established not later than 90
days after the beginning of any performance period applicable to such
Performance Awards, or at such other date as may be required or permitted
for "performance-based compensation" under Code Section 162(m).
(iv) Performance Award Pool. The Committee may establish a Performance
Award pool, which shall be an unfunded pool, for purposes of measuring
performance of the Corporation in connection with Performance Awards. The
amount of such Performance Award pool shall be based upon the achievement
of a performance goal or goals based on one or more of the business criteria
set forth in Section 8(b)(ii) hereof during the given performance period,
as specified by the Committee in accordance with Section 8(b)(iii) hereof.
The Committee may specify the amount of the Performance Award pool as a
percentage of any of such business criteria, a percentage thereof in excess
of a threshold amount, or as another amount which need not bear a strictly
mathematical relationship to such business criteria.
(v) Settlement of Performance Awards; Other Terms. After the end of each
performance period, the Committee shall determine the amount, if any, of
(A) the Performance Award pool, and the maximum amount of potential
Performance Award payable to each Participant in the Performance Award pool,
or (B) the amount of potential Performance Award otherwise payable to each
Participant. Settlement of such Performance Awards shall be in cash, Stock,
other Awards or other property, in the discretion of the Committee. The
Committee may, in its discretion, reduce the amount of a settlement
otherwise to be made in connection with such Performance Awards, but may not
exercise discretion to increase any such amount payable to a Covered
Employee in respect of a Performance Award subject to this Section 8(b).
The Committee shall specify the circumstances in which such Performance
Awards shall be paid or forfeited in the event of termination of employment
by the Participant prior to the end of a performance period or settlement
of Performance Awards.
(c) Annual Incentive Awards Granted to Designated Covered Employees. If
the Committee determines that an Annual Incentive Award to be granted to an
Eligible Person who is designated by the Committee as likely to be a Covered
Employee should qualify as "performance-based compensation" for purposes of
Code Section 162(m), the grant, exercise and/or settlement of such Annual
Incentive Award shall be contingent upon achievement of preestablished
performance goals and other terms set forth in this Section 8(c).
(i) Annual Incentive Award Pool. The Committee may establish an Annual
Incentive Award pool, which shall be an unfunded pool, for purposes of
measuring performance of the Corporation in connection with Annual Incentive
Awards. The amount of such Annual Incentive Award pool shall be based upon
the achievement of a performance goal or goals based on one or more of the
business criteria set forth in Section 8(b)(ii) hereof during the given
performance period, as specified by the Committee in accordance with
Section 8(b)(iii) hereof. The Committee may specify the amount of the
Annual Incentive Award pool as a percentage of any of such business
criteria, a percentage thereof in excess of a threshold amount, or as
another amount which need not bear a strictly mathematical relationship to
such business criteria.
(ii) Potential Annual Incentive Awards. Not later than the end of the 90th
day of each fiscal year, or at such other date as may be required or
permitted in the case of Awards intended to be "performance-based
compensation" under Code Section 162(m), the Committee shall determine the
Eligible Persons who will potentially receive Annual Incentive Awards, and
the amounts potentially payable thereunder, for that fiscal year, either out
of an Annual Incentive Award pool established by such date under
Section 8(c)(i) hereof or as individual Annual Incentive Awards. In the
case of individual Annual Incentive Awards intended to qualify under Code
Section 162(m), the amount potentially payable shall be based upon the
achievement of a performance goal or goals based on one or more of the
business criteria set forth in Section 8(b)(ii) hereof in the given
performance year, as specified by the Committee; in other cases, such amount
shall be based on such criteria as shall be established by the Committee.
In all cases, the maximum Annual Incentive Award of any Participant shall
be subject to the limitation set forth in Section 5 hereof.
(iii)Payout of Annual Incentive Awards. After the end of each fiscal year,
the Committee shall determine the amount, if any, of (A) the Annual
Incentive Award pool, and the maximum amount of potential Annual Incentive
Award payable to each Participant in the Annual Incentive Award pool, or
(B) the amount of potential Annual Incentive Award otherwise payable to each
Participant. The Committee may, in its discretion, determine that the
amount payable to any Participant as a final Annual Incentive Award shall
be increased or reduced from the amount of his or her potential Annual
Incentive Award, including a determination to make no final Award
whatsoever, but may not exercise discretion to increase any such amount in
the case of an Annual Incentive Award intended to qualify under Code Section
162(m). The Committee shall specify the circumstances in which an Annual
Incentive Award shall be paid or forfeited in the event of termination of
employment by the Participant prior to the end of a fiscal year or
settlement of such Annual Incentive Award.
(d) Written Determinations. All determinations by the Committee as to the
establishment of performance goals, the amount of any Performance Award pool
or potential individual Performance Awards and as to the achievement of
performance goals relating to Performance Awards under Section 8(b), and the
amount of any Annual Incentive Award pool or potential individual Annual
Incentive Awards and the amount of final Annual Incentive Awards under
Section 8(c), shall be made in writing in the case of any Award intended to
qualify under Code Section 162(m). The Committee may not delegate any
responsibility relating to such Performance Awards or Annual Incentive
Awards.
(e) Status of Section 8(b) and Section 8(c) Awards under Code
Section 162(m). It is the intent of the Corporation that Performance Awards
and Annual Incentive Awards under Sections 8(b) and 8(c) hereof granted to
persons who are designated by the Committee as likely to be Covered
Employees within the meaning of Code Section 162(m) and regulations
thereunder (including Regulation 1.162-27 and successor regulations thereto)
shall, if so designated by the Committee, constitute "performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder. Accordingly, the terms of Sections 8(b), (c), (d) and (e),
including the definitions of Covered Employee and other terms used therein,
shall be interpreted in a manner consistent with Code Section 162(m) and
regulations thereunder. The foregoing notwithstanding, because the
Committee cannot determine with certainty whether a given Participant will
be a Covered Employee with respect to a fiscal year that has not yet been
completed, the term Covered Employee as used herein shall mean only a person
designated by the Committee, at the time of grant of Performance Awards or
an Annual Incentive Award, as likely to be a Covered Employee with respect
to that fiscal year. If any provision of the Plan as in effect on the date
of adoption or any agreements relating to Performance Awards or Annual
Incentive Awards that are designated as intended to comply with Code Section
162(m) does not comply or is inconsistent with the requirements of Code
Section 162(m) or regulations thereunder, such provision shall be construed
or deemed amended to the extent necessary to conform to such requirements.
9. Change in Control.
(a) Effect of "Change in Control." In the event of a "Change in Control,"
the following provisions shall apply unless otherwise provided in the Award
agreement:
(i) Any Award carrying a right to exercise that was not previously
exercisable and vested shall become fully exercisable and vested as of the
time of the Change in Control and shall remain exercisable and vested for
the balance of the stated term of such Award without regard to any
termination of employment by the Participant, subject only to applicable
restrictions set forth in Section 11(a) hereof;
(ii) Any optionee who holds an Option shall be entitled to elect, during
the 60-day period immediately following a Change in Control, in lieu of
acquiring the shares of Stock covered by such Option, to receive, and the
Corporation shall be obligated to pay, in cash the excess of the Change in
Control Price over the exercise price of such Option, multiplied by the
number of shares of Stock covered by such Option;
(iii)The restrictions, deferral of settlement, and forfeiture conditions
applicable to any other Award granted under the Plan shall lapse and such
Awards shall be deemed fully vested as of the time of the Change in Control,
except to the extent of any waiver by the Participant and subject to
applicable restrictions set forth in Section 11(a) hereof; and
(iv) With respect to any outstanding Award subject to achievement of
performance goals and conditions under the Plan, such performance goals and
other conditions will be deemed to be met if and to the extent so provided
in the Award agreement relating to such Award.
(b) Definition of "Change in Control." A "Change in Control" shall be
deemed to have occurred if:
(i) any Person (other than the Corporation, any trustee or other fiduciary
holding securities under any employee benefit plan of the Corporation, or
any company owned, directly or indirectly, by the stockholders of the
Corporation immediately prior to the occurrence with respect to which the
evaluation is being made in substantially the same proportions as their
ownership of the common stock of the Corporation) acquires securities of the
Corporation and immediately thereafter is the Beneficial Owner (except that
a Person shall be deemed to be the Beneficial Owner of all shares that any
such Person has the right to acquire pursuant to any agreement or
arrangement or upon exercise of conversion rights, warrants or options or
otherwise, without regard to the sixty day period referred to in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 30% or more of the combined voting power of the
Corporation's then outstanding securities (except that an acquisition of
securities directly from the Corporation shall not be deemed an acquisition
for purposes of this clause (i));
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement
with the Corporation to effect a transaction described in clause (i), (iii),
or (iv) of this paragraph) whose election by the Board or nomination for
election by the Corporation's stockholders was approved by a vote of at
least two-thirds of the directors then still in office who either were
directors at the beginning of the two-year period or whose election or
nomination for election was previously so approved but excluding for this
purpose any such new director whose initial assumption of office occurs as
a result of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or consents by
or on behalf of an individual, corporation, partnership, group, associate
or other entity or Person other than the Board, cease for any reason to
constitute at least a majority of the Board;
(iii)the consummation of a merger or consolidation of the Corporation with
any other entity, other than (i) a merger or consolidation which would
result in the voting securities of the Corporation outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving or resulting
entity) more than 50% of the combined voting power of the surviving or
resulting entity outstanding immediately after such merger or consolidation
or (ii) a merger or consolidation in which no premium is intended to be paid
to any shareholder participating in the merger or consolidation;
(iv) the stockholders of the Corporation approve a plan or agreement for
the sale or disposition of all or substantially all of the consolidated
assets of the Corporation (other than such a sale or disposition immediately
after which such assets will be owned directly or indirectly by the
stockholders of the Corporation in substantially the same proportions as
their ownership of the common stock of the Corporation immediately prior to
such sale or disposition) in which case the Board shall determine the
effective date of the Change in Control resulting therefrom; or
(v) any other event occurs which the Board determines, in its discretion,
would materially alter the structure of the Corporation or its ownership.
For purposes of this definition:
(A) The term "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 under the Exchange Act (including any successor to
such Rule).
(B) The term "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.
(C) The term "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and
14(d) thereof, including "group" as defined in Section 13(d) thereof.
(c) Definition of "Change in Control Price." The "Change in Control
Price" means an amount in cash equal to the higher of (i) the amount of cash
and fair market value of property that is the highest price per share paid
(including extraordinary dividends) in any transaction triggering the
Change in Control or any liquidation of shares following a sale of
substantially all assets of the Corporation, or (ii) the highest Fair Market
Value per share at any time during the 60-day period preceding and 60-day
period following the Change in Control.
10. Options Granted Automatically to Non-Employee Directors.
(a) Annual Option Grants. A Non-Employee Director Annual Option will be
automatically granted at the close of business on the last trading day of
each July.
(b) Number of Shares Subject to Automatic Option Grants. Unless otherwise
determined by the Board in a resolution adopted on or prior to the date of
the annual meeting of the Company's shareholders that coincides with or most
recently precedes the date of grant of an Option to a Non-Employee Director,
the number of shares of Stock to be subject to each Annual Option shall be
5,000, in each case subject to adjustment as provided in Section 11(c).
(c) Other Non-Employee Director Annual Option Terms. Unless otherwise
determined by the Board, other terms of Annual Options shall be as follows:
(i) The exercise price per share of Stock purchasable upon exercise of
a Non-Employee Director Annual Option will be equal to 100% of the Fair
Market Value of a share of Stock on the date of grant of the Option.
(ii) A Non-Employee Director Annual Option will expire at the earlier of
(A) 10 years after the date of grant or (B) three months after the date the
Participant ceases to serve as a director of the Company for any reason.
(iii)Each Non-Employee Director Annual Option will become exercisable in
three equal installments after each of the first, second and third
anniversaries of the date of grant.
(d) Method of Exercise. A Participant may exercise a Non-Employee
Director Annual Option, in whole or in part, at such time as it is
exercisable and prior to its expiration, by giving written notice of
exercise to the Secretary of the Company, specifying the Option to be
exercised and the number of shares to be purchased, and paying in full the
exercise price in cash (including by check) or by surrender of shares of
Stock already owned by the Participant (except for shares acquired from the
Company by exercise of an option less than six months before the date of
surrender) having a Fair Market Value at the time of exercise equal to the
exercise price, or by a combination of cash and shares.
(e) Availability of Shares. If an automatic grant of Options authorized
under Section 10(a) or (b) cannot be made in full due to the limitation set
forth in Section 4(a), such grant shall be made (together with other
automatic grants to occur at the same time) to the greatest extent then
permitted under Section 4(a).
11. General Provisions.
(a) Compliance with Legal and Other Requirements. The Corporation may,
to the extent deemed necessary or advisable by the Committee, postpone the
issuance or delivery of Stock or payment of other benefits under any Award
until completion of such registration or qualification of such Stock or
other required action under any federal or state law, rule or regulation,
listing or other required action with respect to any stock exchange or
automated quotation system upon which the Stock or other securities of the
Corporation are listed or quoted, or compliance with any other obligation
of the Corporation, as the Committee may consider appropriate, and may
require any Participant to make such representations, furnish such
information and comply with or be subject to such other conditions as it may
consider appropriate in connection with the issuance or delivery of Stock
or payment of other benefits in compliance with applicable laws, rules, and
regulations, listing requirements, or other obligations.
(b) Limits on Transferability; Beneficiaries. No Award or other right or
interest of a Participant under the Plan shall be pledged, hypothecated or
otherwise encumbered or subject to any lien, obligation or liability of such
Participant to any party (other than the Corporation or a subsidiary), or
assigned or transferred by such Participant otherwise than by will or the
laws of descent and distribution or to a Beneficiary upon the death of a
Participant, and such Awards or rights that may be exercisable shall be
exercised during the lifetime of the Participant only by the Participant or
his or her guardian or legal representative, except that Awards and other
rights (other than ISOs and SARs in tandem therewith) may be transferred to
one or more Beneficiaries or other transferees during the lifetime of the
Participant, and may be exercised by such transferees in accordance with the
terms of such Award, but only if and to the extent such transfers are
permitted by the Committee pursuant to the express terms of an Award
agreement (subject to any terms and conditions which the Committee may
impose thereon). A Beneficiary, transferee, or other person claiming any
rights under the Plan from or through any Participant shall be subject to
all terms and conditions of the Plan and any Award agreement applicable to
such Participant, except as otherwise determined by the Committee, and to
any additional terms and conditions deemed necessary or appropriate by the
Committee.
(c) Adjustments. In the event that any dividend or other distribution
(whether in the form of cash, Stock, or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, share exchange, liquidation, dissolution or other
similar transaction or event affects the Stock such that an adjustment is
determined by the Committee to be appropriate under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all
of (i) the number and kind of shares of Stock which may be delivered in
connection with Awards granted thereafter, (ii) the number and kind of
shares of Stock by which annual per-person Award limitations are measured
under Section 5 hereof, (iii) the number and kind of shares of Stock subject
to or deliverable in respect of outstanding Awards and (iv) the exercise
price, grant price or purchase price relating to any Award and/or make
provision for payment of cash or other property in respect of any
outstanding Award. In addition, the Committee is authorized to make
adjustments in the terms and conditions of, and the criteria included in,
Awards (including Performance Awards and performance goals, and Annual
Incentive Awards and any Annual Incentive Award pool or performance goals
relating thereto) in recognition of unusual or nonrecurring events
(including, without limitation, events described in the preceding sentence,
as well as acquisitions and dispositions of businesses and assets) affecting
the Corporation, any subsidiary or any business unit, or the financial
statements of the Corporation or any subsidiary, or in response to changes
in applicable laws, regulations, accounting principles, tax rates and
regulations or business conditions or in view of the Committee's assessment
of the business strategy of the Corporation, any subsidiary or business unit
thereof, performance of comparable organizations, economic and business
conditions, personal performance of a Participant, and any other
circumstances deemed relevant; provided that no such adjustment shall be
authorized or made if and to the extent that such authority or the making
of such adjustment would cause Options, SARs, Performance Awards granted
under Section 8(b) hereof or Annual Incentive Awards granted under
Section 8(c) hereof to Participants designated by the Committee as Covered
Employees and intended to qualify as "performance-based compensation" under
Code Section 162(m) and regulations thereunder to otherwise fail to qualify
as "performance-based compensation" under Code Section 162(m) and
regulations thereunder.
(d) Taxes. The Corporation and any subsidiary is authorized to withhold
from any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Stock, or any payroll or other payment to
a Participant, amounts of withholding and other taxes due or potentially
payable in connection with any transaction involving an Award, and to take
such other action as the Committee may deem advisable to enable the
Corporation and Participants to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to any Award. This
authority shall include authority to withhold or receive Stock or other
property and to make cash payments in respect thereof in satisfaction of a
Participant's tax obligations, either on a mandatory or elective basis in
the discretion of the Committee.
(e) Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue or terminate the Plan or the Committee's authority to grant
Awards under the Plan without the consent of shareholders or Participants,
except that any amendment or alteration to the Plan shall be subject to the
approval of the Corporation's shareholders not later than the annual meeting
next following such Board action if such shareholder approval is required
by any federal or state law or regulation or the rules of any stock exchange
or automated quotation system on which the Stock may then be listed or
quoted, and the Board may otherwise, in its discretion, determine to submit
other such changes to the Plan to shareholders for approval; provided that,
without the consent of an affected Participant, no such Board action may
materially and adversely affect the rights of such Participant under any
previously granted and outstanding Award. The Committee may waive any
conditions or rights under, or amend, alter, suspend, discontinue or
terminate any Award theretofore granted and any Award agreement relating
thereto, except as otherwise provided in the Plan; provided that, without
the consent of an affected Participant, no such Committee action may
materially and adversely affect the rights of such Participant under such
Award. Notwithstanding anything in the Plan to the contrary, if any right
under this Plan would cause a transaction to be ineligible for pooling of
interest accounting that would, but for the right hereunder, be eligible for
such accounting treatment, the Committee may modify or adjust the right so
that pooling of interest accounting shall be available, including the
substitution of Stock having a Fair Market Value equal to the cash otherwise
payable hereunder for the right which caused the transaction to be
ineligible for pooling of interest accounting. In addition, the Board shall
also have the authority to modify the Plan, to the extent it deems necessary
or desirable in its sole discretion, to minimize the taxes incurred by
either the Company or any Participant relating to any Award.
(f) Limitation on Rights Conferred under Plan. Neither the Plan nor any
action taken hereunder shall be construed as (i) giving any Eligible Person
or Participant the right to continue as an Eligible Person or Participant
or in the employ or service of the Corporation or a subsidiary,
(ii) interfering in any way with the right of the Corporation or a
subsidiary to terminate any Eligible Person's or Participant's employment
or service at any time, (iii) giving an Eligible Person or Participant any
claim to be granted any Award under the Plan or to be treated uniformly with
other Participants and employees, or (iv) conferring on a Participant any
of the rights of a shareholder of the Corporation unless and until the
Participant is duly issued or transferred shares of Stock in accordance with
the terms of an Award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended
to constitute an "unfunded" plan for certain incentive awards and deferred
compensation. With respect to any payments not yet made to a Participant
or obligation to deliver Stock pursuant to an Award, nothing contained in
the Plan or any Award shall give any such Participant any rights that are
greater than those of a general creditor of the Corporation.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the shareholders of the Corporation for approval
shall be construed as creating any limitations on the power of the Board or
a committee thereof to adopt such other incentive arrangements as it may
deem desirable including incentive arrangements and awards which do not
qualify under Code Section 162(m).
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee, in the event of a forfeiture of an
Award with respect to which a Participant paid cash or other consideration,
the Participant shall be repaid the amount of such cash or other
consideration. No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine whether
cash, other Awards or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
(j) Governing Law. The validity, construction and effect of the Plan, any
rules and regulations under the Plan, and any Award agreement shall be
determined in accordance with the laws of the State of New York, without
giving effect to principles of conflicts of laws, and applicable federal
law.
(k) Awards under Preexisting Plan(s). Upon approval of the Plan by
shareholders of the Corporation as required under Section 11(l) hereof, no
further awards shall be granted under the Preexisting Plan(s).
(l) Plan Effective Date and Shareholder Approval. The Plan has been
adopted by the Board effective , subject to approval by
the shareholders of the Corporation.
