THIS CHANGE IN CONTROL AGREEMENT ("CIC Agreement") is
being entered into on September 19, 2008 by and between MICHAEL
WELLESLEY-WESLEY ("MWW"), an individual residing at 145 East 81st
Street, Apt. 11A, New York, New York 10028, and CHYRON CORPORATION,
a New York corporation (the "Company") with its principal office
located at 5 Hub Drive, Melville, New York, New York 11747.
WHEREAS, MWW is entering into a new employment agreement
(the "Employment Agreement") with the Company simultaneously with
this CIC Agreement;
WHEREAS, MWW and the Company entered into a letter
agreement, dated October 26, 2007, regarding severance in the event
of a change-in-control (the "Initial CIC Letter Agreement");
and
WHEREAS, MWW and the Company desire to terminate the
Initial CIC Letter Agreement and to execute and deliver this new
CIC Agreement simultaneously with the Employment Agreement.
NOW, THEREFORE, for good and valuable consideration, and
intending to be legally bound hereby, the parties hereto agree as
follows:
The following sets out our agreement with respect to severance
payments to be paid to MWW if MWW's termination of employment is
"related to" a "Change-in-Control" and is either: (i) without
"Cause," or (ii) a "Resignation with Good Reason" (collectively, a
"Severance Event") (all as defined below). This CIC Agreement shall
be effective as of September 1, 2008 and shall replace all
severance benefits payable to you as a result of a
Change-in-Control as previously set forth in the Initial CIC Letter
Agreement or in any executive retention program previously
maintained by the Company. This CIC Agreement shall not affect any
other severance benefits set forth in your Employment
Agreement.
1. Severance Benefits .
1.1 In the event of a Severance Event, the Company shall pay MWW
severance equal to the following: (i) an amount equal to MWW's base
salary for a 12 month period based on MWW's base salary rate in
effect immediately prior to a Change-in-Control (the "Severance
Salary"); (ii) a bonus equal to the greater of (x) the bonus paid
to MWW for the full fiscal year immediately prior to a
Change-in-Control and (y) the bonus that MWW has accrued for the
fiscal year in which the Change-in-Control has occurred, with such
amount being annualized (the "Severance Bonus"); and (iii) an
amount, grossed up for federal, state and local taxes, in lieu of
one year of participation in the Company's life, long-term
disability, and health insurance plans, as described further below
(the "Severance Benefits"). The payments are not subject to
mitigation or any right of set-off. In addition, MWW will be paid
for accrued, but unused vacation time up to the Company's maximum
permitted accrual of six weeks. Further, all unvested options shall
immediately vest and the period to exercise all options held by MWW
shall be the remaining term of each option regardless of any
shorter
periods provided for by the Stock Option Plan as a result of the
termination of your employment.
1.2 Following a Severance Event, the Severance Salary shall be
paid in even installments on a bi-weekly basis for a period of 12
months from your date of termination. The Severance Bonus and
Severance Benefits amounts shall be paid in a lump sum within
twenty (20) business days from the date of MWW's termination.
1.3 Recognizing that such amount is subject to income and other
taxes, the Severance Benefits payment shall include an amount equal
to the amount of federal, state, and local income taxes that MWW
incurs as a result of the Severance Benefits payment or any
additional tax gross-up payment on such payment. The Severance
Benefits payment shall be equal to the sum of the Health Care
Payment, the Life Insurance Payment and the Disability Insurance
Payment, all as described below, plus the foregoing tax
gross-up.
1.4 The Health Care Payment is an amount equal to 12 times the
monthly premium amount charged by the Company for COBRA
continuation coverage under the health care option in which MWW is
enrolled at the time of the Severance Event. To receive coverage
under the Company's health insurance plans, MWW must elect to
receive COBRA coverage and remit the appropriate payment to the
Company as per the policy of the Company.
1.5 The Company's group term life insurance policy provides MWW
with $500,000 of coverage and, upon termination, offers MWW the
opportunity to convert to Whole Life (subject to acceptance by the
insurer). The Life Insurance Payment is an amount equal to 12 times
the monthly premium for one of the following, as MWW may elect: (i)
a Whole Life conversion policy through the Company's group life
insurer (subject to acceptance by the insurer); (ii) an existing
life insurance policy or policies that you may currently have in
place; or (iii) a new term life insurance policy. The Company will
pay only that pro-rated portion of the premium that represents
coverage equal to MWW's coverage under the group life insurance
plan as of the date of this CIC Agreement, that is, $500,000.
1.6 The Company's long-term disability insurance plan provides
MWW with coverage of 60% of monthly earnings (but not more than
$10,000, which amount may be reduced by deductible sources of
income and disability earnings) after a 26 weeks elimination
(waiting) period, and the insurer offers you a portable policy
after termination. The Disability Insurance Payment is an amount
equal to 12 times the monthly premium for one of the following, as
MWW may elect: (i) a portable long-term disability policy through
the Company's insurer (subject to acceptance by the insurer); (ii)
an existing long-term disability insurance policy or policies that
MWW may currently have in place; or (iii) a new personal long-term
disability insurance policy obtained through other than the
Company's insurance policy. The Company will pay only that
pro-rated portion of the premium that
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represents coverage equal to MWW's coverage under the group
long-term disability insurance plan as of the date of this
Amendment.
1.7 The Severance Salary, Severance Bonus, Severance Benefits
and the Gross-Up Payments (as defined in Section 4) provided
hereunder are intended to comply with the exemption from Section
409A of the Internal Revenue Code of 1986, as amended (the "Code"),
for involuntary separation arrangements set forth in Treasury
Regulation Section 1.409A-1(b)(9). Accordingly, notwithstanding any
other provision hereof, (i) no amount shall be payable to MWW
hereunder in such event unless MWW's termination of employment
constitutes a separation from service within the meaning of Section
409A of the Code, (ii) if the amount payable to MWW hereunder in
such event shall exceed two times the lesser of (A) MWW's annual
compensation (as defined in Treasury Regulation Section
1.415(d)(2)) for services provided to the Company as an employee
for the calendar year preceding the calendar year in which such
separation from service occurs, or (B) the maximum amount that may
be taken into account under a qualified plan pursuant to Section
401(a)(17) of the Code for such year, such amount shall be paid as
otherwise specified in Section 1.2 and Section 4, provided that the
amount in excess of the foregoing limitation shall be subject to
the provisions of Section 3 and (iii) no payment may be made to MWW
hereunder in such event later than December 31 of the second
calendar year following the calendar year in which such separation
from service occurs.
1.8 The Company shall indemnify MWW and hold MWW harmless, on an
after-tax basis, from any taxes, costs, expenses, penalties, fines,
interest or other liabilities that result from the application of
Section 409A of the Code in connection with payments MWW receives
under this Amendment, as long as MWW has complied with the terms of
this CIC Agreement. Any such payments made under this Section shall
be made on a grossed-up basis.
2. Definitions . The defined terms used herein have the
following meanings:
2.1 "Cause" means that MWW (i) is convicted of a felony crime;
(ii) willfully commits any act or willfully omits to take any
action in bad faith and to the material detriment of the Company;
(iii) commits an act of active and deliberate fraud against the
Company; or (iv) materially breaches any term of the Agreement or
any written policy of the Company which could expose the Company to
significant damages (including, but not limited to breach of the
Company's anti-discrimination or harassment policies) and fails to
correct such breach within ten (10) days after written notice
thereof.
2.2 "Change-in-Control" means (i) the acquisition, directly or
indirectly, by any individual, entity or group, or a Person (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act")) of ownership
of 30% or more of either (a) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or
(b) the combined Voting power of the then outstanding voting
securities of the
3
Company entitled to vote generally in the election of directors
(the "Outstanding Company Voting Securities"); (ii) individuals
who, as the date hereof, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority of
the Board; provided , however , that any individual
becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, as
a member of the Incumbent Board, any such individual whose initial
assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents
