-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N4qu/rRVntHAdtxTnOHLYaZivxVunZOX0F5DuzQoP4BwKxr6P/ct/pqMFeo4D081 Bwt8g/3CFMy1EH+bUaO1gQ== 0000020232-97-000005.txt : 19970321 0000020232-97-000005.hdr.sgml : 19970321 ACCESSION NUMBER: 0000020232-97-000005 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970320 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHYRON CORP CENTRAL INDEX KEY: 0000020232 STANDARD INDUSTRIAL CLASSIFICATION: PHOTOGRAPHIC EQUIPMENT & SUPPLIES [3861] IRS NUMBER: 112117385 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09014 FILM NUMBER: 97560105 BUSINESS ADDRESS: STREET 1: 5 HUB DR CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 5168452000 MAIL ADDRESS: STREET 1: 5 HUB DRIVE CITY: MELVILLE STATE: NY ZIP: 11747 FORMER COMPANY: FORMER CONFORMED NAME: COMPUTER EXCHANGE INC DATE OF NAME CHANGE: 19760114 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996 Commission File Number 1-9014 CHYRON CORPORATION (Exact name of registrant as specified in its charger) New York 11-2117385 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 5 Hub Drive, Melville, New York 11747 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (516) 845-2000 Securities registered pursuant to Section 12(b) of the Act: Common Stock, par value $.01 New York Stock Exchange (Title of Class) (Name of exchange on which registered) Common Stock Purchase Warrants expiring January 31, 1996 Chicago Stock Exchange (Name of exchange on which registered) Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ( ) The aggregate market value of voting stock held by non-affiliates of the Company on March 14, 1997 was $68,754,901. The number of shares outstanding of the issuer's common stock, par value $.01 per share, on March 14, 1997 was 32,384,635. APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by a check mark whether the Registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES X NO DOCUMENTS INCORPORATED BY REFERENCE Item 10 (Directors and Executive Officers of the Registrant), Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain Beneficial Owners and Management) and Item 13 (Certain Relationships and Related Transactions) will be incorporated into the Company's Proxy Statement to be filed within 120 days of December 31, 1996 and are incorporated herein by reference. Exhibit index is located on page 55 This document consists of 228 pages PART I ITEM 1. BUSINESS General Information Regarding the Company Chyron Corporation ("Chyron") was incorporated under the laws of the State of New York on April 8, 1966 under the name The Computer Exchange, Inc., which was changed to the present name on November 28, 1975. On April 12, 1996, Chyron acquired Pro-Bel Limited ("Pro-Bel"; collectively with Chyron, the "Company"). The Company's principal executive offices are located at 5 Hub Drive, Melville, New York 11747 and its telephone number is (516) 845-2000. Its executive offices in the United Kingdom are located at Danehill, Lower Early, Reading, Berks RG6 4PB and its telephone number is 44-1734-86-61-21. On September 17, 1990, Chyron and its subsidiaries sought relief under Chapter 11 of the United States Bankruptcy Code. On December 27, 1991, Chyron emerged from bankruptcy. Pursuant to its plan of reorganization, Chyron issued to its banks shares of Common Stock which represented 81% of the voting power and beneficial ownership of all the issued and outstanding Common Stock on a fully diluted basis. Such shares of Common Stock were then purchased from the banks by Pesa, Inc. ("Pesa"). An aggregate of 4,666,666 shares of Common Stock owned by Pesa were eventually acquired by Sepa Technologies Ltd., Co. ("Sepa"), an affiliate of Pesa. In May 1995, CC Acquisition Company A, L.L.C., a Delaware limited liability company ("CCA"), acquired 3,333,333 shares of Common Stock from Pesa. In July 1995, control of Chyron was transferred through the sale of an additional 18,138,238 shares of Common Stock by Pesa and Sepa to (i) CC Acquisition Company B, L.L.C., a Delaware limited liability company ("CCB"); (ii) various funds managed by Weiss, Peck & Greer, L.L.C. ("Weiss, Peck & Greer"); and (iii) Westpool Investment Trust plc ("Westpool") (Weiss, Peck & Greer and Westpool are collectively referred to as the "WPG/Westpool Investment Group"). In addition, Sepa and other parties transferred the voting control over an aggregate of 3,000,000 shares of Common Stock to these entities. As of March 10, 1997, CCA and CCB together beneficially own 8,455,297 shares of Common Stock and the WPB/Westpool Investor Group beneficially own in the aggregate 15,774,432 shares. The Company develops, manufactures, markets and supports a broad range of equipment, software and systems that facilitate the production and enhance the presentation of live and pre-recorded video, audio and other data. The Company's products enable users to (i) create and manipulate text, logos and other graphic images using special effects such as 3D transforming, compositing and painting; (ii) manage, monitor and distribute video, audio and other data signals; and (iii) control edit processes and automate broadcast equipment. The worldwide market for equipment, software and systems used in the production and presentation of video and audio content encompasses major television networks, cable television broadcasters, direct to home satellite program distributors, production companies and post-production houses, as well as organizations and individuals creating materials such as corporate and specialized video and audio presentations. Products The Company offers a broad range of products that address the needs of the video and audio production, post-production and distribution markets. The Company's line of high performance graphics systems are used by many of the world's leading broadcast stations to display new flashes, election results, sports scores, stock market quotations, programming notes and weather information. The Company's signal management systems interconnect video, audio and data signals to and from equipment within a studio's control room or edit suite, as well as to and from signal transmission sites. The Company's line of control and automation systems are used to automate the steps used in the management, editing and distribution of video and audio content. Graphic Systems Graphics and character generators. Chyron's family of iNFiNiT! products use a digital computer and electronic storage to permit operators to create images capable of being broadcast either independently or superimposed on other images. Images broadcast directly from the system have included election results, stock market quotations, sports scores, commercial advertising and promotional material. Superimposed images are similarly used for a variety of purposes such as identifying speakers during interviews or displaying statistics during sports telecasts. The flagship iNFiNiT! is a dual-user graphics workstation with one to three output channels, each with a dedicated key signal. MAX!> is a signal-user graphics system with one or two separate video and key channels. MAXINE! is a single channel/single-user character generator. MAX!> and MAXINE! have similar feature sets and effective resolution to the iNFiNiT!. In September 1996, the Company introduced WiNFiNiT!, an optional PC-based graphical user interface which utilizes the Microsoft Windows NT operating system. Still store management systems. IMAGESTOR! offers real-time playback of uncompressed video frames and instant access to thousands of one-line or archived images. Live newscasters and broadcast trucks use IMAGESTOR! for live video capture as well as for image storage retrieval for on-air display. The IMAGESTOR! system allows on-line storage of 2,000 still images with optional additional storage available. The library of stills can be searched and sorted by criteria, keywords and other attributes. Users can create a playlist of images for automatic playback during live on-air operations and embed the selected still images with effects such as cut, dissolve, wipe, push, reveal and hide. IMAGESTOR! is available as a stand-alone workstation or a database file management software program for use with Chyron's iNFiNiT! family of graphics systems. Compact graphics and character generators. The Company's compact character generators, sold under the CODI and PC-CODI names, provide real-time text, titling and logo generation which are used for broadcasting time, temperature, weather warnings, sports statistics, scoreboards, news updates and financial information. CODI products may operate through touch screens for real-time on-screen drawing. They can work with standard computer platforms regardless of operating system or system performance. Electronic paint and animation systems and software. Chyron's Liberty family of paint and animation tools are resolution-independent, non- linear, digital image processing systems and software. Liberty products are used to create, edit and composite special visual effects in an on- line, real-time environment. Liberty products have been used for high- end film applications and have created special effects for major feature films, including Casino and Broken Arrow. Liberty products operate on various Silicon Graphics workstations and support all popular file formats. Liberty offers a menu of video graphic creation tools, such as painting, compositing, morphing, titling, 3D transforming, layering, coloring, cycle animation, rotoscoping and cell animation. Signal Management Systems Switching and routing systems. Under the Pro-Bel name, the Company provides a complete range of control solutions for matrix systems which process and distribute multimedia signals. The PROCION product offers a range of IBM PC/Windows touch screen control systems which are easy to use and configure. System 3 provides a push button control panel which can utilize simple signal matrix solutions and multi-matrix installations with integrated tie-line management. System 3 and PROCION can co-exist for maximum flexibility. The new XD series of digital router switchers are large-scale routing systems that can produce high-performance signal distribution across a wide spectrum of applications. The TM Series are compact digital routing switchers that provide a cost-effective solution for users moving from analog to digital distribution and for smaller scale routing solutions such as remote broadcast vehicles. The HD series of routing switchers includes matrix products for digital and analog video, digital and analog audio and RS422 machine control. Intercom/talkback. The Trilogy Commander 400 Series combines Digital Signal Processing ("DSP") audio techniques with control technology to produce a digital intercom/talkback system. The system is supplied with IBM compatible PC-based editing and control panels to manage audio crosspoints. Intercom systems are implemented in a wide range of applications including television and radio broadcast facilities, airports, hospitals, outside and remote broadcast trucks, post-production suites and leisure complexes. Control and Automation Systems Master control, storage and station automation. Pro-Bel has developed a suite of products which are designed to process video, audio and related data signals, automate playout of the signals and manage media signal storage devices in the master control and transmission suites. MAPP is a Windows-based, video server management and control system. MAPP provides facilities to record, track, cache and replay broadcast material according to a user defined schedule. MAPP easily interfaces with disk based video servers manufactured by many different vendors. The COMPASS station automation system provides comprehensive station automation capability to major broadcasters that have complex playlists. Video tape cartridge machines, video servers and other devices are typically interfaced by high speed data links which allow the system to control the devices according to a playlist schedule. The automation system monitors all functions to check for discrepancies such as time errors, machines not available for control or manual intervention. The Company's digital master control switcher TX-220 employs component digital and AES/EBU digital audio signal processing. Features include 10 bit component digital video/audio processing with an analog option, up to 4 AES/EBU levels, stand-alone operation with an upstream keyer, multifunction plasma display, simple user friendly manual control and full integration with the compass Automation System. The master control switcher switches and combines video and audio content signals from various devices, such as video tape machines, disk based video servers, character generators and still storage systems, to produce seamless program flow for distribution to the final program delivery channel. Electronic editing control systems. The CMX OMNI family of edit controllers are designed to control and operate edit suite equipment. CMX OMNI systems are flexible, configurable and easy to operate. They are capable of controlling over 200 types of edit suite devices developed by other manufacturers, including video tape recorders, video disks, production control switchers, digital video effects equipment, time base correctors and audio equipment. Marketing and Sales The Company markets its products and systems to traditional broadcast, production and post-production facilities, government agencies, educational institutions and telecommunications and corporate customers. In order to maintain and increase awareness of its products, the Company displays at the major domestic and international trade shows of the broadcast and computer graphics industries. In the United States, the Company exhibits at the National Association of Broadcasters (NAB) and ACM SIGGRAPH conventions. It also exhibits at the International Broadcasters Conventions (IBC) in Europe, INTERBEE in Japan and Broadcast-Asia in China. The Company uses direct-mail campaigns and places advertisements in broadcast, post-production and computer industry publications. Sales of the Company's products in the United States and the United Kingdom are made through Company direct sales personnel, dealers, independent representatives, systems integrators and OEMs. Direct sales, marketing and product specialists serving the domestic markets act as links between the customer and the Company's development teams. Sales of the Company's products outside of the United States and United Kingdom are made through dealers and several representatives covering specific territories. Some of the dealers have been granted exclusive rights to sell certain products in specified territories. During 1996, the Company opened a sales and support office in Hong Kong in order to better service the growing market of Asia. In some territories, dealers sell products from all of the Company's product categories; in other territories, dealers handle only specific products. Service, Support and Training The Company offers comprehensive technical service, support and training to its customers through 24 hour per day, seven days per week access to trained service and support professionals. Training courses are available through the Company and range in length from a few days to a few weeks and consist of a mix of classroom discussions and hands-on training. The Company offers training courses for many of its products at its Melville (New York) headquarters and its Reading (United Kingdom), Atlanta (Georgia) and Burbank (California) centers. The Company also conducts on-site training. Installation assistance, hardware and software, maintenance contracts and spare parts are made available by Company. Support contracts and a responsive spare parts supply service facilitate customer satisfaction. Service is provided both domestically and internationally by the Company or its appointed dealers and representatives. The Company also provides sales and service support to its dealers from time to time. The Company provides warranties on all of its products ranging from 90 days to five years. Research and Development The Company's research and product development, conducted in Melville, New York, Reading, United Kingdom and Santa Clara, California is focused on the continued enhancement of its existing products and the development of new ones. Historically, the Company has oriented its efforts toward the development of complete systems rather than of either hardware or software standing alone. A strategic engineering group evaluates hardware and software technologies. During 1996, 1995 and 1994, the Company expensed approximately $5.3 million, $4.1 million and $4.2 million, respectively, for research and development and amortization of capitalized software development costs incurred in connection with the development of new products and the modification and enhancement of existing products. Manufacturing The Company has final assembly and system integration operations located in Melville and Reading. The Company primarily uses third-party vendors to manufacture and supply all of the hardware components and sub- assemblies utilized in the Company's graphics systems and relies upon a combination of third-party vendors and internal manufacturing for components and sub-assemblies utilized in the Company's signal management systems. The Company designs many of its system components to its own specifications, including metal and electronic parts and components, circuit boards and certain subassemblies. It assembles such items and standard parts, together with internally-developed software, to create final products. The Company then performs testing and quality inspections of each product. Competition The market for graphics imaging, editing and animation systems, signal routing systems and media storage systems is highly competitive and is characterized by rapid technological change and evolving industry standards. Rapid obsolescence of products, frequent development of new products and significant price erosion are all features of the industry in which the Company operates. The Company anticipates increased competition from both existing companies and new market entrants. The Company is currently aware of several major and a number of smaller competitors. In the graphics area, the Company believes its primary competitors are Aston Electronic Designs Limited, Digital Graphix Inc., Dynatech Corporation, Quantel Inc. and Scitex Corporation Ltd. In the signal management area, the Company believes its primary competitors are Dynatech Corporation, Leitch Incorporated, Philips Electronics N.V., Sony Corporation and Tektronix Inc. In the control and automation area, the Company believes its primary competitors are Accom, Inc., Louth Automation, Philips Electronics N.V., Sony Corporation and Tektronix, Inc. Many of these companies have significantly greater financial, technical, manufacturing and marketing resources than the Company. In addition, certain product categories and market segments, on a region-by- region basis, in which the Company does or may compete, are dominated by certain vendors. Backlog The Company's backlog of orders at December 31, 1996 approximated $4 million. The Company believes these orders to be firm and expects to fulfill the entire amount of this backlog in 1996. Employees As of December 31, 1996, the Company employed 405 persons on a full-time basis, including 63 in sales and marketing, 159 in manufacturing and testing, 39 in customer support, service and training, 50 in finance and administration and 94 in research and development. None of these employees is represented by a labor union. Patents and Proprietary Rights The Company's success depends upon its ability to protect its proprietary software technology and operate without infringing the rights of others. It relies on a combination of patent, trademark and trade secret laws to establish and protect its proprietary rights in its technology. The Company currently has seven patents. The names Chyron, Scribe, Chyron Scribe, Chyron Scribe Junior, Chyron SuperScribe, iNFiNiT!, MAX!>, MAXINE!, CODI, I2, Chyron Care, Intelligent Interface, Intelligent Interface (I2), CMX, CMX AEGIS, CMX OMNI, Aurora, Liberty, PROCION and PROCION INNOVATIVE CONTROL SOLUTIONS are registered trademarks of the Company. The Company also has rights in trademarks and service marks which are not federally registered. The Company does not have registered copyrights on any of its intellectual property. The duration of patents in the United States is 20 years from priority or 17 years from issuance. As a result, the Company's existing patents will begin to expire commencing in the year 1998. Government Regulations The United States Federal Communications Commission has issued regulations relating to shielding requirements for electromagnetic interface in electronic equipment. The Company's products are in compliance with these regulations. ITEM 2. FACILITIES The executive offices and principal office of the Company and its graphics business are located in Melville, New York pursuant to a lease that expires on June 30, 2004. This facility consists of approximately 47,000 square feet and is used for manufacturing, research and development, marketing and the executive offices. The Company also leases approximately 15,000 square feet in Santa Clara, California for research and development. This lease expires on October 31, 1997. In the United Kingdom, the Company's executive office is located in Reading, United Kingdom where it owns an approximately 19,000 square foot facility. This facility is used for manufacturing, research and development and marketing. The Company occupies additional facilities in the United Kingdom in Reading and Andover, used primarily for research and development and manufacturing, which total approximately 28,000 square feet pursuant to leases which expire from October 31, 1997 through September 24, 2020. Currently, the Company is considering expanding its Andover facility but has not made any lease commitments. The Company currently utilizes 90% to 100% of the space of all of its facilities. Management currently believes that, other than the Andover facility, each facility is suitable for its existing operations and does not foresee the need for any significant expansion of its current facilities. ITEM 3. LITIGATION The Company is a party to Percival Hudgins & Company, Inc. v. Chyron Corporation v. John Percival, pending in the United States District Court, North District of Georgia (Atlanta), Civil Action No. 1 95-CV-CAM. This is a breach of contract action for an alleged success fee in connection with the sale of Common Stock by Pesa and Sepa to the new investment group. Plaintiff alleges that such transaction was subject to the terms of its engagement letter with the Company. Plaintiff seeks damages of approximately $600,000 together with counsel fees. The Company has answered, denying all material allegations, and has asserted a third party claim against plaintiff's principal, alleging that he, as a director of the Company while his investment banking firm was engaged by the Company, breached his fiduciary duties to the Company and is liable for any amounts that might be awarded to plaintiff, together with counsel fees. Plaintiff has recently amended the complaint to add a claim for quantum meruit. Discovery is continuing. The Company from time to time is involved in routine legal matters incidental to its business. In the opinion of management, the ultimate resolution of such matters will not have a material adverse effect on the Company's financial position, results of operations or liquidity. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On January 24, 1997, at a Special Meeting of Shareholders, the Company's shareholders' ratified a one-for-three reverse stock split of its common stock which was effective February 10, 1997. 77,162,761 shares were voted for the proposal, 2,876,490 shares were voted against the proposal and 169,212 shares abstained. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDERS MATTERS Principal Market Chyron's common stock is traded on the New York Stock Exchange ("NYSE") under the ticker symbol "CHY". The approximate number of holders of record of the Company's common stock at December 31, 1996 was 8,100. The following table sets forth the high and low reported sales price for the common stock adjusted to reflect the reverse stock split. Price Range of Common Stock High Low Year Ended December 31, 1996 Fourth Quarter............. $15.375 $ 8.25 Third Quarter.............. 19.875 12.00 Second Quarter............. 18.750 9.375 First Quarter.............. 10.125 6.375 Year Ended December 31, 1995 Fourth Quarter............. $8.625 $5.250 Third Quarter.............. 9.000 2.438 Second Quarter............. 3.000 1.500 First Quarter.............. 2.250 1.125 On March 14, 1997, the closing price of the Company's common stock as reported on the NYSE was $6.50. The Company has not declared or paid any cash dividend since November 27, 1989. The Company currently plans to retain its future earnings, if any, for use in the operation and expansion of its business and does not anticipate paying cash dividends on the common stock in the foreseeable future. During the term of its loan agreement with Fleet Bank (formerly NatWest Bank), the Company is prohibited from paying dividends in excess of 25% of its net income for the then current fiscal year. ITEM 6. SELECTED FINANCIAL DATA (In thousands, except per share amounts) Year Ended December 31, 1996(1) 1995 1994 1993 1992 Statement of Operations Data: Net sales................. $82,608 $53,971 $42,762 $37,391 $29,715 Cost of products sold..... 39,941 22,746 18,912 16,816 12,512 Gross profit.............. 42,667 31,225 23,850 20,575 17,203 Operating expenses: Selling, general and administrative............ 22,349 17,066 14,301 13,452 11,300 Research and development.. 5,253 4,105 4,163 3,573 2,964 Management fee............ 2,911 1,139 800 891 West Coast restructuring charge (recapture)........ (1,339) 12,716 Total operating expenses.. 27,602 22,743 32,319 17,825 15,155 Operating income (loss)... 15,065 8,482 (8,469) 2,750 2,048 Interest and other expense, net.............. 1,666 536 525 714 445 Income (loss) before provision for income taxes..................... 13,399 7,946 (8,994) 2,036 1,063 Income tax/equivalent provision................. 4,745 470 760 598 Net income (loss)......... $ 8,654 $ 7,476 $(8,994) $ 1,276 $ 1,005 Net income (loss) per common share(2)........... $ 0.27 $ 0.25 $ (0.31) $ 0.05 $ 0.04 Weighted average number of common and common equivalent shares outstanding(2)............ 32,327 30,382 28,962 25,295 23,514 December 31, 1996 1995 1994 1993 1992 Balance Sheet Data: Cash and cash equivalents. $ 4,555 $ 5,012 $ 1,555 $ 213 $ 403 Working capital........... 41,867 28,221 12,103 13,256 11,692 Total assets.............. 91,403 44,332 28,644 38,516 35,623 Long-term obligations..... 16,324 4,911 4,829 200 3,000 Shareholders' equity...... 53,946 29,983 13,776 22,627 17,882 (1) Includes the operations of Pro-Bel since its acquisition by the Company on April 12, 1996. The acquisition was accounted for as a purchase. See Note 2 to the Consolidated Financial Statements. (2) Adjusted to reflect the Reverse Stock Split which was ratified by the Company's shareholders on January 24, 1997. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS From time to time, the Company may publish forward looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products, research and development activities and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause the Company's actual results to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements. The risks and uncertainties that may affect the operations, performance, development and results of the Company's business include the following: product concentration in a mature market, dependence on the emerging digital market, rapid technological changes, highly competitive environment, new product introductions, seasonality, fluctuations in quarterly operations results, expansion into new markets and the Company's ability to implement successfully its acquisition and alliance strategy. Overview The Company develops, manufactures, markets and supports a broad range of equipment, software and systems that facilitate the production and enhance the presentation of live and pre-recorded video, audio and other data. The Company introduced the iNFiNiT!, its flagship product, in late 1990. Subsequently, the Company has introduced a broad range of graphics products such as the MAX!> and MAXINE!, CODI, LIBERTY, WiNFiNiT! and IMAGESTOR!. These products superimpose text, logos and other graphics onto a primary video image or create an independent image to be televised by itself. The Company expects that revenue from its current graphics and character generator systems will continue to constitute a substantial percentage of its net sales in the near future. The Company's Pro-Bel signal management systems interconnect video, audio and data signals to and from equipment within a studio's control room or edit suite, as well as to and from signal transmission sites. The Company's net sales have increased from $29.7 million in 1992 to $82.6 million in 1996, while gross profit has increased from $17.2 million in 1992 to $42.7 million in 1996. Net income was $1.0 million in 1992 and $8.7 million in 1996. The Company was incorporated under the laws of the State of New York on April 8, 1966. The Company filed for Chapter 11 protection in September 1990 and emerged from Chapter 11 in December 1991. In 1994, the Company restructured its West Coast operations, resulting in a charge of approximately $12.7 million. In 1995, a new investor group obtained control, a new executive management team was put in place, a new Board of Directors was elected and a new business strategy was adopted. The Company's current business strategy includes the following key elements: (i) maintain and enhance its leadership position in current markets; (ii) provide upgrades to existing equipment; (iii) cross sell products to its existing customers; (iv) address low-end and emerging markets; (v) expand it global presence; (vi) pursue strategic acquisitions and alliances; and (vii) utilize open platforms. The Company intends to continue to serve its worldwide customer base by introducing products which address the requirements to improve the production and presentation of video, audio and other data. The Company also intends to continue to upgrade its current high performance systems, invest in the development of new options and enhancements for its products and provide complete system solutions to its customers. Acquisition of Pro-Bel On April 12, 1996, the Company acquired Pro-Bel, located in Reading, United Kingdom. Pro-Bel develops, manufactures and markets signal management systems and control and automation systems. The aggregate consideration of $19.1 million consisted of $6.9 million in cash, $5.3 million in two-year promissory notes and 1,048,735 restricted shares of Common Stock valued at $6.9 million. The acquisition of Pro-Bel was accounted for as a purchase. Accordingly, the cost was allocated to the net tangible assets acquired based upon their estimated fair values. The excess of cost over the estimated fair value of the net tangible assets acquired amounted to $6.9 million, which is being amortized over 12 years using the straight-line method. Investment in RT-SET On February 29, 1996, the Company purchased a 19% interest in Real Time Synthesized Entertainment Technology, Ltd. ("RT-SET"), which develops, markets and sells real time virtual studio set software and proprietary communications hardware and is located in Israel. The Company purchased shares of RT-SET Convertible Preferred Stock in exchange for 800,000 restricted shares of Common Stock. In addition, the Company was granted certain call option rights which, if and when exercised, allows the Company to purchase up to a 51% interest in RT-SET in exchange for the issuance of additional shares of Common Stock. In accordance with the purchase agreement, the 800,000 shares of Common Stock were to be held in escrow and released in two tranches, subject to certain conditions. One-third of such shares was released from escrow in June 1996 and the remainder will be released upon a public offering of RT-SET's equity or upon RT-SET achieving two consecutive years of profitability. Prior to any public offering by RT-SET or achievement of the aforementioned profitability, the Company has the right to recover the remaining two- thirds of its shares held in escrow in exchange for its interest in RT- SET. The transaction has been recorded as the purchase of a right to acquire a 19% interest in RT-SET which was diluted to 17% as a result of a subsequent investment by a third party. RT-SET shall retain the voting rights with respect to the escrowed shares while such shares are held by the escrow agent. The acquisition was recorded at the estimated fair value of the restricted shares of Common Stock released from escrow. Year Ended December 31, 1996 Compared to Year Ended December 31, 1995 Net Sales. Net sales increased 53.1% to $82.6 million in 1996 from $53.9 million in 1995. Over 85% of the $28.7 million increase was attributable to the inclusion, since April 1996, of Pro-Bel's sales; Chyron's graphic products showed modest growth. The Company's net sales consist of product sales, upgrades and enhancements and rental income as well as customer service revenue. Gross Profit. Gross profit increased to $42.7 million in 1996 from $31.2 million in 1995. This increase was primarily attributable to the 53.1% increase in net sales. Gross margin as a percentage of net sales decreased to 51.6% in 1996 from 57.9% in 1995. This decrease was caused primarily by the inclusion since April 1996 of net sales of Pro-Bel products, which historically have had lower gross margins. The gross margin for the Chyron product lines decreased slightly, primarily as a result of the product mix for the year. Customer service costs are included in selling, general and administrative expenses and are not material. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased 31.0% to $22.3 million in 1996 from $17.1 million in 1995. As a percentage of net sales, selling, general and administrative expenses decreased to 27.0% in 1996 from 31.6% in 1995. The increase in dollars was primarily due to the inclusion of Pro- Bel's operations since April 1996 and the accounting for the acquisition under the purchase method resulting in amortization of excess purchase price over net tangible assets and increased depreciation, as well as increased costs as a direct result of increased sales volume. The decrease as a percentage of net sales was affected by the incurrence in 1995 of $443,000 of one-time legal and investment banking fees (incurred with respect to the undertaking of the Special Transaction Committee of the Board of Directors, which was appointed in connection with the potential change in control of the Company) and $430,000 of severance costs for former management. Research and Development Expenses. Research and development expenses increased 27.9% to $5.3 million in 1996 from $4.1 million in 1995. This increase was primarily due to the inclusion of Pro-Bel's research and development expenditures since April 1996. Research and development expenses related to Chyron's product lines decreased in 1996 in part due to an increase of approximately $800,000 in the amount of software capitalized and an increased percentage of research and development undertaken internally instead of by outside consultants. Interest and Other Expense, Net. Interest and other expense, net, increased 210.8% to $1,666,000 in 1996 from $536,000 in 1995. In conjunction with the Pro-Bel acquisition, the Company entered into various agreements with a bank, issued promissory notes (payable in pounds sterling) to the shareholders of Pro-Bel and assumed Pro-Bel's existing bank debt, all of which led to an increase of $866,000 in interest expense for the year. Net foreign currency transaction losses of $264,000 have been recognized in 1996 due to the change in the exchange rate from date of acquisition of Pro-Bel to December 31, 1996. Income Before Provision for Income Taxes. Income before provision for income taxes increased 68.6% to $13.4 million in 1996 from $7.9 million in 1995, primarily due to the improved operating income of Chyron coupled with the addition of the operating income generated by Pro-Bel. Income Taxes/Equivalent Provision. Income taxes/equivalent provision increased to $4.7 million in 1996 from $470,000 in 1995, primarily because in 1995 an income tax benefit of approximately $2.2 million was realized as a result of the 1994 West Coast restructuring. The increase was also due to increased income before income taxes in 1996. Year Ended December 31, 1995 Compared to the Year Ended December 31, 1994 Net Sales. Net sales increased 26.2% to $54.0 million in 1995 from $42.8 million in 1994. This increase was primarily due to increased sales of the Company's character generator lines. The iNFiNiT! product line showed the largest dollar growth at $6.4 million, or approximately 41%, with the MAX!> line showing the largest percentage growth at approximately 65%, or $4.7 million. Increases in net sales also reflect growth in the Company's MAXINE! product line, sales of which grew $2.4 million, or approximately 39%, over the prior year. The growth in sales has been both domestically and abroad. These increases were partially offset by the lack of sales from products discontinued in connection with the West Coast restructuring. Gross Profit. Gross profit increased 30.9% to $31.2 million in 1995 from $23.9 million in 1994. This increase was primarily due to the 26.2% increase in net sales. Gross margin as a percentage of net sales increased to 57.9% in 1995 from 55.9% in 1994 mainly due to increased manufacturing efficiencies and management's cost reduction efforts. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased 19.3% to $17.1 million in 1995 from $14.3 million in 1994. This increase was primarily due to (i) legal and investment banking fees of $443,000, incurred with respect to the undertakings of the Special Transaction Committee of the Board of Directors, which had been appointed in connection with the potential change in control of the Company, (ii) the accrual of $430,000 of severance payments for former management and (iii) increases due to increases in costs related to the 26.2% increase in net sales. These increases were offset by cost cutting measures instituted by the Company as part of the West Coast restructuring in 1994 resulting in a decrease in selling, general and administrative expenses as a percentage of net sales to 31.7% in 1995 from 33.4% in 1994. Research and Development Expenses. Research and development expenses decreased 1.4% to $4.1 million in 1995 from $4.2 million in 1994. This decrease was primarily due to benefits recognized as part of the Company's West Coast restructuring in the third quarter of 1994, which eliminated costs related to the Company's unprofitable product lines. Exclusive of 1994 costs related to unprofitable product lines, research and development expenses increased by $359,000 in 1995. This increase was primarily due to additional expenditures for new product development to address emerging markets targeted by the Company as well as the development of new features for the Company's existing products. Research and development expenses include the amortization of software development costs, which increased by $82,000 in 1995 due to the release of new options in 1995 for the Company's character generator product lines. Management Fee. In December 1991, the Company entered into a management agreement (the "Management Agreement") with an affiliate of Sepa to provide business and technical services to the Company. This agreement was subsequently transferred to Sepa. In December 1995, the Company (under its new management) agreed to terminate the Management Agreement upon payment to Sepa of $2.0 million. Pursuant to the original Management Agreement, the Company would have paid $1.5 million in both 1996 and 1997. West Coast Restructuring (Recapture). As of September 30, 1994, the Company's West Coast operations, CMX and Aurora, reflected a continuing trend of poor operating performance. Due to these disappointing results, the lack of certain products in the high growth sector of the market and the strategic decision by management to redirect its product lines to a broader base market and to reengineer its research and development focus, the Company initiated a plan to restructure the West Coast operations. Consequently, the Company decided to eliminate unprofitable product lines such as CMX 6000, Cinema, Gemini, LSI and the 3500 and 3600 series product lines, reduce the West Coast workforce by 30% (or 12 employees), write-down to estimated net realizable value certain assets directly attributable to the initiative and focus, dispose of certain assets, accrue losses for the restructuring period of October 1, 1994 through March 31, 1995 and downsize the Company's Santa Clara, California facility. The result of these measures was a restructuring charge of $12.7 million for the West Coast operations and subsequently a recapture of $1.3 million of such charge in 1995. The specific components of the restructuring charge broken-out between asset write downs and cash outlays were as follows (in thousands): Asset write downs: Write down of assets to estimated net realizable value...................... $ 6,952 Write-off of software development costs. 1,991 Total non cash charges.................. 8,943 Cash outlays: Accrued operating losses through date of disposition........................... 2,500 Loss on lease commitment................ 700 Accrued severance for reduction in workforce............................. 300 Other................................... 273 Total................................. $12,716 The cash outlays required by the restructuring were funded by the Company's profitable product lines. Cash outlays estimated for the six month restructuring period were $3.8 million, of which $1.0 million was made by December 31, 1994. The loss on the lease was to be funded over the remaining lease term of 31 months subsequent to the restructuring period. In 1995, a sublease was obtained. The Company's graphics division had been funding the operating losses of CMX and Aurora out of its working capital since CMX and Aurora began their trend of unprofitability. Operating results as a result of the West Coast restructuring were projected to benefit by a savings of over $2.0 million for 1995, principally due to a reduction in annual salaries and employee benefits of $750,000, a decrease in depreciation and amortization expense of $200,000 per year, a reduction of overhead costs of approximately $200,000 per year and a reduction in losses on unprofitable product lines of approximately $850,000 per year. The Company believes such savings have been substantially realized. Interest and Other Expense, Net. Interest and other expense, net, increased 2.1% to $536,000 in 1995 from $525,000 in 1994. This increase was primarily due to an increase in the average prime rate of interest in 1995 and additional interest expense related to the Company's capital lease obligations entered into in December 1994. This increase was offset by earnings on the Company's cash equivalents. Income Before Provision for Income Taxes. Income before provision for income taxes was $7.9 million for 1995, an improvement of $16.9 million over the $9.0 million loss in the prior year. Net income for 1995 included a $2.0 million charge related to the termination of the Company's Management Agreement with Sepa, which is further described in Note 16 to the Consolidated Financial Statements, and a recapture of $1.3 million of the prior year's $12.7 million restructuring charge. For details of 1995 activity related to the West Coast restructuring, see Note 17 to the Consolidated Financial Statements. Exclusive of the management fee charge in 1995 and amounts related to the West Coast restructuring change in 1994 and 1995, income before provision for income taxes increased $5.0 million due primarily to increases in net sales and gross margins for 1995 coupled with increased efficiencies and cost saving measures as well as the benefit of the West Coast restructuring commencing in the third quarter of 1994. Income Taxes/Equivalent Provision. A total income tax/equivalent provision of $470,000, or 5.9%, was recorded in 1995 and included a tax benefit of approximately $1.0 million which was recognized as a result of the reduction in the valuation allowance provided on deferred tax assets. The valuation allowance was reduced because management believed that the Company would generate sufficient future taxable income from ordinary and recurring operations to realize the deferred tax assets. At December 31, 1995, the Company had recorded a valuation allowance of approximately $5.4 million. At December 31, 1996, the valuation allowance was released in its entirety. Liquidity and Capital Resources At December 31, 1996, the Company had cash on hand of $4.5 million, working capital of $41.9 million and an unused borrowing commitment available of $3.9 million. To finance the acquisition of Pro-Bel, the Company incurred additional debt of $7.2 million and used cash on hand of $6.9 million. In connection with the acquisition of Pro-Bel, the Company issued promissory notes to the shareholders of Pro-Bel for 3.5 million pounds sterling ($5.9 million, converted at the December 31, 1996 exchange rate) in conjunction with the acquisition (see Note 2 to Consolidated Financial Statements). The promissory notes are secured by an irrevocable letter of credit from a bank. The amount of this irrevocable letter of credit is included as an outstanding borrowing in the formula used to calculate borrowing availability for the Company's facility with Fleet Bank described below. Interest through April 15, 1997 is equal to LIBOR as of April 15, 1996 (6.46%) and is payable quarterly. Interest through April 15, 1998 is equal to LIBOR as of April 15, 1997. The notes are due on or before April 15, 1998 and are subordinated to any obligations to a bank or financial institution currently existing or subsequently entered into. The notes can be prepaid without penalty subsequent to November 1, 1996. See Note 10 to Consolidated Financial Statements. Since the Pro-Bel acquisition, the Company's consolidated financial statements include the Pro-Bel accounts, as adjusted for purchase accounting. At the date of acquisition, inventory increased by $7.8 million, accounts receivable increased by $6.9 million and accounts payable increased by $9.5 million which, in sum with other current assets acquired and current liabilities assumed, increased working capital by $6.8 million. Additionally, at the date of acquisition, property and equipment increased by $8.8 million, excess of cost over net tangible assets acquired of $6.9 million was recorded and $3.6 million of Pro-Bel debt was assumed. On March 28, 1996 and April 16, 1996, the Company entered into agreements with Fleet Bank (formerly NatWest Bank) to obtain a revolving credit facility of $10.0 million and a term loan of $8.0 million, respectively. The entire facility is secured by certain of the Company's assets. Borrowings are limited to amounts computed under a formula for eligible accounts receivable and inventory. Additionally, an over-advance is available above the borrowing formula in an amount not to exceed $3.0 million. Interest on the revolving credit facility is equal to adjusted LIBOR plus 175 basis points or prime (8.25% at December 31, 1996) and is payable monthly. The term loan is payable in quarterly installments of $500,000, commencing June 1, 1996. Interest on the term loan is equal to adjusted LIBOR plus 200 basis points or prime and is payable monthly. See Note 10 to Consolidated Financial Statements. Pro-Bel has a commercial mortgage term loan with Barclay's Bank Plc. ("Barclays"). The loan is secured by a building and property located in the United Kingdom. Interest is equal to LIBOR (6% at December 31, 1996) plus 2%. The loan (including interest) is payable in quarterly installments of 80,600 pounds sterling ($136,000, converted at the December 31, 1996 exchange rate). See Note 10 to Consolidated Financial Statements. On February 1, 1996, Pro-Bel entered into an agreement with Barclays to obtain a trade finance facility of 750,000 pounds sterling ($1,267,000, converted at the December 31, 1996 exchange rate). The facility is secured by Pro-Bel's accounts receivable. Interest is equal to the bank's base rate plus 2% (8% at December 31, 1996) on advances against accounts receivable in pounds sterling and equal to the Barclays currency call loan rate plus 2% (8% at December 1, 1996) on advances against foreign accounts receivable. Interest is payable quarterly, in arrears. See Note 10 to Consolidated Financial Statements. On February 1, 1996, Pro-Bel entered into an agreement with Barclays to obtain an overdraft facility of 750,000 pounds sterling. Interest is equal to the bank's base rate plus 2.5% (8.5% at December 31, 1996) and is payable quarterly commencing in March 1996. The facility has a sublimit for overdraft on Pro-Bel's wholly owned subsidiary, Trilogy Broadcast Limited, of 160,000 pounds sterling ($270,000, converted at the December 31, 1996 exchange rate). This facility is payable upon written demand by the bank and any undrawn portion may be cancelled by the bank at any time. See Note 10 to Consolidated Financial Statements. In January 1997, Pro-Bel entered into an agreement with Barclays whereby Barclays agreed to provide an overdraft facility of up to 3.0 million pounds sterling through December 31, 1997 to Pro-Bel and its subsidiaries. The overdraft facility provides for interest at 1.5% per annum over the bank's base rate. Interest is payable quarterly, in arrears. This facility replaces the trade finance facility of up to 750,000 pounds sterling and the overdraft facility of up to 750,000 pounds sterling in place at December 31, 1996. All monies under the facility are repayable upon written demand and are secured by accounts receivable. See Note 10 to Consolidated Financial Statements. At December 31, 1996, the Company had operating lease commitments for equipment and factory and office space totaling $12.7 million, of which $1.0 million is payable within one year. See Note 10 to Consolidated Financial Statements. Impact of Inflation and Changing Prices Although the Company cannot accurately determine the precise effect of the inflation, the Company has experienced increased costs of materials, supplies, salaries and benefits and increased general and administrative expenses. The Company attempts to pass on increased costs and expenses by developing more useful and cost effective products for its customers that can be sold at more favorable profit margins. REPORT OF INDEPENDENT AUDITORS February 3, 1997 To the Board of Directors and Shareholders of Chyron Corporation In our opinion, the consolidated financial statements as of December 31, 1996 and 1995 and for each of the two years in the period ended December 31, 1996 listed in the index appearing under Item 14(a)(1) and (2) on page 56 present fairly, in all material respects, the financial position of Chyron Corporation and its subsidiaries at December 31, 1996 and 1995 and the results of their operations and their cash flows for each of the two years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in Note 1, on January 24, 1997, the Company's shareholders ratified a one-for-three reverse stock split. The consolidated financial statements for the year ended December 31, 1994 have been restated to reflect retroactive application of this reverse stock split. We have audited the adjustments described in Note 1 that were applied to restate the 1994 consolidated financial statements. In our opinion, such adjustments are appropriate and have been properly applied to the 1994 consolidated financial statements. PRICE WATERHOUSE LLP REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Directors Chyron Corporation and Subsidiary We have audited the accompanying consolidated statements of operations, shareholders' equity, and cash flows for the year ended December 31, 1994 of Chyron Corporation and subsidiary. Our audit also included the consolidated financial statement schedule listed in the Index at Item 14(a) for the year ended December 31, 1994. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audit prior to the restatement discussed in Note 1. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash flows of Chyron Corporation and subsidiary for the year ended December 31, 1994, in conformity with generally accepted accounting principles. Also, in our opinion, the related consolidated financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. Ernst & Young, LLP Melville, New York February 17, 1995 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CHYRON CORPORATION CONSOLIDATED BALANCE SHEET (In thousands, except per share amounts) December 31, Assets 1996 1995 Current assets: Cash and cash equivalents............. $ 4,555 $ 5,012 Accounts and notes receivable......... 25,237 13,967 Inventories........................... 23,502 11,645 Prepaid expenses...................... 865 578 Deferred tax asset.................... 6,015 6,457 Other................................. 2,826 Total current assets................ 63,000 37,659 Property and equipment................. 12,701 3,300 Excess of cost over net tangible asset acquired........................ 6,439 Investment in RT-SET................... 2,161 Software development costs............. 2,176 1,716 Deferred tax asset..................... 4,709 1,403 Other.................................. 217 254 TOTAL ASSETS........................... $91,403 $44,332 Liabilities and Shareholders Equity Current Liabilities: Accounts payable and accrued expenses. $15,828 $ 8,120 Management fee payable................ 1,000 Reserve for West Coast restructuring.. 158 Current portion of long-term debt..... 5,080 Capital lease obligations............. 225 160 Total current liabilities........... 21,133 9,438 Long-term debt......................... 15,163 4,741 Capital lease obligations.............. 118 170 Other.................................. 1,043 Total liabilities.................... 37,457 14,349 Commitments and contingencies (See Note 15) Shareholders' equity: Preferred stock, par value without designation; Authorized - 1,000,000 shares; Issued - none Common stock, par value $.01; Authorized - 150,000,000 shares; Issued and outstanding, 32,384,635 and 30,023,798 shares at 1996 and 1995, respectively.......................... 324 300 Additional paid-in capital............. 43,124 28,340 Retained earnings...................... 9,997 1,343 Cumulative translation adjustment...... 501 Total shareholders equity............ 53,946 29,983 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................................. $91,403 $44,332 See Notes to Consolidated Financial Statements CHYRON CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Year Ended December 31, 1996 1995 1994 Net sales............................ $82,608 $53,971 $42,762 Cost of products sold................ 39,941 22,746 18,912 Gross profit......................... 42,667 31,225 23,850 Operating expenses: Selling, general and administrative. 22,349 17,066 14,301 Research and development............ 5,253 4,105 4,163 Management fee...................... 2,911 1,139 West Coast restructuring charge (recapture)......................... (1,339) 12,716 Total operating expenses............. 27,602 22,743 32,319 Operating income (loss).............. 15,065 8,482 (8,469) Interest and other expense, net...... 1,666 536 525 Income (loss) before provision for income taxes........................ 13,399 7,946 (8,994) Income taxes/equivalent provision.... 4,745 470 Net income (loss).................... $ 8,654 $ 7,476 $(8,994) Net income (loss) per common share... $ .27 $ .25 $ (.31) Weighted average number of common and common equivalent shares outstanding......................... 32,327 30,382 28,962 See Notes to the Consolidated Financial Statements CHYRON CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 1996 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)..................... $8,654 $7,476 $(8,994) Adjustments to reconcile net income (loss) to net cash provided by operating activities: West Coast restructuring (recapture).. (1,339) 11,766 Depreciation and amortization......... 3,120 2,067 2,037 Utilization of deferred tax asset..... 2,335 354 Loss on abandonment of leasehold improvements.......................... 350 Changes in operating assets and liabilities: Accounts and trade notes receivable... (3,505) (742) 567 Inventories........................... (3,303) (6,181) 2,879 Prepaid expenses...................... (117) 1,320 (1,184) Other assets.......................... (464) Accounts payable and accrued expenses. (2,865) 1,112 (1,913) Management fee payable................ (1,000) 1,000 Reserve for West Coast restructuring.. (1,327) Net cash provided by operating activities............................ 2,855 3,740 5,508 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of Pro-Bel and Investment in RT-SET............................. (7,191) Acquisition of property and equipment. (1,802) (710) (660) Capitalized software development...... (1,268) (207) (1,383) Other................................. 52 28 102 Net cash (used in) investing activities............................(10,209) (889) (1,941) CASH FLOWS FROM FINANCING ACTIVITIES: Payments of capital lease obligations. (262) (106) Payments of revolving credit agreement............................. (5,644) (4,500) (1,985) Net proceeds from new credit facility. 11,976 4,741 Proceeds from exercise of common stock purchase warrants, net.......... 239 471 43 Proceeds from exercise of stock options............................... 552 Payments of Chapter 11 claims and other reorganization items............ (283) Net cash (used in) provided by financing activities.................. 6,861 606 (2,225) Effect of foreign currency rate fluctuations on cash and cash equivalents........................... 36 Change in cash and cash equivalents... (457) 3,457 1,342 Cash and cash equivalents at beginning of year............................... 5,012 1,555 213 Cash and cash equivalents at end of year.................................. $4,555 $5,012 $ 1,555 SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid......................... $1,636 $ 555 $ 548 Income taxes paid..................... $2,920 $ 116 $ 71 See Notes to Consolidated Financial Statements CHYRON CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (In thousands) Non-cash investing and financing activities: On February 29, 1996, the Company effectively acquired an option to acquire a 19% interest in RT-SET Ltd. in exchange for 800,000 shares of Chyron common stock. See Note 3 to the Consolidated Financial Statements. On April 12, 1996, the Company acquired the issued and outstanding shares of Pro-Bel. The consideration in addition to cash included 1,048,735 shares of Chyron common stock valued at $6,868,000 and notes payable of $5,349,000 (3.5 million pounds sterling valued at the exchange rate at the date of acquisition). See Note 2 to the Consolidated Financial Statements. CHYRON CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In thousands) Cumu- Retained lative Addi- Earnings Trans- tional Accumu- lation Paid-in lated Adjust- Shares Amount Capital Deficit) ment Balance at December 31, 1993. 28,871 $289 $19,477 $2,861 Net loss..................... (8,994) Exercise of warrants......... 93 1 42 Conversion of subordinated notes......................... 167 1 99 Balance at December 31, 1994.. 29,131 291 19,618 (6,133) Net income.................... 7,476 Exercise of warrants.......... 726 7 464 Conversion of subordinated notes......................... 167 2 98 Benefit of utilization of net operating loss carryforward under Fresh Start Reporting... 1,360 Income tax equivalent benefit from reduction of deferred tax asset valuation allowance. 6,800 Balance at December 31, 1995.. 30,024 300 28,340 1,343 Net income.................... 8,654 Exercise of warrants.......... 398 4 235 Exercise of stock options..... 114 1 551 Issuance of stock in connection with acquisition of Pro-Bel, Ltd.................. 1,049 11 6,857 Issuance of stock in connection with investment in RT-SET........................ 800 8 1,942 Cumulative translation adjustment.................... $501 Income tax equivalent benefit from reduction of deferred tax asset valuation allowance..... 5,199 Balance at December 31, 1996.. 32,385 $324 $43,124 $9,997 $501 See Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Chyron Corporation and its wholly-owned subsidiaries("Chyron" or the "Company") develops, manufactures, markets and supports a broad range of equipment, software and systems that facilitate the production and enhance the presentation of live and pre-recorded video, audio and other data. Chyron's wholly-owned subsidiary, Pro-Bel Limited ("Pro-Bel"), develops, manufactures and markets signal management systems and control and automation systems. Basis of Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. On April 12, 1996, the Company acquired Pro-Bel and its subsidiaries (see Note 2). The Company's other subsidiaries are inactive. Restatement and Reclassification On January 24, 1997, the Company's shareholders ratified a one-for-three reverse stock split. Net income (loss) per share, weighted average number of common and common equivalent shares outstanding, common stock issued and outstanding, additional paid-in-capital and all other common stock transactions presented in these consolidated financial statements have been restated to reflect the one-for-three reverse stock split. In addition, certain prior year amounts have been reclassified to conform to the current year presentation. Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, costs and expenses during the periods presented. Cash and Cash Equivalents Cash includes cash on deposit and amounts invested in a highly liquid money market fund. Cash equivalents consist of short term investments convertible into cash within three months or less. The carrying amount of cash and cash equivalents approximates their fair value. Inventories Inventories are stated at the lower of cost (first-in, first-out basis) or market. The need for inventory obsolescence provisions is evaluated quarterly by the Company and, when appropriate, provisions for technological obsolescence, non-profitability of related product lines and excess quantities on hand are made. Property, Equipment and Depreciation Property and equipment are stated at cost. Depreciation and amortization are provided on the straight line method over the following estimated useful lives: Buildings................. 35 years Machinery and Equipment... 3-10 years Furniture and Fixtures.... 5-10 years Leasehold Improvements.... Shorter of the life of improvement or remaining life of the lease Revenue Recognition Net sales, which include revenue derived from product sales and upgrades as well as service revenue, are recorded upon shipment of product or performance of service. Customer service costs are included in selling, general and administrative expenses and are not material. Income Taxes In connection with the Company's emergence in 1991 from its reorganization proceeding under Chapter 11 of the United States Bankruptcy Code, the Company adopted "Fresh Start Reporting" in accordance with AICPA Statement of Position No. 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code." Fresh Start Reporting requires that the Company report an income tax equivalent provision when there is book taxable income and a pre-reorganization net operating loss carryforward. This requirement applies despite the fact that the Company's pre-reorganization net operating loss carryforward would eliminate (or reduce) the related income tax payable. The current and future year benefit related to the carryforward is not reflected in net income, but instead is recorded as a direct increase to additional paid-in capital. The income tax equivalent provision does not affect the Company's tax liability. The Company's net deferred tax assets represent the tax benefit to be derived from the pre- and post- reorganization net deductible temporary differences. Translation of Foreign Currencies The functional currency for the Company's foreign operations is the applicable local currency. The translation from the applicable foreign currency to U.S. dollars is performed for asset and liability accounts using period-end exchange rates and for revenue and expense accounts using a weighted average exchange rate during the period. The gains or losses resulting from such translation are recorded in the cumulative translation adjustment account which is included in shareholders' equity. Transaction gains or losses are included in interest and other expenses. Net Income (Loss) Per Share Net income (loss) per share is based on the weighted average number of common shares outstanding during the period plus, when dilutive, additional shares issuable upon the assumed exercise of outstanding common stock equivalents. Fully diluted net income (loss) per share is not presented since such presentation would not be materially different from primary net income (loss) per share. Common Stock Equivalents In December 1991, the Company issued to Pesa, Inc. ("Pesa"), a Delaware corporation, and its then majority shareholder, $5 million of Convertible Subordinated Notes ("Notes"). The Notes were convertible into shares of common stock at a conversion price of $.60 per share. As of December 31, 1995, all of the Notes have been so converted. See Note 11. In January 1992, shareholders of the Company, other than Pesa, received one warrant for every two shares of common stock held when the Company issued 1,931,851 Common Stock Purchase Warrants. Each warrant entitled its holder to purchase one share of common stock at $.60 per share. As of December 31, 1996, a total of 1,736,182 Common Stock Purchase Warrants had been exercised. The remaining warrants expired on January 31, 1996. During 1995 and 1996, respectively, the Company's Board of Directors granted to certain employees 1,041,666 and 425,000 Incentive Stock Options for the purchase of Chyron common stock and to non-employee members of the Board of Directors 30,000 and 29,999 Non-Incentive Stock Options for the purchase of Chyron common stock. The exercise price of each stock option granted is the quoted closing market price at the date of such grant. The options vest over three years and expire five years from the date of grant. See Note 12. Stock-Based Compensation Plans The Company elected to continue following Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) in accounting for its employee stock options, rather than adopt the alternate method of accounting provided under Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123). Under APB 25, the Company does not recognize compensation expense on stock options granted to employees because the exercise price of each option is equal to the market price of the underlying stock on the respective date of grant. See Note 12. 2. ACQUISITION OF PRO-BEL LIMITED On April 12, 1996, the Company acquired all of the issued and outstanding capital stock of Pro-Bel Limited, located in Reading, United Kingdom in exchange for $6.9 million in cash, 3.5 million British pounds sterling ($5.3 million) in notes and 1,048,735 shares of restricted Chyron common stock valued at $6.9 million. The acquisition of Pro-Bel was accounted for as a purchase. Accordingly, the cost of the acquisition was allocated to the net assets acquired based upon their estimated fair values. The excess of cost over the estimated fair value of net tangible assets acquired amounted to $6,928,000, which is being amortized over 12 years using the straight line method. Amortization in 1996 amounted to $489,000. The Company evaluates whether changes have occurred that would require revision of the remaining estimated useful life of the assigned excess of cost over the value of net tangible assets acquired or its carrying amount. In making such determinations, the Company evaluates undiscounted cash flows of the underlying business which gave rise to such amount. The following unaudited pro forma statements of operations include the operating results of the Company and Pro-Bel for the years ended December 31, 1996 and 1995, assuming the acquisition of Pro-Bel had been made as of January 1, 1996 and 1995, respectively (in thousands except per share amounts). Pro Forma Statement of Operations for the Year Ended December 31, 1996 (Unaudited) Pro Forma Adjustment (a) Increase/ Pro-Bel Chyron (Decrease) Consolidated Net sales................ $10,366 $82,608 $92,974 Cost of products sold.... 5,596 39,941 $784 (b) 46,321 Gross profit............. 4,770 42,667 (784) 46,653 Operating expenses: Selling, general and administrative......... 2,580 22,349 285 (c) 25,214 Research and development. 591 5,253 (50)(d) 5,794 Total operating expenses. 3,171 27,602 235 31,008 Operating income......... 1,599 15,065 (1,019) 15,645 Interest and other expense, net........... 80 1,666 280 (e) 2,026 Income before provision for income tax......... 1,519 13,399 (1,299) 13,619 Income/taxes equivalent provision.............. 340 4,745 (99)(f) 4,986 Net income............... $1,179 $8,654 ($1,200) $8,633 Net income per common share.................. $ .27 $ .27 Weighted average number of common and common equivalent shares outstanding............ 32,327 32,623 Pro Forma Statement of Operations for the Year Ended December 31, 1995 (Unaudited) Pro Forma Adjustment (g) Increase/ Pro-Bel Chyron (Decrease) Consolidated Net sales................ $28,763 $53,971 $82,734 Cost of products sold.... 15,902 22,746 $698 (b) 39,346 Gross profit............. 12,861 31,225 (698) 43,388 Operating expenses: Selling, general and administrative......... 9,064 17,066 741 (c) 26,871 Research and development. 1,548 4,105 (167)(d) 5,486 Management fee........... 2,911 2,911 West Coast restructuring (recapture)............ (1,339) (1,339) Total operating expenses. 10,612 22,743 574 33,929 Operating income......... 2,249 8,482 (1,272) 9,459 Interest and other expense, net........... 461 536 1,052 (e) 2,049 Income before provision for income tax......... 1,788 7,946 (2,324) 7,410 Income taxes/equivalent provision.............. 782 470 (373)(f) 879 Net income............... $1,006 $7,476 ($1,951) $6,531 Net income per common share.................. $ .25 $ .21 Weighted average number of common and common equivalent shares outstanding............ 30,382 31,431 Notes to Unaudited Pro Forma Consolidated Statement of Operations: (a) Results of operations from January 1, 1996 through the date of acquisition at the average exchange rate for the period. (b) Reflects the increase in depreciation expense for the step up in basis of property, plant and equipment acquired and the increase in cost of products sold for the step up in basis of inventory acquired. (c) Reflects the increase in depreciation expense for the step up in basis of property, plant and equipment acquired and the amortization of excess of cost over net tangible assets acquired. (d) Reflects the decrease in research and development expense due to the capitalization of certain of Pro-Bel's software development costs, net of the amortization of such costs for the year. (e) Reflect additional interest expense on indebtedness incurred in connection with the acquisition of Pro-Bel. (f) Reflects the estimated income tax effect on the acquisition financing. (g) Results of operations for the twelve months ended October 31, 1995, as this was Pro-Bel's operating period prior to the acquisition by Chyron, at the average exchange rate for the period. These pro forma results have been prepared for comparative purposes only and include adjustments as a result of applying purchase accounting and conversion to generally accepted accounting principles in the United States. The pro forma financial information is not necessarily indicative of the operating results that would have occurred if the acquisition had taken place on the aforementioned dates or of future results of operations of the consolidated entities. 3. INVESTMENT IN RT-SET On February 29, 1996, the Company effectively purchased an option to acquire a 19% interest in Real Time Synthesized Entertainment Technology, Ltd. ("RT-SET"), located in Tel Aviv, Israel. RT-SET develops, markets and sells real time virtual studio set software and proprietary communications hardware that operate on Silicon Graphics systems. In form, Chyron purchased shares of RT-SET Convertible Preferred Stock, which are convertible into RT-SET common stock, in exchange for 800,000 shares of Chyron restricted common stock. In accordance with the purchase agreement, the 800,000 of Chyron common stock were to be held in escrow and released in tranches of one-third and two-thirds, subject to certain conditions. During 1996, the first of these conditions was met, which resulted in the release of 266,666 shares of Chyron restricted common stock to RT-SET. Upon the satisfaction of the remaining conditions, the remaining 533,334 escrowed shares will be released. If the conditions are not met or at Chyron's option, the remaining shares of Chyron restricted common stock held in escrow will be returned to the Company in exchange for the RT-SET Convertible Preferred Stock held by the Company. Accordingly, the transaction has been recorded as the purchase of a right to acquire a 19% interest in RT-SET. RT-SET retains the voting rights with respect to the escrowed Chyron shares while such shares are held by the escrow agent. The acquisition was recorded at the estimated fair value of the Chyron restricted common stock released from escrow. In addition, Chyron was granted certain call option rights which, if and when exercised, will result in the Company owning up to a 51% interest in RT- SET. 4. CONTROL OF REGISTRANT On May 26, 1995, Pesa, Inc. ("Pesa") the former parent of the Company, sold 3,333,333 shares of common stock of Chyron to CC Acquisition Company A, a Delaware limited liability company ("CCACA"). On July 25, 1995, Pesa sold 16,471,571 shares to the entities listed below. Additionally, on July 25, 1995, Sepa Technologies, Ltd., a Georgia limited liability company ("Sepa"), and an affiliate of Pesa, sold 1,666,667 shares to the entities listed below. The sales were made pursuant to two agreements entered into on May 26, 1995: (1) CCACA and CC Acquisition Company B, a Delaware limited liability company ("CCACB"), and an affiliate of CCACA, entered into a stock purchase agreement with Pesa (the "Pesa Agreement") pursuant to which (i) CCACA acquired 3,333,333 shares and (ii) CCACA and CCACB agreed to acquire an additional 16,471,571 shares and (2) CCACA entered into a stock purchase agreement with Sepa (the "Sepa Agreement") pursuant to which CCACA agreed to acquire 1,666,667 shares and the voting rights and right of first refusal with respect to an additional 3,000,000 shares. CCACA and CCACB are collectively referred to herein as CCAC. On July 25, 1995, CCACA entered into an agreement (the "Leubert Agreement") with Alfred O.P. Leubert Ltd., a New York corporation ("Leubert"), pursuant to which CCACA was granted a right of first refusal to acquire 100,000 shares, which shares were acquired by Leubert from Sepa and which reduced from 3,000,000 to 2,900,000 the number of shares covered by the Company's right of first refusal as set forth in the Sepa Agreement. On July 25, 1995, CCACA and CCACB entered into an assignment and assumption agreement (the "Assignment Agreement") by and among CCACA, CCACB, WPG Corporate Development Associates IV, L.P., a Delaware limited partnership ("CDA"), WPG Corporate Development Associates IV (Overseas), L.P., a Cayman Islands exempt limited partnership ("CDAO"), WPG Enterprise Fund II, L.P., a Delaware limited partnership ("WPGII"), Weiss, Peck & Greer Venture Associates III, L.P., a Delaware limited partnership ("WPGIII"), Westpool Investment Trust plc., a public limited company organized under the laws of England ("WIT"), Lion Investments Limited, a limited company organized under the laws of England ("Lion"), and Charles M. Diker (such individual together with CDA, CDAO, WPGII, WPGIII, WIT and Lion, the "WPG/Westpool Investor Group") and certain other persons (such persons together with the WPG/Westpool Investor Group, the "Assignees") pursuant to which (i) CCACA assigned to the Assignees its rights under the Pesa Agreement to acquire 6,666,666 shares, (ii) CCACA assigned its rights under the Sepa Agreement to acquire 1,666,667 shares, (iii) CCACA assigned its right of first refusal to acquire 1,800,000 of the 3,000,000 shares as set forth in the Sepa Agreement and the Leubert Agreement described above and (iv) CCACB assigned its rights under the Pesa Agreement to acquire 5,882,946 shares. The closing, as contemplated by the Pesa Agreement and the Sepa Agreement, occurred on July 25, 1995. Consequently, at closing CCAC beneficially owned in the aggregate 7,255,297 shares and the WPG/Westpool Investor Group beneficially owned in the aggregate 13,968,629 shares. Beneficial ownership does not include 3,000,000 shares for which the voting rights have been assigned to CCAC and the WPG/Westpool Investor Group. As a consequence of the above transactions, the principal shareholders as of July 25, 1995 were as follows: Name of Owner Number of Shares Date of Acquisition CCACA 3,333,333 May 26, 1995 CCACB 3,921,964 July 25, 1995 CDA 5,923,538 July 25, 1995 CDAO 1,428,373 July 25, 1995 WPGII 1,471,852 July 25, 1995 WPGIII 1,223,848 July 25, 1995 WIT 2,328,103 July 25, 1995 Lion 1,102,788 July 25, 1995 C.M. Diker 490,127 July 25, 1995 Others 247,645 July 25, 1995 Pesa was a 100% owned subsidiary of a Spanish Company, Pesa Electronica, S.A. ("Electronica"), which in turn was 99% owned by a Spanish Company, Amper, S.A. ("Amper"). On June 24, 1994, Amper sold all of its shares of stock of Electronica to Sepa. On August 2, 1994, Sepa acquired 4,666,666 shares of Chyron common stock from certain foreign shareholders. Consequently, Sepa directly and indirectly through Pesa became the beneficial owner of 24,471,570 shares of Chyron common stock. On October 5, 1994, Electronica filed for receivership in Spain ("Suspension de Pagos"). The proceedings are comparable to a Chapter 11 reorganization under the U.S. Bankruptcy laws. 5. ACCOUNTS AND NOTES RECEIVABLE Trade accounts and notes receivable are stated net of an allowance for doubtful accounts of $2,850,000 and $3,134,000 at December 31, 1996 and 1995, respectively. The provision for doubtful accounts amounted to $nil, $466,000 and $729,000 for 1996, 1995, and 1994, respectively. The carrying amounts of accounts and notes receivable approximate their fair values. The Company periodically evaluates the credit worthiness of its customers and determines whether collateral (in the form of letters of credit or liens on equipment sold) should be taken or whether reduced credit limits are necessary. Credit losses have consistently been within management's expectations. Accounts and notes receivable are principally due from customers in, and dealers serving, the broadcast video industry and non-broadcast display markets. At December 31, 1996 and 1995, receivables included approximately $12.5 million and $2.7 million, respectively, due from foreign customers. 6. INVENTORIES Inventories consist of the following (in thousands): December 31, 1996 1995 Finished goods........ $12,879 $ 3,345 Work-in-process....... 5,271 5,250 Raw materials......... 5,352 3,050 $23,502 $11,645 7. PROPERTY AND EQUIPMENT Property and equipment consist of the following (in thousands): December 31, 1996 1995 Land..................... $ 878 $ 53 Building................. 1,794 Machinery and equipment.. 11,593 4,441 Furniture and fixtures... 2,386 1,501 Leasehold improvements... 715 299 17,366 6,294 Less: Accumulated depreciation and amortization............ 4,665 2,994 $12,701 $3,300 Machinery and equipment at December 31, 1996 and 1995 includes $818,000 and $473,000, respectively, of assets held under capital lease obligations. Accumulated depreciation and amortization at December 31, 1996 and 1995 includes $381,000 and $278,000, respectively, attributable to assets held under capital lease obligations. See Note 15. Depreciation expense, which includes amortization of capital lease assets, was $1,671,000, $1,054,000 and $1,106,000 in 1996, 1995 and 1994, respectively. 8. SOFTWARE DEVELOPMENT COSTS Certain software development costs are capitalized and amortized over their estimated economic life, ranging from 3 to 5 years, commencing when each product is available for general release. The following amounts were capitalized, amortized and written off (in thousands): 1996 1995 1994 Amounts capitalized........ $1,420 $207 $1,383 Less: Amortization (included in Research and Development expense)....... (960) (1,013) (931) West Coast restructuring write-down to net realizable value........... (1,991) Net (decrease) increase in software development costs. $460 ($806) ($1,539) 9. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consist of the following (in thousands): December 31, 1996 1995 Accounts payable....... $ 7,500 $2,818 Compensation (including pension liability)..... 3,644 3,136 Other accrued items.... 3,459 2,003 Income taxes payable... 1,225 163 $15,828 $8,120 The carrying amounts of accounts payable and accrued expenses approximate their fair values. 10. LONG-TERM DEBT Long term debt consists of the following (in thousands): December 31, 1996 1995 Term loan, maturing April 16, 2000(a) $6,500 Revolving credit facility, maturing March 28, 1999(a) 2,730 Revolving credit facility, maturing April 27, 1997(b) $4,741 Commercial mortgage term loan, maturing March 28, 2010(c) 2,097 Promissory notes, payable on or before April 15, 1998(d) 5,917 Trade finance facility, maturing December 31, 1996 replaced with debt maturing December 31, 1997(e) 1,209 Overdraft facility, maturing December 31, 1996 replaced with debt maturing December 31, 1997(f) 1,790 20,243 4,741 Less amounts due in one year 5,080 $15,163 $4,741 (a) On March 28, 1996 and April 16, 1996, the Company entered into agreements with a bank to obtain a revolving credit facility of $10 million and a term loan of $8 million, respectively. The entire facility is secured by Chyron's accounts receivable and inventory and the common stock of Pro-Bel. Borrowings are limited to amounts computed under a formula for eligible accounts receivable and inventory. Additionally, an over-advance is available above the borrowing formula in an amount not to exceed $3 million. Interest on the revolving credit facility is equal to adjusted LIBOR plus 175 basis points or prime (8.25% at December 31, 1996) and is payable monthly. The term loan is payable in quarterly installments of $500,000, commencing June 1, 1996. Interest on the term loan is equal to adjusted LIBOR plus 200 basis points or prime and is payable monthly. The Company must pay a commitment fee equal to 1/4 of 1% per annum on the average daily unused portion of the credit facility. The commitment fee is payable on the last day of each quarter commencing June 30, 1996. This agreement contains, among other provisions, requirements for maintaining defined levels of net worth, leverage, capital expenditures, lease payments and various financial ratios. The Company is prohibited by the agreement from paying cash dividends in excess of 25% of its net income for the then current fiscal year. (b) At December 31, 1995, the Company had $4.7 million outstanding with a financial institution under a secured revolving credit facility. Interest was payable monthly at the prime rate (8.5% at December 31, 1995) plus 2% per annum. The facility was due to expire on April 27, 1997, but was replaced by the banking facility described in (a) above in conjunction with the financing of the acquisition of Pro-Bel. (c) Pro-Bel has a commercial mortgage term loan with a bank. The loan is secured by a building and property located in the United Kingdom. Interest is equal to LIBOR (6% at December 31, 1996) plus 2%. The loan (including interest) is payable in quarterly installments of 80,600 pounds sterling ($136,000, converted at the December 31, 1996 exchange rate). (d) On April 12, 1996, the Company issued promissory notes to the shareholders of Pro-Bel for 3.5 million pounds sterling ($5,919,000, converted at the December 31, 1996 exchange rate) in conjunction with the acquisition (See Note 2). The promissory notes are secured by an irrevocable letter of credit from a bank. The amount of this irrevocable letter of credit is included as an outstanding borrowing in the formula used to calculate borrowing availability for the facilities described in (a) above. Interest through April 15, 1997 is equal to LIBOR as of April 15, 1996 (6.46%) and is payable quarterly. Interest through April 15, 1998 is equal to LIBOR as of April 15, 1997. The notes are due on or before April 15, 1998 and are subordinated to any obligations to a bank or financial institution currently existing or subsequently entered into. The notes can be prepaid without penalty subsequent to November 1, 1996. (e) On February 1, 1996, Pro-Bel entered into an agreement with a bank to obtain a trade finance facility of 750,000 pounds sterling ($1,267,000, converted at the December 31, 1996 exchange rate). The facility is secured by Pro-Bel's accounts receivable. Interest is equal to the bank's base rate plus 2% (8% at December 31, 1996) on advances against accounts receivable in pounds sterling and equal to the Barclays Bank PLC currency call loan rate plus 2% (8% at December 31, 1996) on advances against foreign accounts receivable. Interest is payable quarterly, in arrears. (f) On February 1, 1996, Pro-Bel entered into an agreement with a bank to obtain an overdraft facility of 750,000 pounds sterling ($1,276,000 converted at the December 31, 1996 exchange rate). Interest is equal to the bank's base rate plus 2.5% (8.5% at December 31, 1996) and is payable quarterly commencing in March 1996. The facility has a sublimit for overdraft on Pro-Bel's wholly owned subsidiary, Trilogy Broadcast Limited, of 160,000 pounds sterling ($270,000, converted at the December 31, 1996 exchange rate). This facility is payable upon written demand by the bank and any undrawn portion may be cancelled by the bank at any time. In January 1997, Pro-Bel entered into an agreement with Barclays Bank PLC whereby Barclays agreed to provide an overdraft facility of up to 3.0 million pounds sterling through December 31, 1997 to Pro-Bel and its subsidiaries. The overdraft facility provides for interest at 1.5% per annum over the bank's base rate. Interest is payable quarterly, in arrears. This facility replaces the trade finance facility of up to 750,000 pounds sterling and the overdraft facility of up to 750,000 pounds sterling in place at December 31, 1996. The maturity dates of such facilities were extended by the lenders to coincide with the new Barclays agreement. All monies under the facility are repayable upon written demand and are secured by accounts receivable. Aggregate maturities of long term debt in the next five years are as follows (in thousands): The carrying amounts of long-term debt instruments approximate their fair values. 1997........ $5,080 1998........ 7,437 1999........ 4,826 2000........ 607 2001........ 115 Net interest expense was $1,402,000, $536,000 and $525,000 in 1996, 1995 and 1994. 11. CONVERTIBLE SUBORDINATED NOTES PAYABLE In 1991, the Company issued to Pesa 4-year Convertible Subordinated Notes in the principal amount of $5.0 million maturing on January 31, 1996 and bearing interest (payable annually in arrears) at the prime rate, adjusted annually each December. The Notes were convertible into 8,333,333 shares of common stock of the Company at a conversion rate of $.60 cents per share. As of December 31, 1996, all of the Notes had been converted into shares of common stock of the Company. 12. LONG-TERM INCENTIVE PLAN In May 1995, the Company's shareholders approved the Chyron Corporation Long-Term Incentive Plan ("the Plan"). The Plan allows for a maximum of 1,666,666 shares of common stock to be available with respect to the grant of awards under the Plan; any or all of such common stock may be granted for awards of Incentive Stock Options. On July 25, 1995, November 21, 1995 and September 18, 1996 the Board of Directors granted Incentive Stock Options for the purchase of 991,666, 50,000, and 425,000 shares, respectively, to certain employees; the exercise price per option share is $4.875, $5.625, and $12.75, respectively, the quoted closing market prices at the dates of grant. The Incentive Stock Options granted on September 18, 1996 have been cancelled and reissued as of March 7, 1997. Additionally, on July 31, 1995, November 21, 1995, February 22, 1996, July 31, 1996 and September 18, 1996, the non-employee members of the Board of Directors received Non-Incentive Stock Options for the purchase of 26,666, 3,333, 6,666, 20,000 and 3,333 shares, respectively, at exercise prices of $5.625, $5.625, $9.375, $16.125 and $12.75, respectively, the quoted closing market prices at the dates of grant. Subsequent to the grant dates, 86,000 Incentive Stock Options were forfeited. The options to employees vest over three years at 33 1/3% per annum and expire five years after the grant date. Options granted to directors vest immediately. If the Company had elected to recognize compensation expense based upon the fair value at the grant date for awards under these plans consistent with the methodology prescribed by SFAS 123, the Company's net income and net income per share would be reduced to the pro forma amounts indicated below: 1996 1995 Net Income (in thousands): As reported $8,654 $7,476 Pro forma $7,560 $7,125 Earnings per common share: As reported $.27 $.25 Pro forma $.23 $.24 These pro forma amounts may not be representative of future disclosures since the estimated fair value of stock options is amortized to expense over the vesting period for purposes of future pro forma disclosures, and additional options may be granted in future years. The fair value of these options was estimated at the date of grant using the Black- Scholes option-pricing model with the following weighted average assumptions for both 1996 and 1995: dividend yield of 0; expected volatility of 50% and expected life of 4 years. The weighted average risk free interest rates for 1996 and 1995 were 6.54% and 6.11%, respectively. The weighted average fair values of options granted during 1996 and 1995, for which the exercise price equaled the market price on the grant dates, were $12.849 and $4.936 per option, respectively. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected price volatility. Because the Company's employees' stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in managements' opinion, the existing models do not necessarily provide a reliable single measure of the fair value of employee stock options. Transactions involving stock options are summarized as follows: Weighted Average Stock Options Exercise Price of Outstanding Options Outstanding Balance, January 1, 1995 Granted 984,999 $4.936 Exercised Balance, December 31, 1995 984,999 4.936 Granted 454,999 7.436 Exercised (113,018) 7.652 Balance, December 31, 1996 $1,326,980 $7.652 The following table summarizes information concerning currently outstanding and exercisable stock options: Weighted Outstanding Average Exercisable Exercise at December Contractual at December Price 31, 1996 Life 31, 1996 $ 4.875 795,314 3.6 years 265,104 5.625 76,667 3.8 years 43,334 9.375 6,666 4.2 years 6,666 16.125 20,000 4.6 years 20,000 12.750 428,334 4.8 years 3,333 13. INCOME TAXES The provision for income taxes consists of the following (in thousands): 1996 1995 1994 Current: Federal.................. $1,308 $ $ State.................... 629 50 Foreign.................. 473 Tax equivalent provision. 420 2,410 470 Deferred: Federal.................. 2,664 State.................... (150) Foreign.................. (39) Tax equivalent provision Release of valuation reserve.................. (140) 2,335 Total...................... $4,745 $470 $ The effective income tax rate differed from the Federal statutory rate as follows (in thousands): 1996 1995 1994 Amount % Amount % Amount % Federal income tax provision (benefit) at statutory rate..... $4,689 35.0 $2,702 34.0 ($3,058) (34.0) State income taxes, net of federal tax benefit............... 409 3.0 33 .4 Permanent differences. 36 .3 Benefit from post reorganization temporary differences on tax equivalent provision............. (140) (1.1) (1,351) (17.0) Foreign income tax benefit............... 8 .1 Benefit of lower tax rates on U.S. Federal Provision............. (121) (.9) Effect of valuation allowance of deferred tax assets............ (150) (1.1) (940) (11.8) 3,058 34.0 Other, net............ 14 .1 26 .3 $4,745 35.4 $ 470 5.9 $ The Company has deferred tax assets and deferred tax liabilities as presented in the table below. The net deferred tax assets were subject to a valuation allowance, which was $nil and $5.4 million at December 31, 1996 and 1995, respectively. This valuation allowance is primarily attributable to pre-Chapter 11 reorganization net operating loss carryforwards and pre-Chapter 11 reorganization deductible temporary differences. As a result of current and projected future profitability, the allowance was partially reduced in 1995 and eliminated in 1996. Deferred tax assets (deductible temporary differences) prior to the allocation of the valuation allowance consisted of the following (in thousands): December 31, 1996 1995 Post-reorganization net operating loss carryforward.............. $ 276 $ 280 Pre-reorganization net operating loss carryforward.............. 4,631 7,250 Pre-reorganization deductible temporary differences.......... 4,555 4,555 Restructuring reserve............ 55 Other............................ 2,030 2,000 Total deferred tax assets...... $11,492 $14,140 Deferred tax liabilities (taxable temporary differences) consisted of the following (in thousands): December 31, 1996 1995 Pre-reorganization taxable temporary differences.......... $ 85 $ 85 Software development costs....... 683 585 Other............................ 210 Total deferred tax liabilities. $768 $880 At December 31, 1996, the Company had net operating loss carryforwards ("NOL") of approximately $15.0 million for tax purposes. Under U.S. income tax rules, the utilization of the NOL is subject to annual limitations as a result of the changes in control of the Company at December 27, 1991 and July 25, 1995. However, despite these restrictions, the Company expects to fully utilize all of its remaining NOL prior to expiration. 14. BENEFIT PLANS Chyron Corporation has a domestic defined benefit pension plan (the "U.S. Pension Plan") covering substantially all U.S. employees meeting minimum eligibility requirements. Benefits paid to retirees are based upon age at retirement, years of credited service and average compensation. Pension expense is actuarially determined using the projected unit credit method. The Company's policy is to fund the minimum contributions required under the Employees Retirement Income Security Act. The assets held by the U.S. Pension Plan at December 31, 1996 include government securities, corporate bonds and mutual funds. The net periodic pension cost and its components are as follows (in thousands): 1996 1995 1994 Service cost...................... $414 $383 $437 Interest cost on projected benefit obligation...................... 267 292 312 Actual return on plan assets...... (206) (227) (269) Net amortization.................. (43) (15) Net periodic pension cost......... $432 $433 $480 A reconciliation of the funded status of the U.S. Pension Plan to the amounts included in the Company's balance sheet is as follows (in thousands): December 31, 1996 1995 1994 Accumulated pension benefit obligation: Vested................................. $2,234 $2,265 $2,431 Non-vested............................. 29 79 63 Total.................................. $2,263 $2,344 $2,494 Projected benefit obligation........... $3,803 $4,138 $4,532 Plan assets at fair value.............. 2,709 2,609 3,352 projected benefit obligation in excess of assets............................ 1,094 1,529 1,180 Less items not yet recognized in net periodic pension cost: Unrecognized net gain (loss) from past experience and changes in assumptions.......................... 841 49 (35) Pension liability...................... $1,935 $1,578 $1,145 In each year presented, the expected long-term rate of return on U.S. Pension Plan assets was 9%. The weighted average discount rates used to determine the accumulated benefit obligation was 8.0% in 1996, 7.5% in 1995 and 8.0% in 1994. The rate of compensation increase used was 5% for all years presented. The Company's U.K. subsidiary, Pro-Bel, has a non-contributory defined benefit pension plan (the "U.K. Pension Plan") covering all its permanent employees. Contributions are determined on the basis of valuations using the projected unit method. Pro-Bel's policy is to fund minimum contributions required pursuant to the U.K. Rules and Regulations. The assets held by the U.K. Pension Plan at December 31, 1996 include cash equivalents and free hold properties. The net periodic pension cost of the U.K. Pension Plan for the period since the acquisition of Pro-Bel (April 12, 1996) through December 31, 1996 and its components under the provisions of SFAS No. 87 are as follows (in thousands): Service cost-benefit earned during the period $303 Interest cost on projected benefit obligation 285 Actual return on plan assets (457) Net amortization 0 Net periodic pension cost $131 A reconciliation of the funded status of the U.K. Pension Plan to the amounts included in the Company's balance sheet as of December 31, 1996 is as follows (in thousands): December 31, 1996 Accumulated pension benefit obligation: Vested $4,867 Non-vested Total $4,867 Projected benefit obligation $5,739 Plan assets at fair value 7,005 Plan assets at fair value in excess of projected benefit obligation 1,266 Items not yet recognized in net periodic pension cost: Unrecognized net gain from past experience and changes in assumptions 141 Pension asset $1,407 The expected long-term rate of return on the U.K. Pension Plan assets was 9%. The weighted average discount rate used to determine the accumulated benefit obligation was 8% and the rate of compensation increase used was 5.50% for the period presented. In 1994, Chyron Corporation adopted a 401(k) Plan exclusively for the benefit of participants and their beneficiaries. All employees of the Company are eligible to participate in the 401(k) Plan except non- resident aliens and employees who are members of a union who bargain separately for retirement benefits during negotiations. An employee may elect to contribute a percentage of his or her current compensation to the 401(k) Plan, subject to a maximum of 20% of compensation or the Internal Revenue Service annual contribution limit ($9,500 in 1996 and $9,240 in 1995), whichever is less. Total compensation that can be considered for contribution purposes is limited to $150,000. The Company can elect to make a contribution to the 401(k) Plan on behalf of those participants who have made salary deferral contributions. During 1996 and 1995, the Company contributed $51,000 and $29,000, respectively to the 401(k) Plan. 15. COMMITMENTS AND CONTINGENCIES At December 31, 1996, the Company was obligated under operating and capital leases covering facility space and equipment as follows (in thousands): Operating Capital 1997................ $ 1,030 $247 1998................ 890 85 1999................ 885 44 2000................ 880 2001................ 864 2002 and thereafter. 8,173 $12,722 $376 The operating leases contain provisions for maintenance and escalations for real estate taxes. Total rent expense was $826,000, $496,000, and $530,000 for 1996, 1995 and 1994, respectively. The cumulative imputed interest in the capital lease obligation was $33,000 at December 31, 1996. The Company is a party to Percival Hudgins & Company, Inc. v. Chyron Corporation v. John Percival, pending in the United States District Court, North District of Georgia (Atlanta). This is a breach of contract action for an alleged success fee in connection with the sale of common stock by Pesa and Sepa (See Note 4). Plaintiff alleges that such transaction was subject to the terms of its engagement letter with the Company. Plaintiff seeks damages of approximately $600,000 together with counsel fees. The Company has answered, denying all material allegations, and has asserted a third party claim against plaintiff's principal, alleging that he, as a director of the Company while his investment banking firm was engaged by the Company, breached his fiduciary duties to the Company and is liable for any amounts that might be awarded to plaintiff, together with counsel fees. Plaintiff has recently amended the complaint to add a claim for quantum meruit. Discovery is continuing. The Company from time to time is involved in routine legal matters incidental to its business. In the opinion of management, the ultimate resolution of such matters will not have a material adverse effect on the Company's financial position, results of operations or liquidity. 16. RELATED PARTY TRANSACTIONS Sepa, prior to the change in control discussed in Note 4, was the beneficial owner of 24,471,570 shares of Chyron common stock. Consequent to such ownership, Sepa had an amended and restated management agreement with Chyron whereby Chyron agreed to pay management fees to Sepa at 2.5% of consolidated revenues through December 31, 1997. The management fees under this agreement were subject to an annual limitation of $1.5 million. In July 1994, Chyron took advantage of an option to prepay the management fee at a 25% discount from the aggregate estimated yearly fees for the period July 1, 1994 through December 31, 1995, resulting in estimated aggregate total savings of $486,000 in fees for the eighteen month period ending December 31, 1995. In December 1995, Chyron and Sepa agreed to terminate the Management Agreement upon payment to Sepa of $2 million, which resulted in aggregate savings for the Company of $1 million for the two year period ending December 31, 1997. The $2 million was paid in equal installments in December 1995 and January 1996. The Company shared certain trade show and facility costs with Pesa and Electronica. Such services amounted to $30,000 and $303,000 for 1995 and 1994, respectively, and were billed to these related parties under a usage based allocation. A member of the Board of Directors of the Company is a partner of a law firm that rendered various legal services to the Company for which the Company incurred costs of $861,000 and $273,000 during 1996 and 1995, respectively. 17. WEST COAST RESTRUCTURING During the third quarter of 1994, as the result of continuing significant operating losses by the Company's West Coast Operations and their inability to meet revenue and operating targets, management implemented a restructuring plan to eliminate a substantial number of the CMX and Aurora product lines and consolidate certain remaining products into the Company's Graphics Operations, with only certain product engineering capabilities remaining on the West Coast. As a result, the Company recorded a $12.7 million charge to operations during the third quarter of 1994, resulting from headcount reductions, consolidation costs, write-downs of assets related to discontinued product lines and accrual of estimated operating losses anticipated during the disposition period. For 1995, operating losses of $1,707,000 related to the discontinued product lines were charged against the reserve for West Coast restructuring. During August 1995, the Company entered into an agreement to sublease a portion of the office space for the West Coast Operations. The subleasing served to decrease future rent commitments and, as a result, the Company reversed $356,000 of the original $12.7 million charge to account for the decrease in projected rent expense. Additionally, during 1995, the Company sold certain inventory that had been fully reserved for in the original $12.7 million charge. The Company realized a gain of $380,000 related to this inventory. During December 1995, the Company recaptured $603,000 of the original restructuring charge as a result of lower than anticipated costs related to the disposition period. As of December 31, 1995, the amount of the Reserve for West Coast Restructuring of $158,000 represented future rent commitments through 1997. A summary of activity for 1995 related to the West Coast Restructuring is presented below (in thousands): Reserve for West Coast West Coast Restructuring Restructuring Recapture Balance at January 1, 1995 Current year operating loss $2,824 $ 0 Sublease agreement 1,707 Realization on asset write-down 356 356 Recapture 380 Balance at December 31, 1995 603 603 $ 158 $1,339 18. SEGMENT INFORMATION Chyron's business is organized under a group concept that coordinates product development, marketing, advertising, distribution and procurement. The Company has a multi-product approach for filling customer requirements for equipment and systems used in video or film productions. These products include graphics and character generation systems video and audio, signal management systems and electronic paint and animation systems and software. Customers for the Company's products include broadcasters, video production and post-production companies, cable television distributors and operators, industrial users, governments and governmental agencies and domestic and international dealers serving the video production and display industries for non-broadcast and broadcast markets. As a result, the Company operates as one business segment. The Company's operations are located primarily in the United States and Europe. Foreign operations prior to 1996 and interarea sales were not significant. Net sales, operating profit and identifiable assets by geographic areas consist of the following (in thousands): December 31, 1996 1996 Net Operating Identifiable Sales Profit Assets United States $55,446 $12,764 $52,988 Europe 24,281 1,611 38,375 Other 2,881 690 40 Total $82,608 $15,065 $91,403 During 1996, 1995 and 1994, net export sales from the United States were approximately $9,580,000, $7,511,000 and $6,623,000, respectively. During 1996, foreign exchange losses of $264,000 are included in other expenses. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE During 1995, the Company dismissed Ernst & Young, LLP as its principal accountants and retained Price Waterhouse LLP. On October 25, 1995, the Company filed a Form 8-K related to the Change in the Registrant's Certifying Public Accountants which is incorporated herein by reference. PART III Item 10 (Directors and Executive Officers of the Registrant), Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain Beneficial Owners and Management) and Item 13 (Certain Relationships and Related Transactions) will be incorporated in the Company's Proxy Statement to be filed within 90 days of December 31, 1996 and are incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a)(1) Financial Statements The following Consolidated Financial Statements of Chyron Corporation and subsidiaries are included in Part II, Item 8: Report of Independent Auditors - Price Waterhouse, LLP - page 21 Report of Independent Auditors - Ernst & Young, LLP - page 22 Consolidated Balance Sheets at December 31, 1996 and 1995 - page 24 Consolidated Statements of Operations for the Years Ended December 31, 1996, 1995 and 1994 - page 25 Consolidated Statements of Cash Flows for the Years Ended December 31, 1996, 1995 and 1994 - page 26 Consolidated Statements of Shareholder's Equity for the Year Ended December 31, 1996, 1995 and 1994 - page 28 Notes to the Consolidated Financial Statements - page 29-53 (2) Financial Statement Schedules The following Consolidated Financial Statement schedules of Chyron Corporation and subsidiaries is included in Item 14(d): Schedule II - Valuation and Qualifying Accounts for the Years Ended December 31, 1996, 1995 and 1994 - page 64 All other schedules called for under Regulation S-X are not submitted because they are not applicable or not required or because the required information is not material or is not included in the Consolidated Financial Statements or notes hereto. (3) Financial Statement Exhibits See list of exhibits to the Financial Statements in Section (c) below: (b) Reports on Form 8-K 1. Form 8-K was filed on October 25, 1995 for the Change in the Registrant's Certifying Public Accountant ********** 2. Form 8-K was filed on April 26, 1996 for the acquisition of Pro-Bel, Limited *********** 3. Form 8-K was filed on March 14, 1996 for the acquisition of RT-SET, Limited ************ 4. Form 8-K/A was filed on June 21, 1996 which amended the Form 8-K filed on April 26, 1996 to include the financial exhibits related to the acquisition of Pro-Bel Limited - ************* (c) Exhibits 2. Plan of acquisition, reorganization, arrangement, liquidation or succession. (a) First Amended Disclosure Statement pursuant to Section 1125 of the Bankruptcy Code, dated October 28, 1991 (with First Amended Plan of Reorganization under Chapter 11 of the Bankruptcy Code attached as Exhibit A thereto) - *** 3. Articles of Incorporation and By-Laws. (a) Restated Certificate of Incorporation of Chyron Corporation - ** (b) Amended and Restated By-Laws of Chyron Corporation, adopted February 17, 1995 - ********* (c) Amendment of Certificate of Incorporation of Chyron Corporation, adopted January 24, 1997 - page 225 4.Instruments defining rights of security holders, including debentures. (a) Warrant Agreement, dated January 3, 1992, between Chyron Corporation and American Stock Transfer & Trust Company, as warrant agent, incorporating the form of warrant certificate as Exhibit A thereto - ** (b) Convertible Note Purchase Agreement, dated as of December 27, 1991, between Chyron Corporation and Pesa, Inc., incorporating the form of convertible note as Exhibit 1 thereto - *** (c) Registration Rights Agreement, dated December 27, 1991, between Chyron Corporation and Pesa, Inc. - *** (d) Registration Rights Agreement dated July 25, 1995 by and between Chyron Corporation and CC Acquisition Company A, L.L.C., CC Acquisition Company B, L.L.C., WPG Corporate Development Associates, IV, L.P., WPG Corporate Development Associates IV (Overseas), L.P., WPG Enterprise Fund II, L.P. Weiss, Peck & Greer Venture Associates, III, L.P., Westpool Investment Trust PLC, Lion Investment Limited, Charles Diker, Mint House Nominees Limited, Pine Street Ventures, L.L.C., Isaac Hersly, Alan I. Annex, Ilan Kaufthal, Z Four Partners L.L.C. and A.J.L. Beare. ************** 10. Material Contracts. (a) Assignment and Assumption, dated July 1, 1994, effective July 1, 1994, of Management Agreement dated December 27, 1991 and Amended March 10, 1992, between Chyron Corporation and Pesa, Inc. to Sepa Technologies Ltd., Co. - ********* (b) Amended and Restated Management Agreement, dated August 8, 1994, by and between Chyron Corporation and Sepa Technologies Ltd., Co. - ********* (c) Distribution and License Agreement, dated September 22, 1994, between Chyron Corporation and Comunicacion Integral Consultores, S.L. - ********* (d) Termination Agreement, dated November 6, 1995, between Chyron Corporation and Comunicacion Integral Consultores, S.L. - ************** (e) Termination Agreement, dated December 12, 1995, between Chyron Corporation and Sepa Technologies Ltd., Co. - ************** (f) Amendment, dated March 10, 1992, to Management Agreement dated December 27, 1991, between Chyron Corporation and Pesa Electronica, S.A. - * (g) Assignment, dated March 10, 1992, of Management Agreement, dated December 27, 1991, and Amendment March 10, 1992, between Chyron Corporation and Pesa Electronica, S.A., to Pesa, Inc. - * (h) Amendment, dated January 31, 1994, effective December 28, 1993, to Management Agreement dated December 27, 1991 and Amendment March 10, 1992 between Chyron Corporation and Pesa, Inc. - ******** (i) Revolving Credit Agreement, dated December 27, 1991, between Chyron Corporation and Extebank - ** (j) Management Agreement, dated as of December 27, 1991, between Chyron Corporation and Pesa Electronica, S.A. - ** (k) Amendment, dated September 19, 1988, to Employment Agreement, dated September 1, 1987, between Chyron Corporation and Isaac Hersly (previously filed as Exhibit 8 to current report on Form 10-Q dated November 6, 1987 and incorporated herein in its entirety by reference thereto) - ** (l) Amendment, dated October 25, 1987, to Employment Agreement, dated September 1, 1987, between Chyron Corporation and Isaac Hersly, as amended - ** (m) Amendment, dated October 21, 1991, to Employment Agreement, dated September 1, 1987, between Chyron Corporation and Isaac Hersly, as amended - ** (n) Amendment, dated February 23, 1994, to Employment Agreement, dated September 1, 1987, between Chyron Corporation and Isaac Hersly, as amended - ******** (o) Resignation Agreement, dated July 12, 1994, between Chyron Corporation and John A. Poserina - ******* (p) Amendment, dated September 19, 1988, to Employment Agreement dated September 1, 1987, between Chyron Corporation and John A. Poserina (previously filed as Exhibit 7 to current report on Form 10-K dated November 6, 1987 and incorporated herein in its entirety by reference hereto) - ** (q) Amendment, dated October 25, 1989, to Employment Agreement, dated September 1, 1987, between Chyron Corporation and John A. Poserina, as amended - ** (r) Amendment, dated October 21, 1991, to Employment Agreement, dated September 1, 1987, between Chyron Corporation and John A. Poserina, as amended - ** (s) Amendment, dated September 19, 1988, to Employment Agreement, dated September 1, 1987, between Chyron Corporation and Paul J. Rozzini (previously filed as Exhibit 10 to current report on Form 10-K dated November 6, 1987 and incorporated herein in its entirety by reference thereto) - ** (t) Amendment, dated October 25, 1989, to Employment Agreement, dated September 1, 1987, between Chyron Corporation and Paul J. Rozzini, as amended - ** (u) Amendment, dated October 21, 1991, to Employment Agreement, dated September 1, 1987, between Chyron Corporation and Paul J. Rozzini, as amended - ** (v) Employment Agreement, dated March 10, 1993, between Chyron Corporation and Paul M. Yarmolich - ***** (w) Employment Agreement, dated December 24, 1993, between Chyron Corporation and Mark C. Gray - ****** (x) Employment Agreement, dated March 31, 1994, between Chyron Corporation and Patrick A. Burns - ********* (y) Employment Agreement, dated October 19, 1994, effective November 1, 1994, between Chyron Corporation and Peter J. Lance - ********* (z) Employment Agreement, dated February 8, 1995, between Chyron Corporation and James F. Duca - ********* (aa) Employment Agreement, dated February 7, 1995, between Chyron Corporation and Patricia Arundell Lampe - ********* (bb) Employment Agreement, dated July 26, 1995, between Chyron Corporation and Michael Wellesley-Wesley - ************** (cc) Severance Agreement, dated October 25, 1995, between Chyron Corporation and Peter J. Lance - ************** (dd) License Agreement between Softimage, Inc. and Chyron Corporation and Aurora Systems dated February 23, 1993 - ******** (ee) Distribution Agreement between Softimage, Inc. and Chyron Corporation and Aurora Systems dated February 23, 1993 - ******** (ff) Research and Development, Updated and Support Agreement between Softimage, Inc. and Chyron Corporation and Aurora Systems dated February 23, 1993 - ******** (gg) Loan Agreement between Chyron Corporation and NatWest Bank N.A. (currently known as Fleet Bank), dated March 28, 1996 - page 67 (hh) Loan Agreement between Pro-Bel Limited and Barclays Bank, PLC dated December 19, 1996 effective January 1997 - page 102 (ii) Indemnification Agreement between Chyron Corporation and Roi Agneta dated November 19, 1996 - page 128 (jj) Indemnification Agreement between Chyron Corporation and Sheldon Camhy dated November 19, 1996 - page 135 (kk) Indemnification Agreement between Chyron Corporation and James Coppersmith dated November 19, 1996 - page 142 (ll) Indemnification Agreement between Chyron Corporation and Daniel DeWolf dated November 19, 1996 - page 149 (oo) Indemnification Agreement between Chyron Corporation and Charles M. Diker dated November 19, 1996 - page 156 (pp) Indemnification Agreement between Chyron Corporation and Donald P. Greenberg dated November 19, 1996 - page 163 (qq) Indemnification Agreement between Chyron Corporation and Ray Hartman dated November 19, 1996 - page 170 (rr) Indemnification Agreement between Chyron Corporation and Roger Henderson dated November 19, 1996 - page 177 (ss) Indemnification Agreement between Chyron Corporation and Isaac Hersly dated November 19, 1996 - page 184 (tt) Indemnification Agreement between Chyron Corporation and Alan J. Hirschfield dated November 19, 1996 - page 191 (uu) Indemnification Agreement between Chyron Corporation and Patricia Lampe dated November 19, 1996 - page 198 (vv) Indemnification Agreement between Chyron Corporation and Wesley W. Lang, Jr. dated November 19, 1996 - page 205 (ww) Indemnification Agreement between Chyron Corporation and Eugene M. Weber dated November 19, 1996 - page 212 (xx) Indemnification Agreement between Chyron Corporation and Michael Wellesley-Wesley dated November 19, 1996 - page 219 * Incorporated herein in its entirety by reference to the Transition Report for the Period July 1, 1991 to December 31, 1991 on Form 10-K dated March 30, 1992. ** Incorporated herein in its entirety by reference to the Annual Report for the Fiscal Year Ended June 30, 1991 on Form 10-K dated January 31, 1992. *** Incorporated herein in its entirety by reference to the report on Form 8-K dated December 27, 1991. **** Incorporated herein in its entirety by reference to the report on Form 8-K dated March 12, 1993. ***** Incorporated herein in its entirety by reference to the report on Form 8-K dated May 10, 1993. ****** Incorporated herein in its entirety by reference to the report on Form 8-K dated January 19, 1994. ******* Incorporated herein in its entirety by reference to the report on Form 8-K dated July 22, 1994. ******** Incorporated herein in its entirety by reference to the Annual Report for the fiscal year ended December 31, 1993 on Form 10-K dated March 30, 1994. ********* Incorporated herein in its entirety by reference to the Annual Report for the fiscal year ended December 31, 1994 on Form 10-K dated March 24, 1995. ********** Incorporated herein in its entirety by reference to the report on Form 8-K dated October 25, 1995. *********** Incorporated herein in its entirety by reference to the report on Form 8-K dated April 26, 1996. ************ Incorporated herein in its entirety by reference to the report on Form 8-K dated March 14, 1996. ************* Incorporated herein in its entirety by reference to the report on Form 8-K/A dated June 21, 1996. ************** Incorporated herein in its entirety by reference to the Annual Report for the fiscal year ended December 31, 1995 on Form 10-K dated March 14, 1996. d) Financial Statement Schedule Schedule II CHYRON CORPORATION AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS (In thousands) Column A Col B Col C Col D Col E Balance at Additions Balance Begin- Changes to at ning Costs End of and Other Deduc- of Description Period Expenses Accounts tions Period Reserves and allowances deducted from asset accounts: YEAR ENDED DECEMBER 31, 1996 Uncollectible amounts....... $ 3,134 $ $ $ 284 $ 2,850 Inventory reserves.......... 12,233 192 12,041 Deferred tax assets......... 5,400 5,400 0 $20,767 $ $ $ 5,876 $14,891 YEAR ENDED DECEMBER 31, 1995 Uncollectible amounts....... $ 2,204 $ 745 $ 185 $ $ 3,134 Inventory reserves.......... 12,515 1,153 1,435 12,233 Deferred tax assets......... 14,500 9,100 5,400 $29,219 $1,898 $ 185 $10,535 $20,767 YEAR ENDED DECEMBER 31, 1994 Uncollectible amounts....... $ 2,624 $2,333 $ $ 2,753 $ 2,204 Inventory reserves.......... 10,293 5,300 430 3,508 12,515 Deferred tax assets......... 11,500 3,100 100 14,500 $24,417 $7,633 $3,530 $ 6,361 $29,219 UNDERTAKING The Company undertakes to provide without charge to each shareholder entitled to notice of and to vote at the Annual Meeting of Shareholders, to be held May 14, 1997, at which directors are to be elected, upon the written request of any such shareholder, a copy of the Company's Annual Report on Form 10-K, for the year ended December 31, 1996, required to be filed with the Securities and Exchange Commission, including the financial statements and the schedules thereto. The Company does not undertake to furnish without charge copies of all exhibits to its Form 10-K, but will furnish any exhibit upon the payment of twenty ($.20) cents per page or a minimum charge of $5.00. Such written requests should be directed to Ms. Judy Mauro, Director of Corporate Communications, Chyron Corporation, 5 Hub Drive, Melville, New York 11747. Each such request must set forth a good faith representation that as of March 26, 1997 the person making the request was a beneficial owner of securities entitled to vote at the Annual Meeting of Shareholders. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CHYRON CORPORATION /s/ Michael Wellesley-Wesley Michael Wellesley-Wesley Chairman of the Board of Directors and Chief Executive officer Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the date indicated. /s/ Sheldon Camhy Director March 19, 1997 (Sheldon Camhy) /s/ S. James Coppersmith Director March 19, 1997 (S. James Coppersmith) /s/ Charles Diker Director March 20, 1997 (Charles Diker) /s/ Douglas Greenberg Director March 20, 1997 (Douglas Greenberg) /s/ Raymond Hartman Director March 20, 1997 (Raymond Hartman) /s/ Isaac Hersly Director March 20, 1997 (Isaac Hersly) /s/ Alan Hirschfield Director March 20, 1997 (Alan Hirschfield) /s/ Wesley Lang Director March 20, 1997 (Wesley Lang) /s/ Eugene Weber Director March 20, 1997 (Eugene Weber) /s/ Patricia Lampe Chief Financial (Patricia Lampe) Officer March 20, 1997 EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE. Loan Agreement dated as of March 28, 1996 between CHYRON CORPORATION, a New York corporation with its chief place of business at 5 Hub Drive, Melville, New York 11747 (the "Borrower") and NATWEST BANK N.A., a national banking association with an office at 100 Jericho Quadrangle, Jericho, New York 11753 (the "Bank"). The parties hereto hereby agree as follows: SECTION 1. DEFINITIONS 1.1 Defined Terms. As used herein the following terms shall have the following meanings: "Accounts" shall mean those accounts arising out of the sales or lease of goods or the rendition of services by the Borrower. "Account Debtor" shall mean the person who is obligated on or under an Account. "Acquisition Documents" shall mean the agreement with the Borrower for the sale and purchase of the entire issued share capital of Pro- Bel and all exhibits annexed thereto. "Adjusted Libor Rate" means with respect to an Eurodollar Loan Interest Period, the rate per annum at which the U.S. dollar deposits are offered by a Reference Bank (as selected by the Bank) in the London interbank market for Eurodollars at approximately 11:00 a.m. (London time) two Business Days before the first day of such Interest Period in an amount approximately equal to the principal amount of the Eurodollar Loan to which such Interest Period is to apply and for a period of time comparable to such Interest Period divided by one minus the Eurodollar Reserve Percentage. "Affiliate" as applied to any Person, means any other Person directly or indirectly through one or more intermediaries controlling, controlled by, or under common control with, that Person. For the purposes of this definition, "control" (including with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as applied to any Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise. "Agreement" shall mean this Loan Agreement, as the same from time to time may be amended, supplemented or modified. "Borrowing Base" shall mean the sum of: (a) 80% of the Borrower's Eligible Domestic Accounts Receivable from time to time outstanding less reserves with respect to such Accounts which the Bank may deem necessary in its sole discretion; (b) 80% of the Borrower's Eligible Foreign Accounts Receivable from time to time outstanding less reserves with respect to such Accounts which the Bank may deem necessary in its sole discretion; and (c) the lesser of (i) $3,750,000 or (ii) the sum of (v) 50% of the value of the Borrower's Eligible Inventory (excluding Demo Inventory) from time to time on hand and (z) 30% of the Borrower's Demo Inventory, minus the principal amount outstanding under the Term Loan. "Borrowing Base Certificate" shall mean a certificate substantially in the form of Exhibit C hereto. "Business Day" shall mean a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are required or permitted by law to remain closed. "Capital Expenditures" shall mean for any period, the aggregate amount of all payments made by any Person directly or indirectly for the purpose of acquiring, constructing or maintaining fixed assets, real property or equipment which, in accordance with GAAP, would be added as a debit to the fixed asset account of such Person, including, without limitation, all amounts paid or payable with respect to Capitalized Lease Obligations and interest which are required to be capitalized in accordance with GAAP. "Capitalized Lease" shall mean any lease the obligations to pay rent or other amounts under which constitute Capitalized Lease Obligations. "Capitalized Lease Obligations" shall mean as to any Person, the obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) real and/or personal property which obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance GAAP. "Collateral" shall mean the collateral described in Section 9 of this Agreement. "Commitment" shall mean the obligation of the Bank to make Revolving Credit Loans to the Borrower during the Commitment Period pursuant to the terms hereof as such Commitment is described in Section 2.1 hereof and as subject to reduction in accordance with the terms hereof. "Commitment Letter" shall mean the letter agreement between the Borrower and the Bank dated February 1, 1996. "Commitment Period" shall mean the period from and including the date hereof to and including the Termination Date or such earlier date as the Commitment shall terminate as provided herein. "Contractual Obligations" shall mean as to any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its property is bound. "Controlled" and "Control" shall mean any partnership, corporation or other entity of which the Borrower, alone, or the Borrower and/or one or more of its Subsidiaries, either has the power to direct the management thereof or the power to direct at least a majority of the voting interests. "Default" shall mean any of the events specified in this Agreement under "Events of Default", whether or not any requirement for the giving of notice, the lapse of time, or both, has been satisfied. "Demo Inventory" shall mean Eligible Inventory of the Borrower for trial use by a customer of the located at a place other than the Borrower's lease or owned Real Property. "Dollars" and "$" shall mean dollars in lawful currency of the United States of America. "Domestic Tangible Net Worth" shall have the meaning ascribed in Section 6.1(d). "Eligible Domestic Accounts Receivable" shall mean those Accounts arising in the ordinary course of business to Persons other than Subsidiaries or Affiliates domiciled in the United States of America which have been outstanding for not more than 120 days from invoice date in which the Bank has a first priority security interest and which are otherwise satisfactory to the Bank in its reasonable discretion, provided, that, if fifty percent (50%) or more of the Accounts due from an Account Debtor are deemed by the Bank to be ineligible then all Accounts from such Account Debtor shall be deemed ineligible. "Eligible Foreign Accounts Receivable" shall mean those Accounts arising in the ordinary course of business to Persons other than Subsidiaries or Affiliates domiciled outside of the United States of America which have been outstanding for not more than 120 days from invoice date in which the Bank has a first priority security interest, which are covered by insurance protecting the Bank against political and commercial risks on terms reasonably acceptable to the Bank and which are otherwise satisfactory to the Bank in its reasonable discretion, provided, that, if fifty (50%) percent or more of the Accounts due from an Account Debtor are deemed by the Bank to be ineligible then all Accounts from such Account Debtor shall be deemed ineligible. "Eligible Inventory" shall mean all unencumbered inventory of work in process and finished goods from time to time on hand satisfactory to the Bank in its sole discretion in which the Bank has a first priority security interest, valued at the lower of (a) cost, (b) market value, or (c) the valuation consistent with that employed in the preparation of the financial statements of the Borrower referred to in this Agreement. "Environmental Laws" shall mean any federal, state or local statute or regulation relating to hazardous or toxic wastes or substances or the removal thereof. "Eurodollar Loans" shall mean Loans hereunder that bear interest for the Interest Period applicable thereto at a rate of interest based upon the Adjusted Libor Rate. "Eurodollar Reserve Percentage" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve for requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding one billion dollars in respect of "Eurocurrency liabilities" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Eurodollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non- United States office of the Bank to United States residents). With respect to increases in the Eurodollar Reserve Percentage, the Adjusted Libor Rate shall be adjusted automatically on and as of the effective date of any such increase. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. "Event of Default" shall mean any of the events specified in this Agreement under "Events of Default", provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. "Fluctuating Rate Loans" shall mean Loans hereunder that bear interest at a rate of interest based upon the Prime Rate. "GAAP" shall mean generally accepted accounting principles applied in a manner consistent with that employed in the preparation of the financial statements described in Section 3.1. "General Security Agreement" shall have the meaning assigned thereto in Section 4.1(b) and any UCC-1 financing statements executed in connection therewith. "Governmental Authority" shall mean any nation or government, any state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled (through stock or capital ownership or otherwise) by any of the foregoing. "Guarantees" shall mean the guarantees to be executed by the Guarantors on the Bank's standard form. "Guarantors" shall mean, collectively, the entities required to guarantee pursuant to Section 5.9 hereof. "Indebtedness" shall mean, with respect to any Person, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person for the deferred purchase price of property or services, except current accounts payable arising in the ordinary course of business and not overdue beyond such period as is commercially reasonable for such Person's business, (d) all obligations of such Person conditional sale or other title retention agreements relating to property purchased by such Person, (e) all payment obligations of such Person with respect to interest rate of currency protection agreements, (f) all obligations of such Persons as an account party under any letter of credit or in respect of bankers' acceptances (g) all obligations of any third party secured by property or assets of such Person (regardless of whether or not such Person is liable for repayment of such obligations) and (h) the redemption price of all redeemable preferred stock of such Person, but only to the extent that such stock is redeemable at the option of the holder or requires sinking fund or similar payments at any time prior to the Termination Date. "Installment Payment Date" shall mean any date on which all or any portion of the principal amount of the Term Loan is due and payable. "Interest Period" shall mean any period during which a Loan bears interest at an Adjusted Libor Rate as elected by the Borrower in accordance with the terms of this Agreement. (a) If any Interest Period would otherwise end on a day which is not a Business Day, that Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day. (b) No Interest Period shall extend beyond a stated Maturity Date. (c) No portion of the term Loan shall be continued as or converted into a Eurodollar Loan with an Interest Period which extends beyond an Installment Payment Date if, after giving effect to the continuation or conversion of such Eurodollar Loan, the amount payable on any Installment Payment Date would exceed the sum of (i) the aggregate principal amount of the outstanding portion of the Term Loan constituting Eurodollar Loans with Interest Periods ending prior to such Installment Payment Date and (ii) the aggregate outstanding portion of the Term Loan constituting Fluctuating Rate Loans. "Letters of Credit" shall mean, collectively, all standby letters of credit issued for the account of the Borrower pursuant to Section 2.2 hereof. "Lien" shall mean any mortgage, pledge, security interest, hypothecation, assignment, deposit arrangement, encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction). "Loan" or "Loans" shall mean any loan made by the Bank to the Borrower hereunder whether a Revolving Credit Loan or the Term Loan. "Loan Documents" shall mean this Agreement, the Notes, the Security Agreements, the Pledge Agreement and each document, agreement and instrument executed in connection herewith or pursuant hereto together with each document, agreement and instrument made by the Borrower or any Guarantor with or in favor of or owing to the Bank further evidencing or securing the Loans. "Material Adverse Effect" shall mean (a) a materially adverse effect on the business, asset, operations, prospects or condition, financial or otherwise, of the Borrower and it s Subsidiaries taken as a whole, (b) material impairment of the ability of the Borrower or any Subsidiary to perform any of its obligations under any Loan Document to which it is or will be a party or (c) material impairment of the rights of or benefits available to the Bank under any Loan Document. "Maturity Date" shall mean the date that all or a portion of the outstanding principal balance of a Loan is due and payable pursuant to the terms hereof which shall include without limitation (i) with respect to Revolving Credit Loans, the Termination Date, and (ii) with respect to the Term Loan, each Installment Payment Date and the final Maturity Date of the Term Loan. "Non-Restricted Subsidiary" shall mean any Subsidiary other than a Restricted Subsidiary. "Notes" shall mean collectively the Revolving Credit Note referred to in Section 2.3 hereof and the Term Note referred to in Section 2.9 hereof. "Obligations" shall mean any and all sums owing under the Loan Document and all other obligations, direct or contingent, joint, several or independent, or the Borrower now or hereafter existing due or to become due to, or held or to be held by the Bank, whether created directly or acquired by assignment or otherwise. "Over-Advance Amount" shall mean the additional amount of Revolving Credit Loans made available to the Borrower above the Borrowing Base provided such amount does not exceed $3,000,000 and shall not be outstanding for more than 18 months. "Patent Security Agreement" shall have the meaning assigned thereto in Section 4.1(d) hereof. "Person" shall mean any individual corporation, partnership, joint venture, trust, unincorporated organization or any other juridical entity, or a government or state or any agency or political subdivision thereof. "Plan" shall mean any plan of a type described in Section 4021(a) of ERISA in respect of which the Borrower is an "employer" as defined in Section 3(5) of ERISA. "Pledge Agreement" shall have the meaning assigned thereto in Section 4.2(c) hereof. "Post Default Rate" shall mean any time a rate of interest equal to 4% per annum in excess of the rate that would then be applicable to Fluctuating Rate Loans. "Prime Rate" shall mean the rate of interest established from time to time by the Bank as its "prime rate". "Pro-Bel" shall mean Pro-Bel Limited, a corporation formed under the laws of the United Kingdom. "Real Property" shall mean any real property owned or leased by the Borrower or any of its Subsidiaries or any Guarantor or any of its Subsidiaries. "Reference Bank" shall mean a bank appearing on the display designated as page "LIBOR" on the Reuter Monitor Money Rates Service (or such other page as may replace the LIBOR page on that service for the purpose of displaying London interbank offered rates of major banks); provided that if no such offered rate shall appear on such display, "Reference Bank" shall mean a bank in the London interbank market as reasonably selected by the Bank. "Reportable Event" shall mean any of the events set forth in Section 4043(b) of ERISA or the regulations thereunder. "Requirements of Law" shall mean as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation, or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of f its property or to which such Person or any of its property is subject. "Restricted Subsidiary" shall mean any subsidiary of the Borrower incorporated under the laws of any state of the United States. "Revolving Credit Loan" shall mean a Loan made pursuant to Section 2.3 hereof. "Revolving Credit Note" shall mean the Note referred to in Section 2.2 hereof. "Security Agreement" or "Security Agreements" shall mean, collectively, the General Security Agreement, the Trademark Security Agreement and the Patent Security Agreement and, the case of any Guarantor, shall mean any agreement substantially in the same form as the General Security Agreement. "Subsidiary" or "Subsidiaries" of any Person shall mean any corporation or corporations of which the Person alone, or the Person and/or one or more of its Subsidiaries, owns, directly or indirectly, at least a majority of the Securities having ordinary voting power for the election of directors. "Tangible Net Worth" shall mean the sum of capital surplus, earned surplus and capital stock minus deferred charges, intangibles and treasury stock, all determined in accordance with GAAP. "Termination Date" shall mean March 28, 1999 or, if such date is not a Business Day, the Business Day, next succeeding such date. "Term Loan" shall mean the Loan made pursuant to Section 2.8 hereof. "Term Note" shall mean the Note referred to in Section 2.9 hereof. "Trademark Security Agreement" shall have the meaning assigned thereto in Section 4.1(c) hereof. 1.2 Accounting Terms. As used herein and in any certificate or other document made or delivered pursuant hereto, accounting terms not specifically defined herein shall have the respective meanings given to them under generally accepted accounting principles. SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENT AND TERM NOTE. 2.1 Revolving Credit Commitment. Subject to the terms and conditions hereof, the Bank agrees to extend credit to or on behalf of the Borrower (a) by making revolving credit loans (the "Revolving Credit Loans") from time to time during the Commitment Period and (b) by issuing Letters of Credit for the account of the Company up to an aggregate stated amount at any one time outstanding of (y) Five Million and 00/100 ($5,000,000.00) Dollars in connection with the acquisition of Pro-Bel and (z) Five Hundred Thousand 00/100 ($500,000.00) Dollars for all other purposes, pursuant to Section 2.2 hereof during the Commitment Period, provided that at any time the sum of the aggregate of the principal amount of the Revolving Credit Loan and the Aggregate stated amount of the Letters of Credit shall not exceed the lesser of (i) $10,000,000 or (ii) the sum of (y) the Borrowing Base and (zz) the Over-Advanced Amount, as such amounts may be reduced as provided in this Agreement (the "Commitment"). During the Commitment Period the Borrower may use the Commitment of (i) obtaining Revolving Credit Loans by borrowing, paying, prepaying in whole or in part and reborrowing on a revolving basis, all in accordance with the terms and conditions hereof and (ii) for the issuance of Letters of Credit in accordance with the provisions of Section 2.2 hereof. 2.2 Letters of Credit. (a) Subject to the limitations of Section 2.1 hereof, the Borrower may from time to time during the Commitment Period request the issuance by the Bank of Letters of Credit. Each Letter of Credit shall be issued by the Bank upon receipt and processing of the Bank's normal letter of credit application provided that the Bank need not issue any Letter of Credit that would extend beyond the Termination Date. The Borrower shall pay the Bank, upon issuance of the Letter of Credit, the Bank's standard letter of credit and processing fees. (b) Notwithstanding anything to the contrary herein, if any restriction is imposed on the Bank (including without limitation any change in or limitation upon letters of credit) which would prevent the Bank from issuing Letters of Credit or maintaining its obligation to issue Letters of Credit then the Bank may, by notice to the Borrower in writing, terminate such obligations hereunder. 2.3 Revolving Credit Note. The Revolving Credit Loans made by the Bank to the Borrower pursuant to Section 2.1 hereof shall be evidenced by a promissory note of the Borrower substantially in the form of Exhibit A hereto with appropriate insertions (the "Revolving Credit Note"), payable to the order of the Bank and representing the obligation of the Borrower to pay the lesser of (a) the amount of the Commitment or, (b) the aggregate unpaid principal amount of all Revolving Credit Loans made by the Bank to the Borrower, with interest thereof as hereinafter prescribed. The Revolving Credit Note shall (i) be dated the date of the first Revolving Credit Loan evidenced thereby, (ii) be stated to mature on the Termination Date and (iii) bear interest with respect to the unpaid principal balance thereof from time to time outstanding at a rate per annum to be elected by the Borrower in accordance with the notice provisions set forth in Section 2.4 hereof, and in the case of Eurodollar Loans for the Interest Period therein specified, equal to either (1) 1.75% in excess of the Adjusted Libor Rate or (2) the Prime Rate (which interest rate will change when and as the Prime Rate changes). In all cases interest shall be computed on the basis of a 360-day year for actual days elapsed and shall be payable as provided in this Agreement. After any stated or accelerated maturity, the Revolving Credit Note shall bear interest at the rate set forth in this Agreement. 2.4 Procedure for Borrowings. The Borrower may borrow under the Commitment during the Commitment Period on any Business Day by giving the Bank irrevocable notice of a request for a Loan hereunder (a) in the case of Eurodollar Loans three Business Days before a proposed borrowing or continuation or conversation and (b) i n the case of Fluctuating Rate Loans not less than one nor more than five Business Days before a proposed borrowing or continuation or conversation, setting forth (i) the amount of the Loan requested, which shall not be less than $100,000, (ii) the requested borrowing date or Interest Period commencement date, as the case may be, (iii) whether the borrowing or interest Period is to be for a Eurodollar Loan, Fluctuating Rate Loan or a combination thereof, and (iv) if entirely or partially a Eurodollar Loan, the length of the Interest Period therefore, which shall be one, two, three or six months. As used in this Section 2.4, "conversion" shall mean the conversion from one interest rate to another interest rate as more fully described in this Agreement. Such notice hall be written (including, without limitation, via facsimile transmission) and shall be sufficient if received by 1 p.m. on the date on which such notice is to be given. If any such request is sent by facsimile it shall be confirmed in writing sent by the Borrower to the Bank within two Business Days thereafter. Unless notification is otherwise furnished by the Borrower to the Bank (in a manner consistent with the requirements of this Section), Loans will be made by credits to the Borrower's demand deposit account maintained with the Bank. If the Borrower furnishes such notice but no election is made as to the type of Loan or the Interest Period to be applicable thereto, the Loan will automatically then be made as a Fluctuating Rate Loan until such required information is furnished pursuant to the terms hereof. 2.5 Commitment Fee. As additional compensation for the Commitment on the Revolving basis provided for herein, the Borrower agrees to pay the Bank a commitment fee for the Commitment Period at the rate of 1/4 of 1% per annum on the average daily unused portion of the Commitment hereunder. Such commitment fee shall be payable quarterly, on the last day of each march, June, September and December during the Commitment Period, commencing June 30, 1996, and on the Termination Date. If the Borrower so fails to pay any such amount to the Bank the obligations to make such payment shall bear interest from such date not paid when due at the Post Default Rate. The obligation to so pay interest shall not be construed so as to waive the requirement to pay the commitment fees as hereinabove set forth. 2.6 Regulatory Changes in Capital Requirements. If any existing or future law, regulation or guideline or the interpretation thereof by any court or administrative or governmental authority charge with the administration thereof or compliance by the Bank with any request or directive (whether or not having the force of law) of any such authority, imposes, modifies, deems applicable or results in the application of, any capital maintenance, capital ratio or similar requirement against loan commitments made by the Bank (or participation therein) or the Bank in anticipation of the effectiveness of any capital maintenance, capital ratio or similar requirement takes reasonable action to enable itself to comply therewith, an the result thereof is to impose upon the Bank or increase any capital requirement applicable as a result of the making or maintenance of the Commitment or participation therein (which imposition of or increase in capital requirements may be determined by the Bank's reasonable allocation of the aggregate of such capital impositions or increases) then, upon demand by the Bank, the Borrower shall immediately pay to the Bank from time to time as specified by the Bank additional commitment fees which shall be sufficient to compensate the Bank for such impositions of or increases in capital requirements, together with interest on each such amount from the date demanded until payment in full thereof at the Post Default Rate. A certificate setting forth in reasonable detail the amounts necessary to compensate the Bank as a result of an imposition of or increase in capital requirements submitted by the Bank to the Borrower shall be conclusive, absent manifest error or bad faith, as to the amount thereof. For purposes of this Section, (a) in calculating the amount necessary to compensate the Bank for any imposition of or increase in capital requirements, the Bank shall be deemed to be entitled to a rate of return on capital (after federal, state and local taxes) of fifteen per cent per annum, and (b) all references to the "Bank" shall be deemed to include any participant in the Commitment. 2.7 Termination or Reduction of Commitment. The Borrower shall have the right, upon not less than three Business Days' irrevocable written notice, to terminate the Commitment or, from time to time, to reduce the amount of the Commitment, provided that (a) any such reduction (i) shall be in the minimum amount of $100,000 or a multiple thereof, (ii) shall reduce permanently the amount of the Commitment then in effect, and (iii) shall be accompanied by prepayment of the Revolving Credit Loans outstanding to the extent, if any, that the Loans then outstanding exceed the amount of the Commitment as then reduced, together with accrued interest on the amount so prepaid to and including the dates of each such prepayment and any amounts payable pursuant to Section 2.15 in connection therewith and the payment of any unpaid commitment fee then accrued hereunder, and (b) any such termination of the Commitment shall be accompanied by prepayment in full of the Revolving Credit Loans outstanding and together with accrued interest thereon to and including the date of prepayment and any amounts payable pursuant to Section 2.15 in connection therewith and the payment of any unpaid commitment fee then accrued hereunder. 2.8 Term Loan. Subject to the terms and conditions hereof, the Bank agrees to make a term loan to the Borrower (the "Term Loan") in the principal amount of $8,000,000. 2.9 Term Note. The Term Loan made by the Bank to the Borrower pursuant to Section 2.8 hereof shall be evidenced by a promissory note of the Borrower substantially in the form of Exhibit B hereto with appropriate insertions (the "Term Note") and dated the date of the Term Loan. The principal amount of the Term Note shall be payable in sixteen (16) consecutive quarterly installments of $500,000 each payable on the first day of each calendar quarter following the date of the making of the Term Loan and the final installment equal to the then unpaid principal balance of the Term Note together with all interest accrued and unpaid shall be paid in full four years from the date of the making of the Term Loan. The Term note shall bear interest on the unpaid principal amount thereof from time to time outstanding at a rate per annum, to be elected pursuant to the provisions of this Agreement equal to either (i) 2.0% in excess of the Adjusted Libor Rate or (ii) the prime Rate (which interest rate shall change when and as the Prime Rate changes). In all cases interest shall be computed on the basis of a 360 day year for actual days elapsed and shall be payable as provided in this Agreement. After any stated or accelerated maturity thereof, the Term Note shall bear interest at the rate set forth in this Agreement. 2.10 Continuation and Conversion of Loans. The Borrower shall have the right at any time on prior irrevocable written or telex notice to the Bank as specified in this Agreement (i) to continue any Loan into a subsequent Interest Period, (ii) to convert any Eurodollar Loan into a Fluctuating Rate Loan and (iii) to convert any Fluctuating Rate Loan into a Eurodollar Loan (specifying the Interest Period to be applicable thereto), subject to the following: (a) in the case of a conversion of less than all of the outstanding Loans, the aggregate principal amount of Loans converted shall not be less than $100,000 and shall be an integral multiple thereof; (b) no Loan (other than a Fluctuating Rate Loan) shall be converted at any time other than at the end of an Interest Period applicable thereto; and (c) any portion of a Loan maturing or required to be prepaid in less than one month may not be converted into or continued as a Eurodollar Loan. In the event that the Borrower shall not give notice to continue any Eurodollar Loan into a subsequent Interest Period or convert any such Loan into a Loan of another type, on the last day of the Interest Period thereof, such Loan (unless prepaid) shall automatically be converted into a Fluctuating Rate Loan. The Interest Period applicable to any Eurodollar Loan resulting from a conversation or continuation shall be specified by the Borrower in the irrevocable notice delivered by the Borrower pursuant to this Agreement; provided, however, that, if such notice does not specify either the type of Loan or the Interest Period to be applicable thereto, the Loan shall automatically be converted into, or continued as, as the case may be, a Fluctuating Rate Loan until such required information is furnished pursuant to the terms hereof. Notwithstanding anything to the contrary contained above, if an Event of Default shall have occurred and is continuing, no Eurodollar Loan may be construed into a subsequent Interest Period and no Fluctuating Rate Loan may be converted into a Eurodollar Loan. 2.11 Prepayment. (a) Voluntary. The Borrower may prepay any Fluctuating Rate Loan in whole or in part without premium or penalty; provided, however, that each partial prepayment on account of any Fluctuating Rate Loan shall be in an amount not less than $100,000. Except as provided otherwise in Section 2.15 hereof, the Borrower may not prepay any Eurodollar Loan prior to the last day of the Interest Period therefor. Any amount prepaid on account of a Revolving Credit Loan may be borrowed in accordance with the provisions of Section 2.1 hereof. Any partial prepayment of the Term Loan shall be applied to the last maturing installments in inverse order or their respective maturities. (b) Mandatory. If, at any time, the aggregate outstanding principal balance of Loans exceeds the Borrowing Base, within ten Business Days of the first day there exists such excess the Borrower shall make payment to the bank in an amount equal to such excess together with any amounts payable pursuant to Section 2.15 in connection therewith. Such payment shall be applied to reduce the aggregate unpaid principal balance of Loans then outstanding. Any partial prepayment of the Term Loan shall b e applied to the last maturing installments in inverse order of their respective maturities. Each prepayment shall be made together with payment of accrued interest on the amount prepaid to an including the date of prepayment. 2.12 Interest Payments; Manner of Payments; Rate After Default; Schedule to Note. (a) Interest accrued on each Loan shall be payable, without application, on: (i) the Maturing Date of such Loan (excluding any Installment Payment Date unless interest would otherwise be payable on such Installment Payment Date pursuant to subsections (ii) - (vi) below); (ii) with respect to any portion of any Loan repaid or prepaid pursuant to this Agreement, the date of such repayment or prepayment, as the case may be; (iii) with respect to that portion of the outstanding principal amount of all Loans maintained as Fluctuating Rate Loans, the first day of each month, commencing with the first such date following the date of the making of such Loans; (iv) with respect tot that portion of the outstanding principal amount maintained as Eurodollar Loans, the last day of each applicable Interest Period (and, if such Interest Period shall exceed three months, o on the last day of each three-month period occurring during such Interest Period), but in no event more frequently than monthly; (v) with respect to tht portion of the outstanding principal amount converted into Fluctuating Rate Loans or Eurodollar Loans on a day when interest would not otherwise have been payable pursuant to Subsections (a) (iii) or (a) (iv), the date of such conversion. (b) All payments (including prepayments) to be made by the Borrower on account of principal or interest with respect to any Loan or on account of fees or any other obligations of the Borrower to the Bank hereunder shall be made to the Bank at the office of the Bank set forth in Section 10.1 hereof or at such other place as the Bank may from time to time designate in writing in lawful money of the United States of America in immediately available funds. The Borrower hereby authorizes and directs the Bank to charge any account of the Borrower maintained at any office of the Bank for any such payments. Subject to the provisions of subparagraph (a) in the definition of Interest Period set forth in Section 1.1 hereof, if any payment to be so made hereunder, or under either Note, becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day and, to the extent permitted by applicable law, interest thereon shall be payable at the then applicable rate during such extension. (c) Upon the following an Event of Default, all Loans, and any and all accrued and unpaid interest, fee or amount due hereunder, to the extent permitted by applicable law, shall bear interest (payable on demand, and in any event on the last day of each month, and computed daily on the basis of a 360-day year for actual days elapsed) (i) in the case of Fluctuating Rate Loans at the Post Default Rate until paid and (ii) in the case of Eurodollar loans at a rate which shall be the greater of the Post Default Rate or 4% per annum in excess of the rate applicable to such Eurodollar Loan until the expiration of the Interest Period applicable to such Loan, at which time the Loan will automatically be converted into a Fluctuating Rate Loan and until paid shall bear interest at the Post Default Rate. In no event, however, shall interest payable hereunder be in excess of the maximum rate of interest permitted under applicable law. The obligation to so pay interest upon any obligation of the Borrower to the Bank shall not be construed so as to waive the requirement for payment on the same date that payment is to be made to the Bank as set forth in this Agreement. (d) The Borrower hereby expressly authorizes the Bank to record on the schedule attached to the Revolving Credit Note the amount and date of each Revolving Credit Loan, the rate of interest thereon, the date and amount of each payment of principal and the unpaid principal balance; provided, however, that the failure of the Bank to make any such notation shall not in any manner affect the obligation of the Borrower to repay any Loan in accordance with the terms hereof. All such notations shall be presumed to be correct absent manifest error. 2.13 Use of Proceeds. Proceeds of the Revolving Credit Loans shall be used for working capital purposes and for acquisitions approved by the Bank including the acquisition of Pro-Bel. Al or a portion of the proceeds of the initial Revolving Credit loan shall be used to repay in full all indebtedness owing to the CIT Group. Proceeds of the Term Loan shall be used as partial payment of the acquisition price of Pro-Bel and for working capital purposes. 2.14 Increased Costs. If the Bank reasonably determines that the effect of any applicable law or government regulation, guideline or order or the interpretation thereof by any Governmental Authority charged with the administration thereof (such as, for example, a change in official reserve requirements which the Bank is required to maintain in respect of loans or deposits or other funds procured for funding such loans) is to increase the cost to the Bank of making or continuing Eurodollar Loans hereunder or to reduce the amount of any payment of principal or interest receivable by the Bank thereon, then the Borrower will pay to the Bank on demand such additional amounts as the Bank may reasonable determined to be required to compensate the Bank for such additional costs or reduction. Any additional payment under this section will be computed from the effective date at which such additional costs have to be borne by the Bank. A certificate as to any additional amounts payable pursuant to this Section setting forth the basis and method of determining such amounts shall be conclusive, absent manifest error, as to the determination by the Bank set forth therein if made reasonable and in good faith. The Borrower shall pay any amounts so certified to it by the Bank within 10 days of receipt of any such certificate. For purposes of this Section, all references to the "Bank" shall be deemed to include any participant in the Commitment and/or Loans. 2.15 Indemnities. The Borrower hereby indemnifies the Bank against an and all loss and reasonable expenses which the Bank may sustain or incur as a consequence of any of the following: (a) default in payment of the principal amount of any Eurodollar Loan or any part thereof or interest accrued thereon, or any other amount due in connection with the Loan Documents; (b) the occurrence of any other Default under this Agreement; (c) the failure of the Borrower to borrow a Eurodollar Loan after sending notice of the amount and requested interest rate with respect to the making of any such Loans; (d) the receipt or recovery by the Bank of all or any part of a Eurodollar Loan on any Installment Payment Date or prior to the maturity or the last day of the Interest Period thereof (whether by prepayment, acceleration or otherwise); or (e) the conversation prior to the last day of an applicable Interest Period, or a Eurodollar Loan into a Fluctuating Rate Loan. Without limiting the effect of the foregoing, the amount to be paid by the Borrower to the Bank in order to so indemnify the Bank for any loss occasioned by any of the events described in the preceding paragraph, and as liquidated damages therefor, shall be equal to the excess, discounted to its present value as of the date paid to the Bank, of (i) the amount of interest which otherwise would have accrued on the principal amount so received, recovered, converted or not borrowed during the period (the "Indemnity Period') commencing with the date of such receipt, recovery, conversion, or failure to borrow to the last day of the applicable Interest Period for such Eurodollar Loan at the rate of interest applicable to such Loan (or the rate of interest agreed to in the case of a failure to borrow) provided for herein (prior to a Default) over (ii) the amount of interest which would be earned by the Bank during the Indemnity Period if it invested the principal amount so received, recovered, converted or not borrowed at the rate per annum determined by the Bank as the rate it would bid in the London interbank market for a deposit of Eurodollar in an amount approximately equal to such principal amount for a period of time comparable to the Indemnity Period. A certificate as to any additional amounts payable pursuant to this Section setting forth the basis and method of determining such amounts shall be conclusive, absent manifest error, as to the determination by the Bank set forth therein if made reasonably and in good faith. The Borrower shall pay any amounts so certified to it by the Bank within 10 days of receipt of any such certificate. For purposes of this Section, all references to the "Bank" shall be deemed to include any participant in the Commitment and/or Loans. 2.16 Alternate Rate of Interest. In the event, and on each occasion, that on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Loan, the Bank shall have determined (i) that dollar deposits in the amount of the requested principal amount of such Eurodollar Loan are not generally available in the London Interbank Market, (ii) that the rate at which such dollar deposits are being offered will not adequately and fairly reflect the cost to the Bank of making or maintaining such Eurodollar Loan during such Interest Period, or (iii) that reasonable means do not exist for ascertaining the Adjusted Libor Rate, the Bank shall, as soon as practicable thereafter, give written or telex notice of such determination to the Borrower. In the event of any such determination, until the circumstances giving rise to such notice no longer exist, no Eurodollar Loans will be made hereunder. Each determination by the Bank hereunder shall be conclusive absent manifest error. 2.17 Change in Legality. (a) Notwithstanding anything to the contrary herein contained, if any change in any law or regulation or in the interpretation thereof by any governmental authority charge with the administration or interpretation thereof shall make it unlawful for the Bank to make or maintain any Eurodollar Loan, then, by written notice to the Borrower, the Bank may: (i) declare that Eurodollar Loans will not thereafter be made by the Bank hereunder, whereupon the Borrower shall prohibited from the requesting Eurodollar Loans from the Bank hereunder unless such declaration is subsequently withdrawn; and (ii) require that all outstanding Eurodollar Loans made by it be converted to Fluctuating Rate Loans, in which event (x) all such Eurodollar Loans shall be automatically converted to Fluctuating Rate Loans a of the effective date of such notice a provided in paragraph (b) below and 9y) all payments and prepayments of principal which would otherwise have been applied to repay the converted Eurodollar Loans shall instead be applied to repay the Fluctuating Rate Loans resulting from the conversion of such Eurodollar Loans. (b) For purposes of this Section, (i) a notice to the Borrower by the Bank pursuant to paragraph (a) above shall be effective, if lawful, on the last day of the then current Interest Period; in all other cases, such notice shall be effective on the day of receipt of the Borrower and (ii) all references to the "Bank" shall be deemed to include any participants in the Commitment and/or the loans. SECTION 2. REPRESENTATIONS AND WARRANTIES. In order to induce the Bank to enter into this Agreement and to make the financial accommodations herein provided for, the Borrower hereby covenants, represents and warrants to the Bank that: 3.1 Financial Condition. The consolidated balance sheet of the Borrower and its consolidated Subsidiary as at December 31, 1994 and the related consolidated statement of operations, shareholders' equity and cash flows for the fiscal year ended on such date, certified by Ernst & Young, LLP, copies of which certified statements have heretofore been furnished to the Bank, are complete and correct and present fairly the financial condition of the Borrower and its consolidated Subsidiary as at such date, and the results of its operations for the fiscal year then ended and the interim financial statements of the Borrower and its consolidated Subsidiary s at September 30, 1995 and the related consolidated statements of operations, shareholders' equity and cash flows for the fiscal quarter then ended on such date prepared by management of the Borrower and certified as true and correct by the chief financial officer of the Borrower, copies of which statements have heretofore been furnished to the Bank, are complete and correct and present fairly the financial condition of the Borrower and its consolidated Subsidiary as at such date, and the results of its operations for the fiscal quarter then ended. Such financial statements, including schedules and notes thereto, have been prepared in accordance with GAAP. neither the Borrower nor its consolidated Subsidiary has any material contingent obligations, contingent liabilities or liabilities for taxes, long-term leases or unusual forward or long-term commitments, which are not reflected in the foregoing certified statements or in the notes thereto. Since the date of the aforementioned financial statements, there has been no material adverse change in the business, operations, assets or financial or other condition of the Borrower or its consolidated Subsidiary. 3.2 Corporate Existence; Compliance with Law. Each of the active Subsidiaries of the Borrower is indicated on Schedule A attached hereto. The Borrower and each of its Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (b) has the corporate power and authority and the legal right to own and operate its property, and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership or operation of property or the conduct of its business require such qualification, and (d) is in compliance with all Requirements of Law; except to the extent that the failure to so qualify as a foreign corporation as required by clause (c) of this Section or to comply with all Requirements of Law as required by clause (d) of this Section could not, in the aggregate, have a material adverse effect on the business, operations, property or financial or other condition of any such Person, and could not materially adversely affect the ability of the Borrower or any Guarantor to perform its obligations under any Loan Document to which it is a party. 3.3 Corporate Power; Authorization; Enforceable Obligations. The Borrower has the corporate power and authority and the legal right to make, execute, deliver and perform its obligations under the Loan Documents to which it is a party and to borrow hereunder and has taken all necessary corporate action to authorize the borrowings on the terms and conditions of the Loan Documents and to authorize the execution, delivery and performance of the Loan Documents. No consent or authorization of, filing with, or other act by or in respect of any other Person (including stockholders and creditors of the Borrower) or any Governmental Authority, is required in connection with the borrowings hereunder or with the execution, connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of the Loan Documents. The Loan Documents will be duly executed the delivery on behalf of the Borrower and, the executed and delivered, will each constitute a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally. 3.4 Power, Authorization, Enforceable Obligations of Guarantors. Each Guarantor, if any, has the power and authority and the legal right to make, deliver and perform its Guarantee and Security Agreement and the transactions contemplated thereby and has taken all necessary corporate action to authorize the execution, delivery and performance of its Guarantee and Security Agreement. No consent or authorization of, filing with, or other act by or in respect of any other Person (including stockholders and creditors of the Guarantors) or any Governmental Authority is required in connection with the execution, delivery, performance, validity or enforceability of such Guarantee or Security Agreement. Each Guarantee and each Security Agreement have been duly executed and delivered by the respective parties thereto, and each such document constitutes a legal, valid and binding obligation of the respective Guarantor enforceable against such Guarantor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditor's rights generally. 3.5 No Legal Bar. The execution, delivery and performance of the Loan Documents and the Borrowings hereunder and the use of the proceeds thereof by the Borrower and the execution, delivery and performance of the Guarantees and Security Agreements by the Guarantors, if any, will not violate any Requirements of Law or any Contractual Obligation of the Borrower or the Guarantors, and will not result in, or require, the creation or imposition of any Lien on any of its properties or revenues pursuant to any Requirements of Law or Contractual Obligation except those in favor of the Bank provided herein. 3.6 No Material Litigation. No litigation, investigation or proceedings of or before any arbitrator or Governmental Authority is pending by or against the Borrower or any Subsidiary or against any of their properties or revenues with respect to the Loan Documents or any of the transactions contemplated hereby or thereby, which would have a Material Adverse Effect. 3.7 No Default. Neither the Borrower no any Subsidiary is in default under or with respect to any Contractual Obligation in any respect which could have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing. 3.8 No Burdensome Restrictions. No Contractual Obligation of the Borrower or any Subsidiary and no Requirement of Law would have a Material Adverse Effect. 3.9 Taxes. The Borrower and its Subsidiaries have filed or caused to be filed all tax returns which to the knowledge of the Borrower are required to filed, and have paid all taxes shown to be due and payable on said returns or on any assessments made against them or any of their property except such taxes, if any, as are being contested in good faith and by property proceedings and as to which adequate reserves have been maintained. 3.10 Federal Regulations. The Borrower is not engaged nor will it engage, principally or as one of its important activities, in the business of extending credit for the purpose of "purchasing" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. No part of the proceeds of any Loans hereunder will be used for "purchasing" or "carrying" "margin stock" as so defined or for any purpose which violates, or which would be inconsistent with the provisions of the Regulations of such Board of Governors. 3.11 Environmental Matters. (a) To the knowledge of the Borrower, none of the Real Property contains, or has previously contained, any hazardous or toxic waste or substances or undergrounds storage tanks except in compliance with all applicable Environmental Laws. (b) The Borrower's and each Subsidiary's use of the Real Property is in compliance with all applicable Environmental Laws affecting such Real Property, and, to the knowledge of the Borrower and each Subsidiary, there are no environmental conditions which could interfere with the continued use of the Real Property. (c) Neither the Borrower nor any of its Subsidiaries has received any notice of violations or advisory action by regulatory agencies regarding environmental control matters or permit compliance which would have a Material Adverse Effect. (d) To the knowledge of the Borrower and each Subsidiary, hazardous waste has not been transferred from any of the Real Property to any other locations which is not in compliance with all applicable Environmental Laws or permit requirements. (e) With respect to the Real Property, to the knowledge of the Borrower, there are no proceedings, governmental administrative actions or judicial proceedings pending or, to the best knowledge of the Borrower, contemplated under any federal, state or local law regulating the discharge of hazardous or toxic materials or substances into the environment, to which the Borrower or any of its Subsidiaries is named as a party. 3.12 Representations and Warranties Related to the Acquisition Documents. Upon the making of the Term Loan, the Borrower represents and warrants to the Bank that: (a) The Borrower has delivered to the Bank a complete and correct copy of the Acquisition Documents. (b) Each of the representations and warranties given by the Borrower in the Acquisition documents is true and correct in all material respects as of the date of the making of the Term Loan. SECTION 4. CONDITIONS PRECEDENT. 4.1 Conditions to Initial Revolving Credit Loan. The obligation of the Bank to make the initial Revolving Credit Loan to the Borrower hereunder is subject to the satisfaction of the following conditions precedent: (a) Revolving Credit Note. The Bank shall have received the Revolving Credit Note conforming to the requirements hereof and duly executed by the Borrower. (b) General Security Agreement. The Bank shall have received a general security agreement (the "General Security Agreement") duly executed by the Borrower together with - UCC-1 financing statements - security agreement questionnaire - UCC-11 searches - UCC-3 termination statements from the CIT Group - insurance certificate naming the Bank as loss payee - an assignment to the Bank of the Ex-Im Bank insurance policy (c) Trademark Security Agreement. The Bank shall have received a trademark collateral security agreement (the "Trademark Security Agreement") duly executed by the Borrower together with a trademark registration form and same shall have been submitted for filing with the U.S. Commissioner of Patents and Trademarks together with - trademark searches - evidence of termination of any security interests in the trademarks (d) Patent Security Agreement. The Bank shall have received a patent collateral security agreement (the "patent Security Agreement") duly executed by the Borrower together with a patent registration form and same shall have been submitted for filing with the U.S. Commissioner of Patents and Trademarks together with - patents searches - evidence of termination of any security interests in the patents (e) Landlord Waivers. The Bank shall have received executed landlord waivers from all landlords of premises leased by the Borrower where equipment or inventory of the Borrower is located. (f) Borrowing Base Certificate. The Bank shall have received and satisfactorily reviewed a Borrowing Base Certificate as set forth in Section 5.2 (c) hereof. (g) Legal Opinion. The Bank shall have received a favorable opinion of counsel to the Borrower substantially in the form of Exhibit D hereto. Such opinion shall also cover such other matter incident to the transactions contemplated by this Agreement as the Bank shall reasonable require. (h) Certified Copies and Other Documents: The Bank shall have received such certificates and other documents relating to the Borrower with respect to the matters herein contemplated as the Bank may request, including but not limited to: (1) Certificate of good standing from the New York Secretary of State and certificates of authority to do business from each other jurisdiction in which the Borrower conducts business; (2) Certificate of incorporation certified by the New York Secretary of State; (3) An Officers' Certificate dated the date of this Agreement certifying, (x) true and correct copies of the by-laws of the Borrower as in effect on the date of adoption of the resolutions referred to in (y) of this subsection (3), (y) true and correct copies of the resolutions adopted by the board of directors of the Borrower (i) authorizing the borrowings from the Bank hereunder, the execution and delivery by the Borrower of the Loan Documents to which it is a party and the performance by the Borrower of its obligations under the Loan Documents and the granting of the lien and security interest contemplated thereby, (ii) approving forms in substantially execution form of the Loan Documents, and (iii) authorizing officers of the Borrowers to execute and deliver the Loan Documents and any related documents, and (z) the incumbency and specimen of the officers of the Borrower executing any documents delivered to the Bank by the Borrower in connection with the Loans. (i) Field Audit. The Bank shall have conducted a field audit of the Borrower's assets which shall be satisfactory in all respects to the Bank. (j) Commitment Letter. The Borrower shall have satisfied all the terms and conditions of the Commitment Letter. (k) Fees. There shall have been delivered to the Bank evidence of payment of the Bank's commitment fee in the amount of $75,000 and of the Bank's attorney's fees and disbursements. (l) Additional Matters. All other documents and legal matters in connection with the transactions contemplated by this Agreement shall be satisfactory in form and substance to the Bank and its counsel. 4.2 Conditions on the Term Loan. The obligation of the Bank to make the Term Loan to the Borrower hereunder is subject to the satisfaction of the following conditions precedent: (a) Section 4.1 Conditions. Each of the conditions set forth in Section 4.1 shall have b been satisfied. (b) Term Note. The Bank shall have received the Term note conforming to the requirements hereof and duly executed by the Borrower. (c) Pledge Agreement. The Bank shall have received a pledge agreement (the "Pledge Agreement") duly executed by the Borrower pledging all of the shares of stock of Pro-Bel together with - the original share certificates of Pro-Bel - Form U-1 - Stock powers (d) Borrowing Base Certificate. The Bank shall have received a Borrowing Base Certificate as set forth in Section 5.2(c) hereof: (e) Legal Opinion. The Bank shall have received a favorable opinion of counsel to the Borrower substantially in the form of Exhibit D hereto as it pertains to the Term Loan. Such transactions contemplated by this Agreement as the Bank shall reasonably require. (f) Certified Copies and Other Documents. The Bank shall have received such certificates and other documents relating to Pro-Bel with respect to the matters herein contemplated as the Bank may request, including, but not limited to: (1)certificate of good standing (or equivalent) from the applicable United Kingdom authority; (2) certificate of incorporation (or equivalent) certified by the applicable United Kingdom authority; (3) an Officers' Certificate dated the date of Agreement certifying, true and correct copies of the by-laws of Pro-Bel as in effect on the date of this Agreement; (4) an opinion of counsel to pro-Bel as to its corporate existence. (g) Pro-Bel Acquisition Documents. The Bank shall have received executed copies of the Acquisition Documents which shall be satisfactory in all respects to the Bank. (h) Pro-Bel Financial Statements. The Bank shall have received audited financial statements of Pro-Bel for fiscal years 1993-1995. 4.3 Conditions to All Loans. The obligation of the Bank to make any Loan (including the initial Revolving Credit Loan and the Term Loan) to be made by it hereunder is subject to the satisfaction of the following conditions precedent. (a) Representation and Warranties. The representations and warranties made by the Borrower herein or which are contained in by the Borrower or any Subsidiary at any time under or in connection herewith, shall be correct in all material respects on and as of the borrowing date for such extension of credit as if made on and as of such date. (b) No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing on the date an extension of credit is to be made or after giving effect to the extension of credit to be made on such date. (c) Compliance with Borrowing Base. After taking into account the Loan or extension of credit to be made, all outstanding extensions of credit together with the requested extension of credit shall not exceed the Borrowing Base, except to the extent of the Over-Advance Amount. Each borrowing by the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the date of each such borrowing that the conditions in clauses (a), (b), and (c) of this Section have been satisfied. SECTION 5. AFFIRMATIVE COVENANTS. The Borrower hereby agrees that, so long as the Commitment remains in effect, any Note remains unpaid, or any other amount is owing to the Bank hereunder, the Borrower will and will cause each Subsidiary to and, with respect to Sections 5.1, 5.3, 5.4, 5.5, 5.7, 5.8, and 5.10, each Non-Restricted Subsidiary to: 5.1 Corporate Existence and Qualification. Take the necessary steps to preserve its corporate existence and its right to conduct business in all states in which the failure to so preserve its corporate existence or right to conduct business could have a Material Adverse Effect. 5.2 Financial Information and Compliance Certificates. (a) Keep its books of account in accordance with good accounting practices and furnish to the Bank; (1) As soon as available, but not more than one hundred twenty (120) days after the closing of each fiscal year, the consolidated financial statements of the Borrower and its consolidated subsidiaries, including a consolidated balance sheet with related consolidated statements of income, retained earnings and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all prepared in accordance with GGAP consistently applied and certified by Price Waterhouse, CPAs or another firm of independent certified public accountants reasonably to the a Bank. (2) As soon s available, but not more than forty-five 945) days after the close of the first three fiscal quarters of each fiscal year, the consolidated financial statements of the Borrower and its consolidated subsidiaries including consolidated balance sheet with related consolidated statements of income, related earnings and cash flows as at the end of such quarter, all prepared in accordance with GAAP consistently applied and prepared by management and certified as true and correct by the chief financial officer of the Borrower. (3) As soon as available, but not more than one hundred twenty (120) days after the closing of each fiscal year, the consolidating financial statements of the Borrower and its consolidated subsidiaries, including a consolidating balance sheet with related consolidating statements of income, retained earnings and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all prepared in accordance with GAAP consistently applied and prepared by Price Waterhouse, CPAs or another firm of independent certified public accountants reasonable acceptable to the Bank. (4) As soon as available, but not more than forty-five (45) days after the close of the first three fiscal quarters of each fiscal year, the consolidating financial statements of the Borrower and its consolidated subsidiaries including a consolidating balance sheet with related consolidating statement of income, retained earnings and cash flows as at the end of such quarter, all prepared in accordance with GAAP consistently applied and prepared by management and certified as true and correct by the chief financial officer of the Borrower. (5) With reasonable promptness, such other data as may be reasonably requested by the Bank including, but not limited to copies of the annual reports, regular periodic and special reports, schedules or other material which the Borrower may not or hereafter be required to file with or deliver to any securities exchange or the Securities and Exchange Commission or any domestic or non-domestic regulatory body and will, during regular business hours and upon reasonable notice, permit the Bank by or through any of its officers, agents, employees, attorneys, or accountants to inspect and make extracts from such Borrower's books and records. (b) At the same time as it delivers the financial statements called for by Section 5.2(a), deliver a certificate of the chief financial officer of the Borrower evidencing a computation of compliance with the provisions of Section 6 hereof and stating that in each case except as disclosed in such certificate, the person making such certificate has no knowledge of any Default or Event or Default. (c) Deliver to the Bank an accounts receivable aging schedule reflecting aging of receivables from invoice date accompanied by a Borrowing Base Certificate indicating computation of the Borrowing Base promptly upon request of the Bank and monthly (not later than 20 days after the last day of each month) covering the period ending the last day of the immediately preceding month. (d) Within 5 days of any officer of the Borrower obtaining knowledge of any Default, if such Default is then continuing, Borrower shall furnish to the Bank a certificate of the chief financial officer of the Borrower setting forth the details thereof and the action which the Borrower is taken or proposes to take with respect thereto. 5.3 Insurance. Maintain insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower operates and naming the Bank as an additional insured and loss payee thereon as its interest may appear and maintain an Export Credit Insurance Policy from Em-Im Bank in amounts and coverage acceptable to the Bank and name the Bank as assignee thereunder. 5.4 Preservation of Properties; Compliance with Law. Maintain and preserve all of its properties which hare used or which hare useful in the judgment of the Borrower in the conduct of its business in good working order and condition, ordinary wear and tear excepted; comply with all Requirements of Law except where contested in good faith and by proper proceedings if appropriate reserves are maintained with respect thereto. 5.5 Taxes. Duly pay and discharge all taxes or other claims which might become a lien upon any of its property except to the extent that any thereof are being in good faith appropriately contested with adequate reserves provided therefore. 5.6 Maintain Operating Accounts. Maintain all of its primary operating accounts with the Bank. 5.7 Notice of Litigation. Promptly notify the Bank in writing of any litigation, legal proceeding or dispute, other than disputes in the ordinary course of business or, whether or not in the ordinary course of business, involving amounts in excess of Three Hundred Fifty Thousand and 00/100 ($350,000.00) Dollars, affecting the Borrower or any Subsidiary whether or not fully covered by insurance, and regardless of the subject matter thereof (excluding, however, any actions relating to workers' compensation claims or negligence claims relating to use of motor vehicles, if fully covered by insurance, subject to deductibles). 5.8 Indemnity (Environmental Matters). Indemnify the Bank against any liability, loss, cost, damage, or expense (including, without limitation, reasonable attorney's fees) arising from (i) the imposition or recording of a lien by any local, state, or federal government or governmental agency or authority pursuant to any Environmental Laws; (ii) claims of any private parties regarding violations of Environmental Laws; and (iii) costs and expenses (including, without limitation, reasonable attorneys' fee and fees incidental to the securing of repayment of such costs and expenses) incurred by the Borrower, any Subsidiary or the Bank in connection with compliance by the Borrower, any Subsidiary or the Bank with any statute, regulation or order issued pursuant to any Environmental Laws by any local state or federal government or governmental agency or authority. 5.9 New Subsidiaries: Cause any Restricted Subsidiary of the Borrower formed after the date of this Agreement to become a guarantor of all debts and obligations of the Borrower under this Agreement and grant a security interest o the Bank in all of its personal property to secure such guarantee pursuant to a security agreement on the Bank's landlord form and cause such Restricted Subsidiary to execute an agreement, in form satisfactory to the Bank, subjecting it to the affirmative and negative covenants contained in this Agreement. 5.10 Books and Records; Field Audit: Keep proper books of record and account in accordance with GAAP and permit the Bank or its duly authorized agents to examine the books and records of the Borrower, such authorization to include, without limitation, the annual field audit, test or examination of any or all of the assets of the Borrower at the Borrower's expense (and, if more frequently than annually, at the Bank's expense). SECTION 6. FINANCIAL COVENANTS. 6.1 The Borrower hereby agrees that, so long as the Commitment remains in effect, any Note remains outstanding and unpaid, or any other amount is owing to the Bank hereunder, the Borrower and its Restricted Subsidiaries on a consolidated basis will: (a) Current Ratio. Maintain at all times during the periods set forth below a ratio of current assets to current liabilities in a portion not less than that designated opposite each such period: Period Minimum From Through Current Ratio Date hereof - 12/30/97 1.4 to 1.0 12/31/97 and at all times thereafter 2.0 to 1.0 (current assets and current liabilities to be determined in accordance with GAAP; provided, however, that solely for purposes of calculating compliance with this covenant, principal amounts outstanding under the Revolving Credit Loans and the Term Loan shall be considered current liabilities). (b) Minimum Quick Ratio. Maintain at all times during the periods designated below a ratio of cash, cash equivalents and accounts receivable to current liabilities in a proportion not less than that designated opposite each such period: Period Minimum From Through Quick Ratio Date hereof - 12/30/97 .85 to 1.0 12/31/97 and at all times thereafter 1.25 to 1.0 (current liabilities to be determined in accordance with GAAP; provided, however, that solely for purposes of calculating compliance with this covenant, principal amounts outstanding under the Revolving Credit Loans and the Term Loan shall be considered current liabilities). (c) Minimum Debt Service Coverage Ratio. Maintain as at the last day of each fiscal year a ratio of the sum of earnings before interest and taxes plus depreciation and amortization for such fiscal year divided by the sum of interest expense plus the current portion of long term debt at such time plus capital expenditures and additions to capitalized software development costs made in such fiscal year of at least 2.0 to 1.0 ("long term debt" means indebtedness for borrowed money which by its terms matures more than 12 months after the date incurred or if maturing sooner, the maturity thereof may be extended at the option of the debtor beyond such 12 month period). (d) Domestic Tangible Net Worth. Maintain at all times during fiscal year 1996 Domestic Tangible Net Worth of at least $19,400,000, to increase by at least $2,000,000 at each fiscal year end thereafter above the level attained as at the close of the immediately preceding fiscal year (solely for purposes of calculating compliance with this covenant, Domestic Tangible net Worth shall be net of (i) any increases in common stock and additional paid in capital resulting from or due to the acquisition of any Person or joint venture with any Person or any similar arrangement), (ii) any increase in common stock and additional paid in capital due to a public offering and (iii) the accounting effect of the consolidation of the liabilities or assets attributable to the acquisition of or investment in any non-Restricted Subsidiaries. (e) Leverage Ratio. Maintain at all times during the periods designated below a ratio of total liabilities to Domestic Tangible Net Worth in a proportion not more than that designated opposite each such period: Period Maximum From Through Leverage Ratio Date hereof - 12/30/97 1.5 to 1.0 12/31/97 and at all times thereafter 1.0 to 1.0 (total liabilities to be determined in accordance with GAAP). 6.2 The Borrower hereby agrees that, so long as the Commitment remains in effect, any Note remains outstanding and unpaid, or any other amount is owing to the Bank hereunder, the Borrower and its consolidated Subsidiaries will maintain at all times during fiscal year 1996 Tangible Net Worth on a consolidated basis of at least $19,400,000, to increase by at least $2,000,000 in each fiscal year thereafter above the level attained as at the closed of the immediately preceding fiscal year (solely for purposes of calculating compliance with this covenant, Tangible Net Worth shall be net of (i) any increases in common stock and additional paid in capital resulting from or due to the acquisition of any Person or joint venture with an Person or any similar arrangement) and (ii) the intangible attributable to the acquisition of the stock or Pro- Bel. SECTION 7. NEGATIVE COVENANTS. The Borrower hereby agrees that, so long as the Commitment remains in effect, any Note remains outstanding and unpaid, or any other amount is owing to the Bank hereunder it will not, now will it permit any of its Restricted Subsidiaries to and with respect to Sections 7.2, 7.6, 7.7, 7.8, 7.9, 7.10, 7.2, 7.13 and 7.14, any of its Non-Restricted Subsidiaries to: 7.1 Indebtedness for Borrowed Money. Incur, or permit to exist, any Indebtedness for borrowed money except (i) Indebtedness incurred pursuant to borrowings hereunder and under any other loans made by the Bank in its discretion to the Borrower or any Subsidiary, (ii) Indebtedness existing on the date hereof and reflected in the financial statements referred to in Section 3.1 hereof and (iii) purchase money Indebtedness incurred in the acquisition of fixed assets within the limitations of Section 7.8 hereof. 7.2 Mergers, Acquisitions and Sales of Assets. Enter into any merger or consolidation or liquidate, windup or dissolve itself or sell, transfer or lease or otherwise dispose of al or substantially all of its assets (other than sales of inventory and obsolescent equipment in the ordinary course of business) or acquire by purchase or otherwise the business or asset of, or stock of, another business entity; except that any Subsidiary may merge into or consolidate with any other Subsidiary which is wholly-owned by the Borrower and any Subsidiary which his wholly-owned by the Borrower may merge with or consolidate into the Borrower provided that the Borrower is the surviving corporation. 7.3 Loans; Investments. Lend or advance money, credit or property to or invest in (by capital contribution, loan, purchase or otherwise) any firm, corporation, or other Person except (i) investments in United States Government obligations, certificates of deposit of any banking institution with combined capital and surplus of at least $200,000,000, (ii) accounts receivable arising out of sales of inventory in the ordinary course of business, (iii) commercial paper of a domestic issuer rated at least "A-1" by Standard & Poor's Rating Group or "P-1" by Moody's Investors Service, Inc., (iv) investments in a Subsidiary and (v) in addition to all other permitted investments and loans, investments in or loans to any other Person, provided that the aggregate amount of such investments., loans and guaranties permitted by Section 7.5 (ii) hereof, do not exceed in the aggregate Five Hundred Thousand and 00/100 ($500,000.00) Dollars at any one time outstanding. 7.4 Liens. Create, assume or permit to exist, any Liens on any of its property or assets now owned or hereafter acquired except (i) Liens in favor of the Bank; (ii) other Liens incidental to the conduct of its business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances or credit and which do not materially impair the use thereof in the operation of its business; (iii) Liens for taxes or other governmental charges which are not delinquent or which are being contested in good faith and for which a reserve shall have been established in accordance with GAAP; and (iv) purchase money Liens granted to secure the unpaid purchase price of any fixed assets purchased within the limitations of Section 7.8 hereof. 7.5 Contingent Liabilities. Assume, endorse, be or become liable for or guarantee the obligations of an Person except (i) the endorsement of negotiable instruments for deposit or collection in the ordinary course of business and (ii) guaranties of obligations which when aggregated with the loans and investments permitted by Section 7.3(v) hereof do not exceed Five Hundred Thousand and 00/100 ($500,000.00) Dollars at any one time outstanding. 7.6 Dividends. Declare or pay any dividends on its capital stock (other than dividends payable solely in shares of its own common stock), or purchase, redeem, retire or otherwise acquire any of its capital stock at any time outstanding, except (i) any Subsidiary wholly owned by the Borrower may declare and pay dividends to the Borrower and (ii) provided no Event of Default has occurred and is continuing thereunder, the Borrower may do any of the foregoing in any fiscal year not exceeding, i on the aggregate, twenty five (25%) percent of the Borrower's net income in such fiscal year. 7.7 Sales of Receivables; Sale - Leasebacks. Sell, discount or otherwise dispose of notes, accounts receivable or other obligations owing to the Borrower, with or without recourse, except for the purpose of collection in the ordinary course of business; or sell any asset pursuant to an arrangement to thereafter lease such asset from the purchase thereof. 7.8 Capital Expenditures; Capitalized Leases. Expend in the aggregate for the Borrower and all Subsidiaries in excess of Three Million and 00/100 ($3,000,000.00) Dollars in any fiscal year for Capital Expenditures including payments made on account of Capitalized Leases. For purposes of the foregoing, Capital Expenditures shall include payments made on accounts of any deferred purchase price or on account of any indebtedness incurred to finance any such purchase price. 7.9 Lease Payments. Expend in the aggregate for the Borrower and all Subsidiaries in excess of Seven Hundred Fifty Thousand and 00/100 ($750,000.00) Dollars in any fiscal year for the lease, rental or hire of real or personal property pursuant to any rental agreement therefore, whether an operating lease, capitalized lease or otherwise. 7.10 Nature of Business. Materially alter the nature of its business. 7.11 Stock of Subsidiaries. Sell or otherwise dispose of any Subsidiary (except in connection with a merger or consolidation of subsidiary into the Borrower or another Subsidiary) or permit a Subsidiary to issue any additional shares of its capital stock except pro rata to its stockholders. 7.12 ERISA. (i) Terminate any Plan so as to result in any material liability to the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (the "PBGC"), (ii) engage in or permit any person to engage in any "prohibited transaction" (as defined in Section 406 or ERISA or Section 4975 of the Internal Revenue Code of 1954, as amended) involving any Plan which would subject a Borrower to any material tax, penalty or other liability, iii) incur or suffer to exist any material "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, involving any Plan, or (iv) allow or suffer to exist any event or condition, which presents a material risk of incurring a material liability to the PBGC by reason of termination of any Plan. 7.13 Accounting Changes. Make, or permit any Subsidiary to make any change in their account treatment or financial reporting practices except as required or permitted by GAAP in effect from time to time. 7.14 Transactions with Affiliates. Except as otherwise specifically set forth in this Agreement, directly or indirectly purchase, acquire or lease any property from, or sell, transfer or lease any property to, or enter into any other transaction, with any Affiliate except in the ordinary course of business and at prices and on terms not less favorable to it than those which would have been obtained in an arm's-length transaction with a non-affiliated third party. SECTION 8. EVENTS OF DEFAULT. Upon the occurrence and during the continuance of any of the following events (each an Event of Default): (a) Borrower shall fail to pay any interest on any of the Notes within ten days of the due date therefore, or principal of any of the Notes when due, or shall fail to pay any other amount payable hereunder within ten days after written notice or the Borrower or any Guarantor shall default under any other Loan Document after the giving of notice or expiration of grace periods, if any, under such Loan Document; or (b) Any representation or warranty made or deemed made by the Borrower herein or which his contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement shall prove to have been false in any material respect on or as of the date made or deemed made; or (c) Borrower shall default in the observance or performance of any covenant or provision contained in Section 5, 6 or 7 hereof; or (d) Borrower shall default in the observance or performance of any other provision contained in this Agreement and such default shall continue unremedied for a period of 30 days after written notice thereof is given to the Borrower by the Bank; provided that if the default is of such nature that it cannot reasonably be cured within such 30 day period, no default shall be deemed to have occurred hereunder so long as the Borrower commences to cure such default within such 30 day period and thereafter diligently and expeditiously proceeds to cure same, provided that no extension shall be for a period beyond 60 days; or (e) The Borrower or any Subsidiary shall (i) default in any payment of any indebtedness for borrowed money in excess of Two Hundred Thousand and 00/100 $200,000.00) Dollars (other than the Notes) beyond the period of grace, if any, provided in the instrument or agreement under which such indebtedness was created; or (ii) default beyond the period of grace, if any, in the observance or performance of any other agreement or condition relating to any such indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto or any other event shall occur or condition exist, in each case the effect of which default or other event or condition is to cause or permit the holder or holders of such indebtedness (or a trustee or agent on behalf of such holder or holders) to cause such indebtedness to become due prior to its stated maturity; or (f) (i) The Borrower or any Subsidiary shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or the Borrower or any Subsidiary shall make a general assignment of the benefit of its creditors; or (ii) there shall be commenced against the Borrower or any Subsidiary any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 75 days; or (iii) there shall be commenced against the Borrower or any Subsidiary any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which result in the entry of an order for any such relief which shall have been vacated, discharged, or stayed or bonded pending appear within 20 days from the entry thereof; or (iv) the Borrower or any Subsidiary shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) of this Section 8(f); or (v) the Borrower or any Subsidiary shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or (g) (i) the Borrower or any Subsidiary shall engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan, (iii) a Report Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Plan, which Reportable Event or institution of proceedings is, in the reasonable option of the Bank, likely to result in the termination of such Plan for purposes of Title iV of ERISA, and, in the case of a Reportable Event, the continuance of such Reportable Event unremedied for 20 days after notice of such Reportable Event pursuant to Section 4043(a), (c) or (d) of ERISA is given or the continuance of such proceedings for 20 days after commencement thereof, as the case may be, (iv) any Plan shall terminate for purposes of Title IV of ERISA, and in each case in clauses (i) through (iv) above, such event or condition could subject the Borrower to any tax, penalty or other liabilities in the aggregate material in relation to the business, operations or property of the Borrower; or (h) the rendition by any court of a final judgement in excess of Two Hundred Thousand and 00/100 ($200,000.00) Dollars against the Borrower or any Subsidiary which shall not be satisfactorily stayed, discharged, vacated or set aside within 75 days of the making thereof; or the attachment of any material property of the Borrower or any Subsidiary which has not been released or provided for to the reasonable satisfaction of the Bank within 75 days after the making thereof; or (i) any Guarantee or Security Agreement of any Guarantor shall cease to be in full force and effect; or (j) any of the Liens created and granted pursuant to the Security Agreements or the Pledge Agreement shall fail to be valid, first, perfected Liens subject to nor prior to equal Lien except as permitted by this Agreement. Then, in any such event, any or all of the following actions may be taken: (i) the Bank may, at its option, declare the Commitment to be terminated forthwith, whereupon the Commitment and all obligations of the Bank to make Loans to the Borrower shall immediately terminate; (ii) the Bank may, at its option, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the Notes to be due and payable and the same, and all interest accrued thereon, shall forthwith become due and payable without presentment, demand, protest or notice of any kind, all of which are hereby waived, anything contained herein or in any instrument evidencing the Loans to the contrary notwithstanding. SECTION 9. COLLATERAL SECURITY 9.1 General Loan and Collateral Agreement. As collateral security for the payment of the Obligations, the Borrower hereby grants to the Bank a lien on and security interest in any and all deposits or other sums at any time credited by or due from the Bank to the Borrower, whether in regular or special depository accounts or otherwise, and any and all monies, securities and other property of the Borrower, and the proceeds thereof, now or hereafter held or received by or in transit to the Bank from or for the Borrower, whether for safekeeping, custody, pledge, transmission, collection or otherwise, and any such deposits, sums, monies, securities and other property, may at any time after the occurrence of any Event of Default be set-off, appropriated and applied by the Bank against any of the Obligations whether or not such Obligations are then due or are secured by any collateral, or, if they are so secured, whether or not such collateral held by the Bank is considered to be adequate. 9.2 Additional Collateral Security. In addition to the collateral described in Section 9.1 hereof, payment of the Obligation is also secured by a first priority security interest in (i) all personal property including trademarks and patents of the Borrower whether now owned or hereafter acquired, and (ii) after the making of the Term Loan, all outstanding shares of stock of Pro-Bel, as provided, respectively, in the Security Agreements and Pledge Agreement executed and delivered by the Borrower to the Bank. SECTION 10. MISCELLANEOUS. 10.1 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing unless otherwise expressly provided herein and shall be deemed to have been duly given or made when delivered by hand, or by telegram or telecopy, or when deposited in the mail addressed as follows, or to such address as may be hereafter notified in writing by the respective parties hereto and any future holders of any Note: The Borrower: Chyron Corporation 5 Hub Drive Melville, New York 11747 with a courtesy copy (which copy shall not constitute notice) to: Camhy, Karlinsky & Stein LLP 1740 Broadway New York, New York 10019-4315 Attn: Daniel DeWolf, Esq. The Bank: NatWest Bank N.A. 100 Jericho Quadrangle Jericho, New York 11753 Attn: Alice B. Adelberg Vice President 10.2 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Bank, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right. 10.3 Survival of Representations and Warranties. All representations and warranties made hereunder and in any Loan Document shall survive the execution and delivery of this Agreement and the Notes. 10.4 Payment of Expenses; Examination. (a) The Borrower agrees to pay or reimburse the Bank for all its reasonable costs and expenses (including, without limitation, the reasonable fees and expenses of attorneys for the Bank) incurred in connection with (i) the enforcement or preservation of any rights under any Loan Document or any other instrument or agreement entered into in connection herewith or therewith including, without limitation, the reasonable fees and disbursements of attorneys for the Bank; (ii) any claim or action threatened, made or brought against the Bank arising out of or relating to any extent to any Loan Document or any instrument or agreement entered into in connection with the transactions contemplated hereby or thereby; (iii) the perfection of any security interest in the Collateral or in the maintenance of the Collateral; (iv) any amendment or modification of any Loan Document; (v) the payment of any tax, assessment, recording fee or similar charge; (vi) any waiver of any right of the Bank under any Loan Document and (vii) the reasonable fees and disbursements of any counsel to the Bank incurred from time to time in connection with the transactions contemplated by this Agreement. The Borrower agrees to reimburse the Bank for any payments made to the CIT Group/Credit Finance Inc. ("CIT") pursuant to the indemnity letter of the Bank to CIT dated March 28, 1996. (b) The Borrower agrees that at any time and from time to time upon reasonable notice and during regular business hours the Bank may conduct, at the Borrower's expense, an examination of the Borrower's books and records (provided, if more frequently than annually, at the Bank's expense). The obligations set forth in this Section 10.4 shall be in addition to any other obligations or liabilities of the Borrower to the Bank hereunder or at common law or otherwise. The provisions of this Section 10.4 shall survive the payment of the Notes and the termination of this Agreement. 10.5 WAIVER OF JURY TRIAL, SET-OFF AND COUNTERCLAIM. THE BORROWER AND THE BANK IN ANY LITIGATION (WHETHER OR NOT ARISING OUT OF OR RELATING TO THIS AGREEMENT) IN WHICH THEY SHALL BE ADVERSE PARTIES WAIVE THE RIGHT OF TRIAL BY JURY AND THE BORROWER WAIVES THE RIGHT TO INTERPOSE ANY SET-OFF OR COUNTERCLAIM OF ANY KIND OR DESCRIPTION IN ANY SUCH LITIGATION. 10.6 WAIVER OF AUTOMATIC STAY. THE BORROWER AGREES THAT, IN THE EVENT THAT THE BORROWER, ANY GUARANTOR OR ANY OF THE PERSONS OR PARTIES CONSTITUTING THE BORROWER OR ANY GUARANTOR SHALL (i) FILE WITH ANY BANKRUPTCY COURT OF COMPETENT JURISDICTION OR BE THE SUBJECT OF ANY PETITION UNDER TITLE 11 OF THE U.S. CODE, AS AMENDED ("BANKRUPTCY CODE"), (ii) BE THE SUBJECT OF ANY ORDER FOR RELIEF ISSUED UNDER THE BANKRUPTCY CODE, (iii) FILE OR E THE SUBJECT OF ANY PETITION SEEKING ANY REORGANIZATION, ARRANGEMENT, COMPOSITION, READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR OTHER RELIEF FOR DEBTORS, (iv) HAVE SOUGHT OR CONSENTED TO OR ACQUIESCED IN THE APPOINTMENT OF ANY TRUSTEE, RECEIVER, CONSERVATOR, OR LIQUIDATOR, OR (v) BE THE SUBJECT OF ANY ORDER, JUDGEMENT, OR DECREE ENTERED BY ANY COURT OF COMPETENT JURISDICTION APPROVING A PETITION FILED AGAINST SUCH PARTY FOR ANY REORGANIZATION, ARRANGEMENT, COMPOSITION, READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR RELIEF FOR DEBTORS, THE BANK SHALL THEREUPON BE ENTITLED AND THE BORROWER IRREVOCABLY CONSENTS TO IMMEDIATE AND UNCONDITIONAL RELIEF FROM ANY AUTOMATIC STAY IMPOSED BY SECTION 362 OF THE BANKRUPTCY CODE, OR OTHERWISE, ON OR AGAINST THE EXERCISE OF THE RIGHTS AND REMEDIES OTHERWISE AVAILABLE TO THE BANK AS PROVIDED FOR HEREIN, IN ANY NOTE, OTHER LOAN DOCUMENTS DELIVERED IN CONNECTION HEREWITH AND AS OTHERWISE PROVIDED BY LAW, AND THE BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT TO OBJECT TO SUCH RELIEF AND WILL NOT CONTEST ANY MOTION BY THE BANK SEEKING RELIEF FROM THE AUTOMATIC STAY AND THE BORROWER WILL COOPERATE WITH THE BANK, IN ANY MANNER REQUESTED BY THE BANK, IN ITS EFFORTS TO OBTAIN RELIEF FROM ANY SUCH STAY OR OTHER PROHIBITION. 10.7 LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY (i) THE BORROWER, ANY GUARANTOR, ANY SUBSIDIARY, OR ANY OTHER PERSON AGAINST THE BANK OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OF THE BANK (ii) THE BANK AGAINST THE BORROWER, ANY GUARANTOR, ANY SUBSIDIARY OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OF ANY OF THE FOREGOING, FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR, TO THE FULLEST EXTENT PERMITTED BY LAW, FOR ANY PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM OR CAUSE OF ACTION (WHETHER BASED ON CONTRACT, TORT, STATUTORY LIABILITY, OR ANY OTHER GROUND) BASED ON, ARISING OUT OF OR RELATED TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, AND THE BORROWER (FOR ITSELF AND ON BEHALF OF EACH GUARANTOR AND EACH SUBSIDIARY) AND THE BANK HEREBY WAIVE, RELEASE AND AGREE NEVER TO SUE UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER SUCH CLAIM NOW EXISTS OR HEREAFTER ARISING AND WHETHER OR NOT IT IS NOW KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR. 10.8 Modification and Waiver. No modification of waiver of, or with respect to any provision of this Agreement or any document or instrument delivered in connection therewith shall be effective unless and until it shall be in writing and signed by the Bank, and then such modification or waiver shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the Borrower in any case shall, of itself, entitle to it any other or further notice or demand in similar or other circumstances. 10.9 Successor and Assigns. This Agreement shall be binding upon and inure to the benefit of the Borrower, the Bank, all future holders of the Notes and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights under this Agreement without the prior written consent of the Bank. The term "Bank" as used herein shall be deemed to include the Bank and its successors, endorsees, and assigns. 10.10 Governing Law; Consent to Jurisdiction. This Agreement and the other Loan Documents and any documents and instruments delivered in connection hereunder and thereunder shall be governed by, and construed and interpreted in accordance with, the law of the state of New York and the Borrower consents to the jurisdiction of the courts of the State of New York in any action brought to enforce any rights of the Bank under this Agreement and any document or instrument related hereto. 10.11 Entire Agreement. This Agreement and any other agreement, documents and instruments executed and delivered pursuant to or in connection with the Obligations contain the entire agreement between the parties relating to the subject matter hereof and thereof. The Borrower expressly acknowledges that the Bank has not made and the Borrower is not relying on any oral representations, agreements or commitments of the Bank or any officer, employee, agent or representative thereof. 10.12 Interest Adjustment. Notwithstanding anything to the contrary contained in this Agreement or any Note, the rate of interest payable on either Note shall never exceed the maximum rate of interest permitted under applicable law. If at any time the rate of interest otherwise prescribed herein shall exceed such maximum rate, and such prescribed rate is thereafter below such maximum rate, the prescribed rate shall be e increased to the maximum rate for such period of time as is required so that the total amount of interest received by the Bank is that which would have been received by the Bank except for the operation of the first sentence of this Section 10.12. 10.13 Counterparts. This Agreement may be signed in any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered in Jericho, New York by their proper and duly authorized officer as of the day and year first above written. CHYRON CORPORATION By: /s/ Patricia A. Lampe Chief Financial Officer NATWEST BANK N.A. By: /s/ William Ewing Vice President BARC LAYS BANK PLC Oxford Corporate Banking Centre P.O. Box 858, Oxford OX1 3YP PRIVATE AND CONFIDENTIAL The Directors Your Ref: H/JEF/SH Pro-Bel Limited Our Ref: 01865 442139 Triology Broadcast Limited Fax No.: 01865 442570 Pro-Bel Software Limited Xebec Electronic Production Services Ltd. 19th December 1996 Danehill, Lower Early Reading RG6 4PB Dear Sirs We are please to advise you that Barclays Bank PLC ("the Bank") has agreed to provide an overdraft facility ("the Overdraft") of up to 3,000,000 pounds sterling gross (Three million pounds sterling gross) and of up to $3,000,0000 pounds sterling (Three million pounds sterling net) until 31st December 1997 to Pro-Bel Limited ("the Parent") and its subsidiary named below (the Parent and such subsidiaries are referred to individually as a "borrower" and collectively as the "Borrowers"). The Bank is also prepared to provide the Borrower with: Ancillary facilities by way of negotiation of sterling/foreign currency cheques and Bills of Exchange payable abroad, Company Barclaycard, Bankers Automatic Clearing Services (BACS), Branch Originated BACS Services (BOBS) and Spot and Forward Exchange Transactions (known collectively a the "ancillaries") Utilisation under the Ancillaries shall be in accordance with Schedule B. The Schedules attached hereto from part of the terms and conditions of this letter. Following the completion of the acceptance formalities detailed below the Overdraft will be available for drawing by the Borrowers, subject to the following terms and conditions: 1. The Overdraft The Overdraft will be available by way of a Composite Accounting System ("CAS") in accordance with a Composite Accounting Agreement made between the Parent and its subsidiaries named below an the Bank, (subject to the sub limits detailed below - at the Oxford City Office branch of the Bank ("the Branch") with interest charged at a rate of 1.5% per annum over the Bank's Base Rate current from time to time. Interest, together with other charges will be debited to the Borrowers' current accounts at the Branch quarterly in arrears in March, June, September and December each year, or at such other times as may be determined by the Bank, and such interest will be calculated on the basis of actual days elapsed over a 365 day year. Sub Limits Trilogy Broadcast Limited 300,000 pounds sterling Pro-Bel Software Limited 200,000 pounds sterling Xebec Electronic Production Services Limited 50,000 pounds sterling Options Available Within and Utilization of the Facility The Facility may be utilized by way of the following options and in accordance with the provisions of the Schedules related thereto: Sterling Overdraft the terms and conditions of which are contained in the Bank's Facility Letter of even date, and/or Foreign Currency Overdraft (see Schedule A) Within the Facility the aggregate of the liabilities due, owing or incurred thereunder shall not at any time exceed 3,000,000 until 31 December 1997 or its currency equivalent. 2. Availability All monies owing under the Facility are repayable upon written demand by the Bank and/or any undrawn portion of the Facility may be cancelled by the Bank, at any time. Following demand and/or cancellation, no further utilisation may be made under the Facility. The Bank may at any time after such demand and/or cancellation call for payment of full cash cover for all liabilities outstanding under the Ancillary Facilities. The Borrower shall indemnify the Bank on demand against any loss, liability or expense which the Bank may reasonably sustain or incur as a consequence of making such demand or as a consequence of non- performance by the Borrower of any obligation under this letter. Any monies not paid following a demand under this clause shall continue to bear interest in respect of any outstanding interest period, and in respect of the Sterling Overdraft and the Foreign Currency Overdraft as calculated in the respective Schedules. The amounts of any payments made by the Bank on behalf of the Borrower under the Ancillary Facilities, will, except for those amounts where cash cover has been made by the Borrower as provided for above, continue to bear interest at 1.5% per annum over the Bank's Base Rate current from time to time until payment is made. Interest shall, if unpaid, be compounded in the Bank's usual charging dates. Interest will continue to be charged and compounded on this basis after as well as before demand or Judgement. The Bank reserves the right, at any time following a demand under this clause, to purchase with Sterling any currency necessary to convert any amounts outstanding under the Facility, together with interest accrued thereon, to Sterling, whereupon the Borrow shall then become liable to pay the Bank forthwith the relevant Sterling amounts, together with all costs and expenses incurred by the Bank. Interest will continue to be charged as detailed above. In the absence of demand or cancellation by the Bank, the Facility is available for utilisation until 31 December 1997. However, the Bank will be pleased to discuss the Borrower's future requirements shortly before that date. 3. Security and/or Guarantee(s) The Borrower's obligations hereunder will be secured by any security which is now held, or hereafter may be held, by the Bank to secure all moneys and liabilities which shall from time to time be due, owing or incurred to the Bank by the Borrower, whether actually or contingently. Specifically, in addition to the security currently held the Bank will be provided with: a) Cross Guarantee and Debenture from Xebec Electronic Production Services Limited. b) Assignment of current NCM Policies. c) Acknowledgement in a form to be agreed from Chyron Corporation of the agreed arrangement relating to reductions in the outstanding inter company loan from that organisation. The Bank reserves the right to require all subsidiary companies to be taken into the CAS arrangement. 4. Information The Parent undertakes to provide the Bank with: a) copies of its audited consolidated Profit and Loss account and Balance Sheet as soon as they are available and not later than 180 days from the end of each accounting reference period together with any other information which the Bank may reasonably request from time to time. b) Monthly management accounts in a form acceptable to the Bank. Such reports to be received by the Bank within 30 days of the relevant month end. c) Debenture monitoring Form 862 to be received by the Bank within 30 days of the relevant month end. d) Schedule, in a format to be agreed detailing an overseas debtor aged analysis together with appropriate buyer limits as established by NCM. The Bank reserves the right to arrange for an independent review of the sales ledger at the Companies' reasonable expense. The Bank will not seek these reviews at intervals of less than six months. 5. Change of Circumstances In the event of any change in applicable law or regulation or the existing requirements of, or any new requirements being imposed by, the Bank of England or other regulatory authority the results of which, in the sole opinion of the Bank, is to increase the cost to it of funding, maintaining or making available the Overdraft (or any undrawn amount thereof) or to reduce the effective return to the Bank, then the Borrowers shall pay to the Bank such sum as may be certified by the Bank to the Borrowers as shall compensate the Bank for such increased cost or such reduction. 6. Authority of Parent to agree changes to the Composition of the Borrowers and to the limit and terms applicable to the Overdraft. By countersigning this letter, each Borrower (other than the parent) irrevocably authorises the Parent (which is hereby appointed the agent of the Borrowers for such purposes) from time to time (i) to agree with the Bank in writing to add any further subsidiary or subsidiaries as a Borrower or Borrowers, and/or (ii) to remove any subsidiary as a Borrower, and/or (iii) to make such changes to the limit and sub limits and other terms applicable to the Overdraft as the Parent may deem appropriate, and/or (iv) to sign any document and perform any act on behalf of the Borrowers (or any of them) required to effect or implement any of the foregoing. Each change so agreed by the Parent shall be binding on each Borrower and the terms of this letter will continue in full force and effect, save as expressly amended thereby. 7. Fees A fee of 15,000 pounds sterling will be payable by the Borrowers to the Bank in respect of the facility. Legal and Valuation Costs Any legal valuation fees and expenses and other out of pocket expenses (including VAT) incurred by the Bank in connection with the negotiation and granting of the Facility will be reimbursed by the Borrower on demand by the Bank. All fees will e ebited to the Current Account of Pro-Bel Limited. 8. Set-Off Any sum of money at any time standing to the credit of the Borrower with the Bank in any currency upon any account or otherwise (whether or not any such account is held in the Borrower's name) r provided to the Bank cash cover for any outstanding liabilities under the Ancillary Facilities, may be applied by y the Bank at any time (without notice to the Borrower) in or towards the discharge of any money or liabilities now or hereafter due, owing or incurred to the Bank by the Borrower hereunder (whether presently payable or not). 9. Currency Indemnity If for any reason, any amount payable to the Bank is received or recovered in a currency other than the contractual currency in which it is due, then, to the extent that the amount actually received or recovered by the Bank (when converted by the Bank into the contractual currency at the applicable rate of exchange) falls short of the amount due in the contractual currency, the Borrower shall, as a separate and independent obligation, reimburse the Bank on demand (on a full indemnity basis) for the amount of such shortfall. 10. Applicable Law This letter shall be governed by and construed and take effect in accordance with English Law. 11. Acceptance Prior to the Overdraft being utilised, the Parent shall provide the Branch with the following: a) the enclosed duplicate of this letter duly signed on each Borrower's behalf together with a CAS Agreement and CAS Guarantees, and b) a certificate true copy of a Resolution of each Borrower's Board of Directors: i) accepting the Overdraft on the terms and conditions stated herein and approving the terms of the CAS Agreement and the CAS Guarantee to be given by it, ii) authorising a specified person, or persons, to sign and return to the Bank the duplicate of this letter, iii) authorising the Bank to accept instructions and confirmations in connection with the operation of the Overdraft signed in accordance with the Bank's signing mandate current from time to time, iv) appointing the Parent to act as agent of he Borrowers for the purposes contemplated in Clause 6 above. This offer will remain available for a period of one month from the date of this letter after which it will lapse if not accepted. Yours faithfully for and on behalf of BARCLAYS BANK PLC /s/ J.A. Bullen J.A. BULLEN SENIOR CORPORATE MANAGER Accepted on the terms and conditions stated herein pursuant to a resolution of the Board of Directors (a certified true copy of which is attached hereto). For and on behalf of PRO BEL LIMITED Director Secretary/Director Accepted on the terms and conditions stated herein pursuant to a Resolution of the Board of Directors (a certified true copy of which is attached hereto) For and on behalf of Trilogy Broadcast Limited Director Secretary/Director Accepted on the terms and conditions stated herein pursuant to a Resolution of the Board of Directors (a certified true copy of which is attached hereto) For and on behalf of Pro-Bel Software Limited Director Secretary/Director Accepted on the terms and conditions stated herein pursuant to a Resolution of the Board of Directors (a certified true copy of which is attached hereto) For and on behalf of Xebec Electronic Production Services Limited Director Secretary/Director SCHE DULE A Foreign Currency Overdraft The Foreign Currency Overdraft will be made available in any currency (other than sterling) as previously agreed by and arranged with the Bank, and which currency is freely transferable and available to the Bank in the normal course of business. The Foreign Currency Overdraft will be available on the Borrower's foreign currency account at Reading International Services Branch with interest charged at 1.5% per annum over the Bank's call loan rate current from time to time. Interest together with other charges will be debited to the Borrower's Foreign Currency Account at the Reading International Services Branch quarterly in arrears in March, June, September and December each year or at such other times as may be determined by the Bank, and such interest will be calculated on the basis of actual days elapsed over a 360 day a year. SCHEDULE B ANCILLARY FACILITIES Negotiation of Sterling/Foreign Currency Cheques and Bills of Exchange payable Abroad up to 50,000 Pounds Sterling The Bank will purchase, with recourse, suitable foreign currency and sterling cheques payable abroad and/or approved foreign currency or sterling bills of exchange payable abroad. The suitability of those cheques and bills of exchange which the Bank is prepared to purchase is entirely at the discretion of the Bank, and is subject to the Uniform Rules for the Collection of Commercial Paper (1978 Revision). Pricing will be decided on a case by case basis. A Spot & Forward Exchange Transaction Limit Up To 200,000 Pounds Sterling The SFET Facility covers the maximum liability of the Borrower to the Bank outstanding at any time under contracts of not more t than twelve months' duration for the forward purchase or sale of foreign currencies, but excludes purchases or sales where the Bank is required irrevocably to pay away funds prior to receiving firm confirmation of incoming cover. When wishing to utilise the SFET facility the Borrower should telephone the Oxford City Office Branch of the Bank on (01865) 442156. All payment and delivery instructions are to e advised to and processed by the Branch and confirmed by letter at the earliest opportunity. BOBS up to 200,000 pounds sterling BACS up to 250,000 pounds sterling To allow the Borrower(s) to make salary and/or credit payments electronically. Company Barclaycard up to 100,000 pounds sterling To be used in accordance with the terms and conditions of use, current from time to time, as detailed in the Agreement executed by the Borrower(s). PRO-BEL LIMITED MINUTES OF A MEETING OF THE BOARD OF DIRECTORS HELD ON 20 December 1996 at Danehill Lower Earley Present: Roger Henderson Michael Knight Graham Pitman Ray Hartman David Steal Graham Roe Derek Over Roger Stanwell There was produced to the meeting a Facility Letter date 19th December 1996 from Barclays Bank PLC ("the Bank"), Oxford City Office (Old Bank) to the Company setting out the terms and conditions upon which the Bank is prepared to lend to the Company the sum of 3,000,000 pounds sterling until 31 December 1996 by way of a on demand overdraft facilities. IT WAS RESOLVED 1. That the terms and conditions of the overdraft as set out in the said Facility Letter be and they are hereby approved and accepted. 2. That Roger Henderson and Ray Hartman be and is hereby authorised to sign on behalf of the Company the copy of the said Facility Letter to indicate acceptance of the terms and conditions. 3. That the Bank be and is hereby authorised to act in all matters relating to the overdraft upon instructions from the Company signed in accordance with the Bank's Mandate for the Company's Account with the Bank, current from time to time. I hereby certify the above to be a true extract from the Minutes of a Meeting of the Board of Directors held on the date shown above. /s/ Roger Henderson For and on behalf of PRO-BEL LIMITED XEBEC ELECTRONIC PRODUCTION SERVICES LIMITED MINUTES OF A MEETING OF THE BOARD OF DIRECTORS HELD ON 20 December 1996 at Danehill Lower Earley Present: Ray Hartman Graham Pitman There was produced to the meeting a Facility Letter date 19th December 1996 from Barclays Bank PLC ("the Bank"), Oxford City Office (Old Bank) to the Company setting out the terms and conditions upon which the Bank is prepared to lend to the Company the sum of 3,000,000 pounds sterling until 31 December 1996 by way of a on demand overdraft facilities. IT WAS RESOLVED 1. That the terms and conditions of the overdraft as set out in the said Facility Letter be and they are hereby approved and accepted. 2. That Roger Henderson and Graham Pitman be and is hereby authorised to sign on behalf of the Company the copy of the said Facility Letter to indicate acceptance of the terms and conditions. 3. That the Bank be and is hereby authorised to act in all matters relating to the overdraft upon instructions from the Company signed in accordance with the Bank's Mandate for the Company's Account with the Bank, current from time to time. I hereby certify the above to be a true extract from the Minutes of a Meeting of the Board of Directors held on the date shown above. /s/ Raymond Hartman For and on behalf of XEBEC ELECTRONIC PRODUCTION SERVICES LIMITED TRILOGY BROADCAST LIMITED MINUTES OF A MEETING OF THE BOARD OF DIRECTORS HELD ON 20 December 1996 at Danehill Lower Earley Present: Ray Hartman Phil White Graham Pitman Tim Hardisty Roger Stanwell There was produced to the meeting a Facility Letter date 19th December 1996 from Barclays Bank PLC ("the Bank"), Oxford City Office (Old Bank) to the Company setting out the terms and conditions upon which the Bank is prepared to lend to the Company the sum of 3,000,000 pounds sterling until 31 December 1996 by way of a on demand overdraft facilities. IT WAS RESOLVED 1. That the terms and conditions of the overdraft as set out in the said Facility Letter be and they are hereby approved and accepted. 2. That Raymond Hartman and Graham Pitman be and is hereby authorised to sign on behalf of the Company the copy of the said Facility Letter to indicate acceptance of the terms and conditions. 3. That the Bank be and is hereby authorised to act in all matters relating to the overdraft upon instructions from the Company signed in accordance with the Bank's Mandate for the Company's Account with the Bank, current from time to time. I hereby certify the above to be a true extract from the Minutes of a Meeting of the Board of Directors held on the date shown above. /s/ Raymond Hartman For and on behalf of TRILOGY BROADCAST LIMITED PRO-BEL SOFTWARE LIMITED MINUTES OF A MEETING OF THE BOARD OF DIRECTORS HELD ON 20 December 1996 at Danehill Lower Earley Present: Ray Hartman Roger Meet Derek Owen Matca Butler Roger Henderson Neil Maycock There was produced to the meeting a Facility Letter date 19th December 1996 from Barclays Bank PLC ("the Bank"), Oxford City Office (Old Bank) to the Company setting out the terms and conditions upon which the Bank is prepared to lend to the Company the sum of 3,000,000 pounds sterling until 31 December 1996 by way of a on demand overdraft facilities. IT WAS RESOLVED 1. That the terms and conditions of the overdraft as set out in the said Facility Letter be and they are hereby approved and accepted. 2. That Raymond Hartman and Roger Henderson be and is hereby authorised to sign on behalf of the Company the copy of the said Facility Letter to indicate acceptance of the terms and conditions. 3. That the Bank be and is hereby authorised to act in all matters relating to the overdraft upon instructions from the Company signed in accordance with the Bank's Mandate for the Company's Account with the Bank, current from time to time. I hereby certify the above to be a true extract from the Minutes of a Meeting of the Board of Directors held on the date shown above. /s/ Raymond Hartman For and on behalf of TRILOGY BROADCAST LIMITED BARCLAYS BANK PLC Oxford Corporate Banking Centre P.O. Box 858, Oxford OX1 3YP PRIVATE AND CONFIDENTIAL The Directors Your Ref: H/JEF/SH Pro-Bel Limited Our Ref: 01865 442139 Triology Broadcast Limited Fax No.: 01865 442570 Pro-Bel Software Limited Xebec Electronic Production Services Ltd. 19th December 1996 Danehill, Lower Early Reading RG6 4PB Dear Sirs BANK FACILITY - PARENTAL COMPANY LOAN I write to confirm the arrangement we have discussed with Mike Knight, Financial Director relating to parental company Loan from Chyron Inc. Pro-Bel Limited's Cash Flow Forecast for 1997 linked to the level of Bank support we now propose suggest that Pro-Bel will be in a position to effect a reduction of some 1 million pounds sterling in its Loan from Chyron Corporation during the period at the rate of 250,000 pounds sterling per quarter commencing the 31st March 1997. In recognising that the Bank facility will be utilised for the above purpose we seek your confirmation and that of Chyron Corporation that these payments will not be made if cumulative cash or trading performance is 15% worse than forecast on a cumulative basis measured quarterly throughout the year unless the Bank consents to the arrangement beforehand. We should be grateful if you would confirm the agreement of both Pro- bel Limited and Chyron Corporation to this arrangement by having representatives of both parties sign and return to us a copy of this letter. Yours sincerely /s/ J.A. Bullen J.A. BULLEN SENIOR CORPORATE MANAGER BARCLAYS MERCANTILE Mr. M Knight Finance Director Pro-Bel Limited Danehill Lower Earley Reading Bershire RG6 4PB 20 December 1996 Dear Mr. Knight, Re: LEASE PURCHASE FACILITY OFFER We are pleased to confirm our willingness to offer Lease Purchase facilities in respect of various items of plan & machinery and computer equipment. This offer is made subject to the following conditions; 1. A maximum advance of 750,000 pounds sterling 2. A maximum lease term of 60 months in respect of surface mount machinery and telephone system only. All other assets to be subject to a maximum term of 36 months. 3. A minimum deposit equivalent to 10% of the capital cost (+ full VAT where applicable) 4. Ongoing sight and satisfaction with quarterly management accounts. 5. Sight and satisfaction with 1996 audited accounts by 30 June 1997 6. Cross guarantees of all Pro-Bel Ltd subsidiary companies 7. All suppliers to be bona fide 8. These facilities are available for drawdown until 31 December 1997 In addition an agency purchase facility has been approved which I hope will be of great benefit. This facility is designed to simplify utilisation of the lease purchase facility and is especially beneficial when there are a number of suppliers. The agency will allow Pro-Bel to acquire assets (acting as our agents) thus controlling expenditure and then to seek reimbursement from Barclays Mercantile under an hire purchase agreement. In order to enact the agency I would be grateful if you would sign the document attached and return it together with a signed copy of this offer letter. Our willingness to provide these facilities is upon the condition that, in our opinion, there is no adverse change in your financial circumstances before we purchase the equipment. This offer is valid for a period of fourteen days from today; nevertheless we reserve the right to revise our terms should monetary, economic or taxation conditions change before we purchase the equipment. We welcome the opportunity to be of service to you. Please signify your acceptance of the above terms by signing and returning the enclosed additional copy of this letter. Yours sincerely, /s/ David Bye David Bye Branch Manager For and on behalf of Roger Henderson Pro-Bel Ltd. Authorised to sign BARCLAYS BANK PLC Oxford Corporate Banking Centre P.O. Box 858, Oxford OX1 3YP PRIVATE AND CONFIDENTIAL The Directors Your Ref: H/JEF/SH Pro-Bel Limited Our Ref: 01865 442139 Triology Broadcast Limited Fax No.: 01865 442570 Pro-Bel Software Limited Xebec Electronic Production Services Ltd. 19th December 1996 Danehill, Lower Early Reading RG6 4PB Dear Sirs Barclays Bank PLC (the "Bank") is pleased to offer to provide a Bonds, Guarantees and/or Indemnities facility (the "Facility") of up to 300,000 pounds sterling (three hundred pounds sterling) or its currency equivalent ("Facility Amount") to Pro-Bel Limited (the "Borrower") subject to the terms and conditions set out below. 1. Interpretation For the purpose of this Facility Letter: a) "Indemnities" means the counter-indemnities from time to time held by the Bank in relation to the Obligations and, unless the context otherwise requires, includes each or any of them; b) "Obligations" means the Bonds, Guarantees and/or Indemnities issued by the Bank (or its correspondents) under the Facility and, unless the context otherwise requires, includes each or any of them; c) "Sterling Equivalent" means, in relation to an amount denominated in foreign currency, the amount of Sterling which would be purchased with such foreign currency amount at the Bank's spot rate for the purchase of Sterling with such foreign currency on the date of which conversion is required; d) "Utilised Amount" means, on the date on which the calculation is required, the maximum amount of all liabilities due, owing or incurred, whether actually or contingently and whether presently payable or not, by the Bank under or in connection with the Obligations including where Obligations are denominated in foreign currencies the Sterling Equivalent of the relevant liabilities of the Bank in relation to such Obligations. 2. Utilisation The Bank agrees to issue Obligations in Sterling and/or foreign currencies when requested by the Borrower, provided that: a) No Obligation may be issued if, as a result, the Utilised Amount would exceed the Facility Amount; b) No Obligation may be issued until the acceptance formalities detailed in clause 8 have been completed; c) No Obligation may be issued after 31 December 1997 d) The terms of the relevant Obligation have been approved by the Bank; e) The Borrower has provided all information in connection with the relevant Obligation required by the Bank; f) The Borrower has agreed to pay the fees required by the Bank in relation to the relevant Obligation; g) An Obligation will not be issued until the Bank has satisfied itself that it holds an Indemnity in respect of such Obligation or, as the case may be, such Obligation is covered by an existing Indemnity. 3. Availability (a) The Bank may, in its sole discretion at any time: (i) cancel its commitment to issue any further Obligation (if unissued); and/or (ii) demand from the Borrower the payment of all amounts (if any) outstanding under this Facility Letter whereupon the same shall be immediately due and payable; and/or (iii) require the Borrower on demand to deposit and maintain with the Bank an amount in Sterling sufficient to cover the Utilised Amount and require the Borrower to give security over the money so deposited (together with interest accruing thereon) in form and substance satisfactory to the Bank to secure the Borrower's liabilities to the Bank under this Facility Letter and/or the Indemnities. (b) Any sum of money at any time standing to the credit of the Borrower with the Bank in any currency upon any account or otherwise may be applied by the Bank, at any time after exercising the Bank's right under clause 3 (a) above (without notice to the Borrower), in or towards the payment or discharge of any indebtedness now or subsequently owing to the Bank by the Borrower hereunder and/or under the Indemnities and the Bank may use any such money to purchase any currency or currencies required to effect such application. 4. Security and/or Guarantee(s) The Borrower's obligations hereunder will be secured by any security which is now held, or hereafter may be held, by the Bank to secure all moneys and liabilities which shall from item to time be due, owing or incurred to the Bank by the borrower, whether actually or contingently. 5. Fees All facilities are to be charged in accordance with published tariff. 6. Information The Parent undertakes to provide the Bank with copies of its audited consolidated Profit and Loss account and Balance Sheet as soon as they are available and not later than 180 days from the end of each accounting reference period together with any other information which the Bank may reasonably request from time to time. 7. Governing Law This Facility Letter shall be governed by and construed in accordance with English law. 8. Acceptance The Facility will become available to the Borrower for drawing only upon receipt by the Bank not later than the close of business on 1st March 1997 (or such later date as the Bank may agree) of the following in form and substance satisfactory to the Bank: a) the enclosed duplicate of this letter duly signed on the Borrower's behalf as evidence ofacceptance of the terms and conditions stated therein, b) a certified true copy of a resolution of the Borrower's Board of Directors: (i) accepting the Facility and this offer on the terms and conditions stated herein; (ii) authorising a specified person, or persons, to countersign and return to the Bank the enclosed duplicate of this Facility Letter; and (iii) specifying the names of those officers of the Borrower whose instruction (jointly or alone) the Bank is authorised to accept in all matters concerning the Facility and this offer once accepted and confirmed specimens of the signatures of those officers referred to in (ii) and herein, if not already known to the Bank; and Yours faithfully for & on behalf of Barclays Bank PLC /s/ JA Bullen JA BULLEN SENIOR CORPORATE MANAGER Accepted on the terms and conditions stated herein, pursuant to a resolution of the Board of Directors (a certified copy of which is attached hereto). For & on behalf of PRO-BEL LIMITED DIRECTOR Accepted on the terms and conditions stated herein, pursuant to a resolution of the Board of Directors (a certified copy of which is attached hereto). For & on behalf of XEBEC ELECTRONIC PRODUCTION SERVICES LIMITED DIRECTOR Accepted on the terms and conditions stated herein, pursuant to a resolution of the Board of Directors (a certified copy of which is attached hereto). For & on behalf of TRILOGY BROADCAST LIMITED DIRECTOR Accepted on the terms and conditions stated herein, pursuant to a resolution of the Board of Directors (a certified copy of which is attached hereto). For & on behalf of PRO-BEL SOFTWARE LIMITED DIRECTOR PRO-BEL LIMITED MINUTES OF A MEETING OF THE BOARD OF DIRECTORS HELD ON 20 December 1996 at Danehill Lower Earley Present: Roger Henderson Michael Knight Graham Pitman Rayond Hartman David Steel Graham Roe Derek Owen Roger Stanwell There was produced to the meeting a Facility Letter dated 19th December 1996 from Barclays Bank PLC ("the Bank"), Oxford City Office to the Company setting out the terms and conditions upon which the Bank is prepared to provide a Bond, Guarantees and Indemnities facility of 300,000 pounds sterling until 31st December 1997. IT WAS RESOLVED 1. That the terms and conditions of the Bonds, Guarantees and Indemnities facility as set out in the said Facility Letter be and they are hereby approved and accepted. 2. That Roger Henderson be and is hereby authorised to sign on behalf of the Company the copy of the said Facility Letter to indicate acceptance of the terms and conditions. 3. That the Bank be and is hereby authorised to act in all matters relating to the facility upon instructions from the Company signed in accordance with the Bank's mandate for the Company's account with the Bank, current from time to time. I hereby certify the above to be true extract from the Minutes of a Meeting of the Board of Directors held on the date shown above. /s/ Roger Henderson FOR AND ON BEHALF OF PRO-BEL LIMITED XEBEC ELECTRONIC PRODUCTION SERVICES LIMITED MINUTES OF A MEETING OF THE BOARD OF DIRECTORS HELD ON 20 December 1996 at Danehill Lower Earley Present: Roger Henderson Graham Pitman There was produced to the meeting a Facility Letter dated 19th December 1996 from Barclays Bank PLC ("the Bank"), Oxford City Office to the Company setting out the terms and conditions upon which the Bank is prepared to provide a Bond, Guarantees and Indemnities facility of 300,000 pounds sterling until 31st December 1997. IT WAS RESOLVED 1. That the terms and conditions of the Bonds, Guarantees and Indemnities facility as set out in the said Facility Letter be and they are hereby approved and accepted. 2. That Graham Pitman be and is hereby authorised to sign on behalf of the Company the copy of the said Facility Letter to indicate acceptance of the terms and conditions. 3. That the Bank be and is hereby authorised to act in all matters relating to the facility upon instructions from the Company signed in accordance with the Bank's mandate for the Company's account with the Bank, current from time to time. I hereby certify the above to be true extract from the Minutes of a Meeting of the Board of Directors held on the date shown above. /s/ Graham Pitman FOR AND ON BEHALF OF PRO-BEL LIMITED TRILOGY BROADCAST LIMITED MINUTES OF A MEETING OF THE BOARD OF DIRECTORS HELD ON 20 December 1996 at Danehill Lower Earley Present: Raymond Hartman Roger Stanwell Graham Pitman Phil White There was produced to the meeting a Facility Letter dated 19th December 1996 from Barclays Bank PLC ("the Bank"), Oxford City Office to the Company setting out the terms and conditions upon which the Bank is prepared to provide a Bond, Guarantees and Indemnities facility of 300,000 pounds sterling until 31st December 1997. IT WAS RESOLVED 1. That the terms and conditions of the Bonds, Guarantees and Indemnities facility as set out in the said Facility Letter be and they are hereby approved and accepted. 2. That Raymond Hartman be and is hereby authorised to sign on behalf of the Company the copy of the said Facility Letter to indicate acceptance of the terms and conditions. 3. That the Bank be and is hereby authorised to act in all matters relating to the facility upon instructions from the Company signed in accordance with the Bank's mandate for the Company's account with the Bank, current from time to time. I hereby certify the above to be true extract from the Minutes of a Meeting of the Board of Directors held on the date shown above. /s/ Raymond Hartman FOR AND ON BEHALF OF PRO-BEL LIMITED PRO-BEL SOFTWARE LIMITED MINUTES OF A MEETING OF THE BOARD OF DIRECTORS HELD ON 20 December 1996 at Danehill Lower Earley Present: Raymond Hartman Roger Meath Derek Own Malcolm Butler Roger Henderson Neil Maycock There was produced to the meeting a Facility Letter dated 19th December 1996 from Barclays Bank PLC ("the Bank"), Oxford City Office to the Company setting out the terms and conditions upon which the Bank is prepared to provide a Bond, Guarantees and Indemnities facility of 300,000 pounds sterling until 31st December 1997. IT WAS RESOLVED 1. That the terms and conditions of the Bonds, Guarantees and Indemnities facility as set out in the said Facility Letter be and they are hereby approved and accepted. 2. That Roger Henderson be and is hereby authorised to sign on behalf of the Company the copy of the said Facility Letter to indicate acceptance of the terms and conditions. 3. That the Bank be and is hereby authorised to act in all matters relating to the facility upon instructions from the Company signed in accordance with the Bank's mandate for the Company's account with the Bank, current from time to time. I hereby certify the above to be true extract from the Minutes of a Meeting of the Board of Directors held on the date shown above. /s/ Roger Henderson FOR AND ON BEHALF OF PRO-BEL LIMITED BARCLAYS BANK PLC Oxford Corporate Bank ing Centre P.O. Box 858, Oxford OX1 3YP PRIVATE AND CONFIDENTIAL The Directors Your Ref: H/JEF/SH Pro-Bel Limited Our Ref: 01865 442139 Triology Broadcast Limited Fax No.: 01865 442570 Pro-Bel Software Limited Xebec Electronic Production Services Ltd. 19th December 1996 Danehill, Lower Early Reading RG6 4PB Dear Sirs FINANCIAL CRITERIA I thought that it would be helpful to write to indicate the financial criteria which the Bank expects Pro-bel Limited (and its subsidiary companies) ("the Company") to observe in connection with the facilities made available to it by the Bank under our letter dated 19th December 1996. These criteria are not intended to create legally binding covenants on the Company but to indicate the guidelines within which the Bank expects the Company to operate. The contents of this letter are not intended to affect the above facilities and each facility shall remain repayable on demand by the Bank at any time, whether or not the Company has failed to observe any of the financial criteria. Financial Criteria DEBTOR FORMULA (BOOK DEBTS): The Borrower shall ensure that the total amount of indebtedness (actual and contingent) incurred by the Borrower to the Bank shall at all times be covered at least one and a half times by the aggregate value of unencumbered book debts receivable by the Borrower from debtors (except its subsidiaries) which are not overdue by more than 30 days. Overseas debtors will be covered by an appropriate N.C.M. Policy. The Borrower shall, within 30 days of the last day of the month under review provide to the Bank such information as the Bank may reasonably require to enable it to monitor compliance with this formula. Notwithstanding this provision, the facilities offered under this letter shall remain repayable on demand by the Bank at any time, whether or not the Borrower has complied with the above formula. PRO-BEL INC.: During the term of this Facility neither the Borrower nor any of its subsidiaries will provide any further financial accommodation or make any investments by way of shares or debentures (secured or unsecured) or purchase fixed asset in Pro-bel Inc save for this which have already been agreed by the Bank. EVENT OF DEFAULT: By its nature the facility is repayable upon demand and the Bank retains the right, particularly in the event of a breach of the above conditions. I would be grateful if you could please sign and return the attached copy of this letter by way of acknowledgement. Yours faithfully /s/ JA Bullen JA BULLEN SENIOR CORPORATE MANAGER Accepted on the terms and conditions contained herein. For & on behalf of PRO-BEL LIMITED Accepted on the terms and conditions contained herein. For & on behalf of XEBEC ELECTRONIC PRODUCTION SERVICES LIMITED Accepted on the terms and conditions contained herein. For & on behalf of TRILOGY BROADCAST LIMITED Accepted on the terms and conditions contained herein. For & on behalf of PRO-BEL SOFTWARE LIMITED Accepted on the terms and conditions contained herein. Indemnification Agreement: Chyron Corporation (New York) AGREEMENT, effective as of November 19, 1996 between Chyron Corporation, a New York corporation (the "Company"), and Roi Agneta (the "Indemnitee"). WHEREAS, it is essential to the Company to remain and attract as directors and officers the most capable persons available; and WHEREAS, Indemnitee is a director or officer of the Company; and WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment; and WHEREAS, the By-Laws of the Company provide: "The Corporation shall indemnify any person to the full extent permitted, and in the manner provided, by the New York Business Corporation Law ["BCL"], as the same now exists or may hereafter be amended" and WHEREAS, this Agreement satisfies the provision of Section 721 of the BCL: and WHEREAS, in recognition of the fact that the Indemnitee continues to serve as a director or officer of the Company in part in reliance on the aforesaid By-Laws and Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such By-Laws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such By-Laws or any change in the composition of the Company's Board of Directors or any acquisition transaction relating to the Company), and due to the potential inadequacy of the Company's directors' and officers' liability insurance coverage, the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to service the Company directly or, in its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Definitions. (a) Approved Law Firm: shall mean any law firm (i) located in New York City and (ii) rated "av" by Martindale-Hubbel Law Directory. (b) Board of Directors: shall mean the Board of Directors of the Company. (c) Change in Control: shall be deemed to have occurred if (i) any "person" (as such term isused in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than any stockholder (and/or affiliate of such stockholder) on the date of this Agreement or a trustee or other fiduciary holding securities under an employee benefit plan of the Company in substantially the same portions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly of securities of the Company representing 15 percent or more of the totaling voting power represented by the Company's then outstanding Voting Securities (such person being hereinafter referred to as an "Acquiring Person"), or (ii) during any 24- consecutive-month period, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's shareholders was approved by a vote of at least two- thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entry) at least 80 percent of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (d) Claim: shall mean any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by the company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suite or proceeding, whether civil, criminal, administrative, investigative or other. (e) Expenses: shall include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, being a witness in or participate in, any Claim relating to any Indemnifiable Event, together with interest, computed at the Company's average cost of funds for short-term borrowings, accrued from the date of incurrence of such expense to the date Indemnitee receives reimbursement therefore. (f) Indemnifiable Event: shall mean any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation of any type or kind, domestic or foreign, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of anything done or not done by Indemnitee in such capacity. Without limitation of any indemnification provided hereunder, an Indemnitee serving (i) another corporation, partnership, joint venture or trust of which 10 percent or more of the voting power or residual economic interest is held, directly or indirectly, by the Company, or (ii) any employee benefit plan of the Company or an entity referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (g) Reviewing Party: shall be (i) the Board of Directors acting by quorum consisting of directors who are not parties to the particular Claim with respect to which Indemnitee is seeking indemnification, or (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, (A) the Board of Directors upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in Section 2 of this Agreement and in Section 721 of the BCL has been met by the Indemnitee or (B) the shareholders upon a finding that the Indemnitee has met the applicable standard of conduct referred to in clause (ii)(A) of this definition. (h) Voting Securities: shall mean any securities of the Company which vote generally in the election of the directors. 2. Basic Indemnification Arrangement. If Indemnitee was, is or becomes at any time a party to, or witness or other participant in, or is threatened to be made a party to, or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law as soon as practicable but in any event no later than 30 days after written demand is presented to the Company, against any and all Expenses, judgements, fines (including excise taxes assessed on an Indemnitee with respect to an employee benefit plan), penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with, or in respect of, such Expenses, judgements, fines, penalties or amounts paid in settlement) of such Claim. If so requested by Indemnitee, the Company shall advance (within two business days of such request) any and all Expenses to Indemnitee (an "Expense Advance"). Notwithstanding anything in this Agreement to the contrary; (i) Indemnitee shall not be entitled to indemnification pursuant to this Agreement if a judgement or other final adjudication adverse to the Indemnitee establishes that Indemnitee's acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or that Indemnitee personally gained in fact a financial profit or other advantage to which Indemnitee was not legally entitled and (ii) prior to a Change in Control Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has jointed in or consented to the initiation of such Claim. 3. Payment. Notwithstanding the provision of Section 2, the obligations of the Company under Section 2 (which shall in no event be deemed to preclude any right to indemnification to which Indemnitee may be entitled under Section 723(a) of the BCL) shall be subject to the condition that the Reviewing Party shall have authorized such indemnification in the specific case by having determined that Indemnitee is permitted to be indemnified under the applicable standard of conduct set forth in Section 2 and applicable law. The Company shall promptly call a meeting of the Board of Directors with respect to a Claim and agrees to use its best efforts to facilitate a prompt determination by the Receiving Party with respect to the Claim. Indemnitee shall be afforded the opportunity to make submissions to the Reviewing Party with respect to the Claim. The obligation of the company to make an Expense Advance pursuant to Section 2 shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under Section 2 and applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees and undertakes to the full extent required by paragraph (a) of Section 725 of the BCL to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the State of New York having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. 4. Change in Control. If there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Board of Directors who were directors immediately prior to such Change in Control) then (i) all determinations by the Company pursuant to the first sentence of Section 3 hereof and Section 723(b) of the BCL shall be made pursuant to subparagraph (1) or (2)(A) of such Section 723(b) and (ii) with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or By- law of the Company now or hereinafter in effect relating to Claims for Indemnifiable Events (including, but not limited to, any option to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of the BCL) the Company (including the Board of Directors) shall seek legal advice from (and only from) special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company (or any subsidiary of the Company) or the Acquiring Person (or any affiliate or associate of such Acquiring Person) within the last five years (other than in connection with such matters) or indemnitee. Unless Indemnitee has theretofore selected counsel pursuant to this Section 4 and such counsel has been approved by the Company, any Approved Law Firm shall be deemed to satisfy the requirements set forth above. Such counsel, among otherthings, shall render its written opinion to the Company, the Board of Directors and Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising our of or relating to this Agreement or its engagement pursuant hereto. As used in this Section 4, the terms "affiliate" and "associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the date of this Agreement. 5. Indemnification for Additional Expenses. The Company shall indemnify Indemnitee against any and all expenses (including attorneys' fees) and, if requested by Indemnitee, shall (within two business days of such request) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any claim asserted or action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or By-law of the Company now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expenses payment or insurance recovery, as the case may be. 6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgements, fines, penalties and amounts paid in settlement of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereto to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified, to the extent permitted by law, against all Expenses incurred in connection with such Indemnifiable Event. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall, to the extent permitted by law, be on the Company to establish that Indemnitee is not so entitled. 7. Presumption. For purposes of this Agreement, the termination of any claim, action, suite or proceeding, whether civil or criminal, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the By-laws of the Company, the BCL or otherwise. To the extent that a change in the BCL (whether by statue or judicial decision) permits greater indemnification by agreement than would be afforded currently under the By-laws of the Company and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 9. Liability Insurance To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any director or officer of the Company. 10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern. 11. Amendments, Etc. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, By-law or otherwise) of the amounts otherwise Indemnifiable hereunder. 14. Specific Performance. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, the Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either at law or in equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue. 15. Binding Effect, Etc. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or of any other enterprise at the Company's request. 16. Severability. The provisions of this Agreement shall be severable if any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdication to be invalid, void or other wise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 17. Governing Law. This Agreement shall be governed by, and be construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. Executed this 19th day of November, 1996. CHYRON CORPORATION /s/Michael Wellesley-Wesley Michael Wellesley-Wesley Chief Executive Officer /s/Roi Agneta Roi Agneta Idemnification Agreement: Chyron Corporation (New York) AGREEMENT, effective as of November 19, 1996 between Chyron Corporation, a New York corporation (the "Company"), and Sheldon Camhy (the "Indemnitee"). WHEREAS, it is essential to the Company to remain and attract as directors and officers the most capable persons available; and WHEREAS, Indemnitee is a director or officer of the Company; and WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment; and WHEREAS, the By-Laws of the Company provide: "The Corporation shall indemnify any person to the full extent permitted, and in the manner provided, by the New York Business Corporation Law ["BCL"], as the same now exists or may hereafter be amended" and WHEREAS, this Agreement satisfies the provision of Section 721 of the BCL: and WHEREAS, in recognition of the fact that the Indemnitee continues to serve as a director or officer of the Company in part in reliance on the aforesaid By-Laws and Indemnitee's need for substantial protection against personal liabiity in order to enhance Indemnitee's continued service to the Company in an effective manner, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such By-Laws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such By-Laws or any change in the composition of the Company's Board of Directors or any acquisition transaction relating to the Company), and due to the potential inadequacy of the Company's directors' and officers' liability insurance coverage, the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to service the Company directly or, in its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Definitions. (a) Approved Law Firm: shall mean any law firm (i) located in New York City and (ii) rated "av" by Martindale-Hubbel Law Directory. (b) Board of Directors: shalll mean the Board of Directors of the Company. (c) Change in Control: shall be deemed to have occured if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than any stockholder (and/or affiliate of such stockholder) on the date of this Agreement or a trustee or other fiduciary holding securities under an employee benefit plan of the Company in substantially the same portions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly of securities of the Company representing 15 percent or more of the totaling voting power represented by the Company's then outstanding Voting Securities (such person being hereinafter referred to as an "Acquiring Person"), or (ii) during any 24-consecutive-month period, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Comany outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the survivng entry) at least 80 percent of the total voting power repreented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (d) Claim: shall mean any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by the company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suite or proceeding, whether civil, criminal, administrative, investigative or other. (e) Expenses: shall include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, being a witness in or participate in, any Claimrelating to any Indemnifiable Event, together with interest, computed at the Company's average cost of funds for short-term borrowings, accrued from the date of incurrence of such expense to the date Indemnitee receives reimbursement therefore. (f) Indemnifiable Event: shall mean any event or occurence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation of any type or kind, domestic or foreign, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of anything done or not done by Indemnitee in such capacity. Without limitation of any indemnification provided hereunder, an Indemnitee serving (i) another corporation, partnership, joint venture or trust of which 10 percent or more of the voting power or residual economic interest is held, directly or indirectly, by the Company, or (ii) any employee benefit plan of the Company or an entity referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (g) Reviewing Party: shall be (i) the Board of Directors acting by quorum consisting of directors who are not parties to the particular Claim with respect to which Indemnitee is seeking indemnification, or (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, (A) the Board of Directors upon the opinion in writing of independent legal counsel that indemnifiction is proper in the circumstances because the applicable standard of conduct set forth in Section 2 of this Agreement and in Section 721 of the BCL has been met by the Indemnitee or (B) the shareholders upon a finding that the Indenitee has met the applicable standard of conduct referred to in clause (ii)(A) of this definition. (h) Voting Securities: shall mean any securities of the Company which vote generally in the election of the directors. 2. Basic Indemnification Arrangement. If Indemnitee was, is or becomes at any time a party to, or witness or other participant in, or is threatened to be made a party to, or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law as soon as practicable but in any event no later than 30 days after written demand is presented to the Company, against any and all Expenses, judgements, fines (including excise taxes assessed on an Indemnitee with respect to an employee benefit plan), penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with, or in respect of, such Expenses, judgements, fines, penalties or amounts paid in settlement) of such Claim. If so requested by Indemnitee, the Company shall advance (within two business days of such request) any and all Expenses to Indemnitee (an "Expense Advance"). Notwithhstanding anything in this Agreement to the contrary; (i) Indemnitee shall not be entitled to indemnification pursuant to this Agreement if a judgement or other final adjudication adverse to the Indemnitee establishes that Indemnitee's acts were comitted in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or that Indemnitee personally gained in fact a financial profit or other advantage to which Indemniteewas not legally entitled and (ii) prior to a Change in Control Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has jointed in or consented to the initiation of such Claim. 3. Payment. Notwithstanding the provision of Section 2, the obligations of the Company under Section 2 (which shall in no event be deemed to preclude any right to indemnification to which Indemnitee may be entitled under Section 723(a) of the BCL) shall be subject to the condition that the Reviewing Party shall have authorized such indemnification in the specific case by having determined that Indemnitee is permitted to be indemnified under the applicable standard of conduct set forth in Section 2 and applicable law. The Company shall promptly call a meeting of the Board of Directors with respect to a Claim and agrees to use its best efforts to faciiate a prompt determination by the Receiving Party with respect to the Claim. Indemnitee shall be afforded the opportunity to make submissions to the Reviewing Party with respect to the Claim. The obligation of the company to make an Expense Advance ursuant to Section 2 shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under Section 2 and applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees and undertakes to the full extent required by paragraph (a) of Section 725 of the BCL to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the State of New York having subject matter jurisdication thereof and in which venue is proper sekking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. 4. Change in Control. If there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Board of Directors who were directors immediately prior to such Change in Control) then (i) all determinations by the Company pursuant to the first sentence of Section 3 hereof and Section 723(b) of the BCL shall be made pursuant to subparagraph (1) or (2)(A) of such Section 723(b) and (ii) with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or By- law of the Company now or hereinafter in effect relating to Claims for Indemnifiable Events (including, but not limited to, any option to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of the BCL) the Company (including the Board of Directors) shall seek legal advice from (and only from) special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company (or any subsidiary of the Company) or the Acquiring Person (or any affiliate or associate of such Acquiring Person) within the last five years (other than in connection with such matters) or indemnitee. Unless Indemnitee has theretofore selected counsel pursuant to this Section 4 and such counsel has been aproved by the Company, any Approved Law Firm shall be deemed to satisfy the requirements set forth above. Such counsel, among otherthings, shall render its written opinion to the Company, the Board of Directors and Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the special, independent coursel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising our of or relating to this Agreement or its engagement pursuant hereto. As used in this Section 4, the terms "affiliate" and "associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the date of this Agreement. 5. Indemnification for Additional Expenses. The Company shall indemnify Indemnitee against any and all expenses (including attorneys' fees) and, if requested by Indemnitee, shall (within two business days of such request) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any claim aserted or action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or By-law of the Company now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expenses payment or insurance recovery, as the case may be. 6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgements, fines, penalties and amounts paid in settlement of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereto to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified, to the extent permitted by law, against all Expenses incurred in connection with such Indemnifiable Event. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall, to the extent permitted by law, be on the Company to establish that Indemnitee is not so entitled. 7. Presumption. For purposes of this Agreement, the termination of any claim, action, suite or proceeding, whether civil or criminal, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the By-laws of the Company, the BCL or otherwise. To the extent that a change in the BCL (whether by statue or judicial decision) permits greater indemnification by agreement than would be afforded currently under the By-laws of the Company and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 9. Liability Insurance To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any director or officer of the Company. 10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern. 11. Amendments, Etc. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, By-law or otherwise) of the amounts otherwise Indemnifiable hereunder. 14. Specific Performance. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, the Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either at law or in equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue. 15. Binding Effect, Etc. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or of any other enterprise at the Company's request. 16. Severability. The provisions of this Agreement shall be severable if any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or other wise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 17. Governing Law. This Agreement shall be governed by, and be construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. Executed this 19th day of November, 1996. CHYRON CORPORATION /s/Michael Wellesley-Wesley Michael Wellesley-Wesley Chief Executive Officer /s/Sheldon Camhy Sheldon Camhy Indemnification Agreement: Chyron Corporation (New York) AGREEMENT, effective as of November 19, 1996 between Chyron Corporation, a New York corporation (the "Company"), and James Coppersmith (the "Indemnitee"). WHEREAS, it is essential to the Company to remain and attract as directors and officers the most capable persons available; and WHEREAS, Indemnitee is a director or officer of the Company; and WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment; and WHEREAS, the By-Laws of the Company provide: "The Corporation shall indemnify any person to the full extent permitted, and in the manner provided, by the New York Business Corporation Law ["BCL"], as the same now exists or may hereafter be amended" and WHEREAS, this Agreement satisfies the provision of Section 721 of the BCL: and WHEREAS, in recognition of the fact that the Indemnitee continues to serve as a director or officer of the Company in part in reliance on the aforesaid By-Laws and Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such By-Laws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such By-Laws or any change in the composition of the Company's Board of Directors or any acquisition transaction relating to the Company), and due to the potential inadequacy of the Company's directors' and officers' liability insurance coverage, the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to service the Company directly or, in its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Definitions. (a) Approved Law Firm: shall mean any law firm (i) located in New York City and (ii) rated "av" by Martindale-Hubbel Law Directory. (b) Board of Directors: shall mean the Board of Directors of the Company. (c) Change in Control: shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than any stockholder (and/or affiliate of such stockholder) on the date of this Agreement or a trustee or other fiduciary holding securities under an employee benefit plan of the Company in substantially the same portions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly of securities of the Company representing 15 percent or more of the totaling voting power represented by the Company's then outstanding Voting Securities (such person being hereinafter referred to as an "Acquiring Person"), or (ii) during any 24-consecutive-month period, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's shareholders was approved by a vote of at least two- thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entry) at least 80 percent of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (d) Claim: shall mean any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by the company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suite or proceeding, whether civil, criminal, administrative, investigative or other. (e) Expenses: shall include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, being a witness in or participate in, any Claim relating to any Indemnifiable Event, together with interest, computed at the Company's average cost of funds for short-term borrowings, accrued from the date of incurrence of such expense to the date Indemnitee receives reimbursement therefore. (f) Indemnifiable Event: shall mean any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation of any type or kind, domestic or foreign, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of anything done or not done by Indemnitee in such capacity. Without limitation of any indemnification provided hereunder, an Indemnitee serving (i) another corporation, partnership, joint venture or trust of which 10 percent or more of the voting power or residual economic interest is held, directly or indirectly, by the Company, or (ii) any employee benefit plan of the Company or an entity referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (g) Reviewing Party: shall be (i) the Board of Directors acting by quorum consisting of directors who are not parties to the particular Claim with respect to which Indemnitee is seeking indemnification, or (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, (A) the Board of Directors upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in Section 2 of this Agreement and in Section 721 of the BCL has been met by the Indemnitee or (B) the shareholders upon a finding that the Indemnitee has met the applicable standard of conduct referred to in clause (ii) (A) of this definition. (h) Voting Securities: shall mean any securities of the Company which vote generally in the election of the directors. 2. Basic Indemnification Arrangement. If Indemnitee was, is or becomes at any time a party to, or witness or other participant in, or is threatened to be made a party to, or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law as soon as practicable but in any event no later than 30 days after written demand is presented to the Company, against any and all Expenses, judgements, fines (including excise taxes assessed on an Indemnitee with respect to an employee benefit plan), penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with, or in respect of, such Expenses, judgements, fines, penalties or amounts paid in settlement) of such Claim. If so requested by Indemnitee, the Company shall advance (within two business days of such request) any and all Expenses to Indemnitee (an "Expense Advance"). Notwithstanding anything in this Agreement to the contrary; (i) Indemnitee shall not be entitled to indemnification pursuant to this Agreement if a judgement or other final adjudication adverse to the Indemnitee establishes that Indemnitee's acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or that Indemnitee personally gained in fact a financial profit or other advantage to which Indemnitee was not legally entitled and (ii) prior to a Change in Control Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has jointed in or consented to the initiation of such Claim. 3. Payment. Notwithstanding the provision of Section 2, the obligations of the Company under Section 2 (which shall in no event be deemed to preclude any right to indemnification to which Indemnitee may be entitled under Section 723(a) of the BCL) shall be subject to the condition that the Reviewing Party shall have authorized such indemnification in the specific case by having determined that Indemnitee is permitted to be indemnified under the applicable standard of conduct set forth in Section 2 and applicable law. The Company shall promptly call a meeting of the Board of Directors with respect to a Claim and agrees to use its best efforts to facilitate a prompt determination by the Receiving Party with respect to the Claim. Indemnitee shall be afforded the opportunity to make submissions to the Reviewing Party with respect to the Claim. The obligation of the company to make an Expense Advance pursuant to Section 2 shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under Section 2 and applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees and undertakes to the full extent required by paragraph (a) of Section 725 of the BCL to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the State of New York having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. 4. Change in Control. If there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Board of Directors who were directors immediately prior to such Change in Control) then (i) all determinations by the Company pursuant to the first sentence of Section 3 hereof and Section 723(b) of the BCL shall be made pursuant to subparagraph (1) or (2)(A) of such Section 723(b) and (ii) with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or By- law of the Company now or hereinafter in effect relating to Claims for Indemnifiable Events (including, but not limited to, any option to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of the BCL) the Company (including the Board of Directors) shall seek legal advice from (and only from) special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company (or any subsidiary of the Company) or the Acquiring Person (or any affiliate or associate of such Acquiring Person) within the last five years (other than in connection with such matters) or indemnitee. Unless Indemnitee has theretofore selected counsel pursuant to this Section 4 and such counsel has been approved by the Company, any Approved Law Firm shall be deemed to satisfy the requirements set forth above. Such counsel, among otherthings, shall render its written opinion to the Company, the Board of Directors and Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising our of or relating to this Agreement or its engagement pursuant hereto. As used in this Section 4, the terms "affiliate" and "associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the date of this Agreement. 5. Indemnification for Additional Expenses. The Company shall indemnify Indemnitee against any and all expenses (including attorneys' fees) and, if requested by Indemnitee, shall (within two business days of such request) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any claim asserted or action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or By-law of the Company now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expenses payment or insurance recovery, as the case may be. 6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgements, fines, penalties and amounts paid in settlement of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereto to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified, to the extent permitted by law, against all Expenses incurred in connection with such Indemnifiable Event. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall, to the extent permitted by law, be on the Company to establish that Indemnitee is not so entitled. 7. Presumption. For purposes of this Agreement, the termination of any claim, action, suite or proceeding, whether civil or criminal, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the By-laws of the Company, the BCL or otherwise. To the extent that a change in the BCL (whether by statue or judicial decision) permits greater indemnification by agreement than would be afforded currently under the By-laws of the Company and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 9. Liability Insurance To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any director or officer of the Company. 10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern. 11. Amendments, Etc. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, By-law or otherwise) of the amounts otherwise Indemnifiable hereunder. 14. Specific Performance. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, the Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either at law or in equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue. 15. Binding Effect, Etc. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or of any other enterprise at the Company's request. 16. Severability. The provisions of this Agreement shall be severable if any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or other wise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 17. Governing Law. This Agreement shall be governed by, and be construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. Executed this 19th day of November, 1996. CHYRON CORPORATION /s/Michael Wellesley-Wesley Michael Wellesley-Wesley Chief Executive Officer /s/James Coppersmith James Coppersmith Indemnification Agreement: Chyron Corporation (New York) AGREEMENT, effective as of November 19, 1996 between Chyron Corporation, a New York corporation (the "Company"), and Daniel DeWolf (the "Indemnitee"). WHEREAS, it is essential to the Company to remain and attract as directors and officers the most capable persons available; and WHEREAS, Indemnitee is a director or officer of the Company; and WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment; and WHEREAS, the By-Laws of the Company provide: "The Corporation shall indemnify any person to the full extent permitted, and in the manner provided, by the New York Business Corporation Law ["BCL"], as the same now exists or may hereafter be amended" and WHEREAS, this Agreement satisfies the provision of Section 721 of the BCL: and WHEREAS, in recognition of the fact that the Indemnitee continues to serve as a director or officer of the Company in part in reliance on the aforesaid By-Laws and Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such By-Laws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such By-Laws or any change in the composition of the Company's Board of Directors or any acquisition transaction relating to the Company), and due to the potential inadequacy of the Company's directors' and officers' liability insurance coverage, the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to service the Company directly or, in its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Definitions. (a) Approved Law Firm: shall mean any law firm (i) located in New York City and (ii) rated "av" by Martindale-Hubbel Law Directory. (b) Board of Directors: shall mean the Board of Directors of the Company. (c) Change in Control: shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than any stockholder (and/or affiliate of such stockholder) on the date of this Agreement or a trustee or other fiduciary holding securities under an employee benefit plan of the Company in substantially the same portions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly of securities of the Company representing 15 percent or more of the totaling voting power represented by the Company's then outstanding Voting Securities (such person being hereinafter referred to as an "Acquiring Person"), or (ii) during any 24-consecutive-month period, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entry) at least 80 percent of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (d) Claim: shall mean any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by the company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suite or proceeding, whether civil, criminal, administrative, investigative or other. (e) Expenses: shall include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, being a witness in or participate in, any Claim relating to any Indemnifiable Event, together with interest, computed at the Company's average cost of funds for short-term borrowings, accrued from the date of incurrence of such expense to the date Indemnitee receives reimbursement therefore. (f) Indemnifiable Event: shall mean any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation of any type or kind, domestic or foreign, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of anything done or not done by Indemnitee in such capacity. Without limitation of any indemnification provided hereunder, an Indemnitee serving (i) another corporation, partnership, joint venture or trust of which 10 percent or more of the voting power or residual economic interest is held, directly or indirectly, by the Company, or (ii) any employee benefit plan of the Company or an entity referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (g) Reviewing Party: shall be (i) the Board of Directors acting by quorum consisting of directors who are not parties to the particular Claim with respect to which Indemnitee is seeking indemnification, or (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, (A) the Board of Directors upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in Section 2 of this Agreement and in Section 721 of the BCL has been met by the Indemnitee or (B) the shareholders upon a finding that the Indemnitee has met the applicable standard of conduct referred to in clause (ii) (A) of this definition. (h) Voting Securities: shall mean any securities of the Company which vote generally in the election of the directors. 2. Basic Indemnification Arrangement. If Indemnitee was, is or becomes at any time a party to, or witness or other participant in, or is threatened to be made a party to, or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law as soon as practicable but in any event no later than 30 days after written demand is presented to the Company, against any and all Expenses, judgements, fines (including excise taxes assessed on an Indemnitee with respect to an employee benefit plan), penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with, or in respect of, such Expenses, judgements, fines, penalties or amounts paid in settlement) of such Claim. If so requested by Indemnitee, the Company shall advance (within two business days of such request) any and all Expenses to Indemnitee (an "Expense Advance"). Notwithstanding anything in this Agreement to the contrary; (i) Indemnitee shall not be entitled to indemnification pursuant to this Agreement if a judgement or other final adjudication adverse to the Indemnitee establishes that Indemnitee's acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or that Indemnitee personally gained in fact a financial profit or other advantage to which Indemnitee was not legally entitled and (ii) prior to a Change in Control Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has jointed in or consented to the initiation of such Claim. 3. Payment. Notwithstanding the provision of Section 2, the obligations of the Company under Section 2 (which shall in no event be deemed to preclude any right to indemnification to which Indemnitee may be entitled under Section 723(a) of the BCL) shall be subject to the condition that the Reviewing Party shall have authorized such indemnification in the specific case by having determined that Indemnitee is permitted to be indemnified under the applicable standard of conduct set forth in Section 2 and applicable law. The Company shall promptly call a meeting of the Board of Directors with respect to a Claim and agrees to use its best efforts to facilitate a prompt determination by the Receiving Party with respect to the Claim. Indemnitee shall be afforded the opportunity to make submissions to the Reviewing Party with respect to the Claim. The obligation of the company to make an Expense Advance pursuant to Section 2 shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under Section 2 and applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees and undertakes to the full extent required by paragraph (a) of Section 725 of the BCL to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the State of New York having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. 4. Change in Control. If there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Board of Directors who were directors immediately prior to such Change in Control) then (i) all determinations by the Company pursuant to the first sentence of Section 3 hereof and Section 723(b) of the BCL shall be made pursuant to subparagraph (1) or (2)(A) of such Section 723(b) and (ii) with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or By- law of the Company now or hereinafter in effect relating to Claims for Indemnifiable Events (including, but not limited to, any option to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of the BCL) the Company (including the Board of Directors) shall seek legal advice from (and only from) special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company (or any subsidiary of the Company) or the Acquiring Person (or any affiliate or associate of such Acquiring Person) within the last five years (other than in connection with such matters) or indemnitee. Unless Indemnitee has theretofore selected counsel pursuant to this Section 4 and such counsel has been approved by the Company, any Approved Law Firm shall be deemed to satisfy the requirements set forth above. Such counsel, among otherthings, shall render its written opinion to the Company, the Board of Directors and Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising our of or relating to this Agreement or its engagement pursuant hereto. As used in this Section 4, the terms "affiliate" and "associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the date of this Agreement. 5. Indemnification for Additional Expenses. The Company shall indemnify Indemnitee against any and all expenses (including attorneys' fees) and, if requested by Indemnitee, shall (within two business days of such request) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any claim asserted or action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or By-law of the Company now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expenses payment or insurance recovery, as the case may be. 6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgements, fines, penalties and amounts paid in settlement of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereto to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified, to the extent permitted by law, against all Expenses incurred in connection with suchIndemnifiable Event. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall, to the extent permitted by law, be on the Company to establish that Indemnitee is not so entitled. 7. Presumption. For purposes of this Agreement, the termination of any claim, action, suite or proceeding, whether civil or criminal, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the By-laws of the Company, the BCL or otherwise. To the extent that a change in the BCL (whether by statue or judicial decision) permits greater indemnification by agreement than would be afforded currently under the By-laws of the Company and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 9. Liability Insurance To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any director or officer of the Company. 10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern. 11. Amendments, Etc. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, By-law or otherwise) of the amounts otherwise Indemnifiable hereunder. 14. Specific Performance. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, the Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either at law or in equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue. 15. Binding Effect, Etc. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or of any other enterprise at the Company's request. 16. Severability. The provisions of this Agreement shall be severable if any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or other wise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 17. Governing Law. This Agreement shall be governed by, and be construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. Executed this 19th day of November, 1996. CHYRON CORPORATION /s/Michael Wellesley-Wesley Michael Wellesley-Wesley Chief Executive Officer /s/Daniel DeWolf Daniel DeWolf Indemnification Agreement: Chyron Corporation (New York) AGREEMENT, effective as of November 19, 1996 between Chyron Corporation, a New York corporation (the "Company"), and Charles M. Diker (the "Indemnitee"). WHEREAS, it is essential to the Company to remain and attract as directors and officers the most capable persons available; and WHEREAS, Indemnitee is a director or officer of the Company; and WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment; and WHEREAS, the By-Laws of the Company provide: "The Corporation shall indemnify any person to the full extent permitted, and in the manner provided, by the New York Business Corporation Law ["BCL"], as the same now exists or may hereafter be amended" and WHEREAS, this Agreement satisfies the provision of Section 721 of the BCL: and WHEREAS, in recognition of the fact that the Indemnitee continues to serve as a director or officer of the Company in part in reliance on the aforesaid By-Laws and Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such By-Laws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such By-Laws or any change in the composition of the Company's Board of Directors or any acquisition transaction relating to the Company), and due to the potential inadequacy of the Company's directors' and officers' liability insurance coverage, the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to service the Company directly or, in its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Definitions. (a) Approved Law Firm: shall mean any law firm (i) located in New York City and (ii) rated "av" by Martindale-Hubbel Law Directory. (b) Board of Directors: shall mean the Board of Directors of the Company. (c) Change in Control: shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than any stockholder (and/or affiliate of such stockholder) on the date of this Agreement or a trustee or other fiduciary holding securities under an employee benefit plan of the Company in substantially the same portions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly of securities of the Company representing 15 percent or more of the totaling voting power represented by the Company's then outstanding Voting Securities (such, person being hereinafter referred to as an "Acquiring Person"), or (ii) during any 24-consecutive-month period, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entry) at least 80 percent of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (d) Claim: shall mean any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by the company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suite or proceeding, whether civil, criminal, administrative, investigative or other. (e) Expenses: shall include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, being a witness in or participate in, any Claim relating to any Indemnifiable Event, together with interest, computed at the Company's average cost of funds for short-term borrowings, accrued from the date of incurrence of such expense to the date Indemnitee receives reimbursement therefore. (f) Indemnifiable Event: shall mean any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation of any type or kind, domestic or foreign, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of anything done or not done by Indemnitee in such capacity. Without limitation of any indemnification provided hereunder, an Indemnitee serving (i) another corporation, partnership, joint venture or trust of which 10 percent or more of the voting power or residual economic interest is held, directly or indirectly, by the Company, or (ii) any employee benefit plan of the Company or an entity referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (g) Reviewing Party: shall be (i) the Board of Directors acting by quorum consisting of directors who are not parties to the particular Claim with respect to which Indemnitee is seeking indemnification, or (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, (A) the Board of Directors upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in Section 2 of this Agreement and in Section 721 of the BCL has been met by the Indemnitee or (B) the shareholders upon a finding that the Indemnitee has met the applicable standard of conduct referred to in clause (ii) (A) of this definition. (h) Voting Securities: shall mean any securities of the Company which vote generally in the election of the directors. 2. Basic Indemnification Arrangement. If Indemnitee was, is or becomes at any time a party to, or witness or other participant in, or is threatened to be made a party to, or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law as soon as practicable but in any event no later than 30 days after written demand is presented to the Company, against any and all Expenses, judgements, fines (including excise taxes assessed on an Indemnitee with respect to an employee benefit plan), penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with, or in respect of, such Expenses, judgements, fines, penalties or amounts paid in settlement) of such Claim. If so requested by Indemnitee, the Company shall advance (within two business days of such request) any and all Expenses to Indemnitee (an "Expense Advance"). Notwithstanding anything in this Agreement to the contrary; (i) Indemnitee shall not be entitled to indemnification pursuant to this Agreement if a judgement or other final adjudication adverse to the Indemnitee establishes that Indemnitee's acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or that Indemnitee personally gained in fact a financial profit or other advantage to which Indemnitee was not legally entitled and (ii) prior to a Change in Control Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has jointed in or consented to the initiation of such Claim. 3. Payment. Notwithstanding the provision of Section 2, the obligations of the Company under Section 2 (which shall in no event be deemed to preclude any right to indemnification to which Indemnitee may be entitled under Section 723(a) of the BCL) shall be subject to the condition that the Reviewing Party shall have authorized such indemnification in the specific case by having determined that Indemnitee is permitted to be indemnified under the applicable standard of conduct set forth in Section 2 and applicable law. The Company shall promptly call a meeting of the Board of Directors with respect to a Claim and agrees to use its best efforts to facilitate a prompt determination by the Receiving Party with respect to the Claim. Indemnitee shall be afforded the opportunity to make submissions to the Reviewing Party with respect to the Claim. The obligation of the company to make an Expense Advance pursuant to Section 2 shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under Section 2 and applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees and undertakes to the full extent required by paragraph (a) of Section 725 of the BCL to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the State of New York having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. 4. Change in Control. If there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Board of Directors who were directors immediately prior to such Change in Control) then (i) all determinations by the Company pursuant to the first sentence of Section 3 hereof and Section 723(b) of the BCL shall be made pursuant to subparagraph (1) or (2)(A) of such Section 723(b) and (ii) with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or By- law of the Company now or hereinafter in effect relating to Claims for Indemnifiable Events (including, but not limited to, any option to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of the BCL) the Company (including the Board of Directors) shall seek legal advice from (and only from) special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company (or any subsidiary of the Company) or the Acquiring Person (or any affiliate or associate of such Acquiring Person) within the last five years (other than in connection with such matters) or indemnitee. Unless Indemnitee has theretofore selected counsel pursuant to this Section 4 and such counsel has been approved by the Company, any Approved Law Firm shall be deemed to satisfy the requirements set forth above. Such counsel, among otherthings, shall render its written opinion to the Company, the Board of Directors and Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising our of or relating to this Agreement or its engagement pursuant hereto. As used in this Section 4, the terms "affiliate" and "associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the date of this Agreement. 5. Indemnification for Additional Expenses. The Company shall indemnify Indemnitee against any and all expenses (including attorneys' fees) and, if requested by Indemnitee, shall (within two business days of such request) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any claim asserted or action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or By-law of the Company now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expenses payment or insurance recovery, as the case may be. 6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgements, fines, penalties and amounts paid in settlement of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereto to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified, to the extent permitted by law, against all Expenses incurred in connection with such Indemnifiable Event. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall, to the extent permitted by law, be on the Company to establish that Indemnitee is not so entitled. 7. Presumption. For purposes of this Agreement, the termination of any claim, action, suite or proceeding, whether civil or criminal, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the By-laws of the Company, the BCL or otherwise. To the extent that a change in the BCL (whether by statue or judicial decision) permits greater indemnification by agreement than would be afforded currently under the By-laws of the Company and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 9. Liability Insurance To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any director or officer of the Company. 10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern. 11. Amendments, Etc. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, By-law or otherwise) of the amounts otherwise Indemnifiable hereunder. 14. Specific Performance. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, the Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either at law or in equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue. 15. Binding Effect, Etc. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or of any other enterprise at the Company's request. 16. Severability. The provisions of this Agreement shall be severable if any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or other wise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 17. Governing Law. This Agreement shall be governed by, and be construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. Executed this 19th day of November, 1996. CHYRON CORPORATION /s/Michael Wellesley-Wesley Michael Wellesley-Wesley Chief Executive Officer /s/Charles M. Diker Charles M. Diker Indemnification Agreement: Chyron Corporation (New York) AGREEMENT, effective as of November 19, 1996 between Chyron Corporation, a New York corporation (the "Company"), and Donald P. Greenberg (the "Indemnitee"). WHEREAS, it is essential to the Company to remain and attract as directors and officers the most capable persons available; and WHEREAS, Indemnitee is a director or officer of the Company; and WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment; and WHEREAS, the By-Laws of the Company provide: "The Corporation shall indemnify any person to the full extent permitted, and in the manner provided, by the New York Business Corporation Law ["BCL"], as the same now exists or may hereafter be amended" and WHEREAS, this Agreement satisfies the provision of Section 721 of the BCL: and WHEREAS, in recognition of the fact that the Indemnitee continues to serve as a director or officer of the Company in part in reliance on the aforesaid By-Laws and Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such By-Laws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such By-Laws or any change in the composition of the Company's Board of Directors or any acquisition transaction relating to the Company), and due to the potential inadequacy of the Company's directors' and officers' liability insurance coverage, the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to service the Company directly or, in its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Definitions. (a) Approved Law Firm: shall mean any law firm (i) located in New York City and (ii) rated "av" by Martindale-Hubbel Law Directory. (b) Board of Directors: shall mean the Board of Directors of the Company. (c) Change in Control: shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than any stockholder (and/or affiliate of such stockholder) on the date of this Agreement or a trustee or other fiduciary holding securities under an employee benefit plan of the Company in substantially the same portions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly of securities of the Company representing 15 percent or more of the totaling voting power represented by the Company's then outstanding Voting Securities (such person being hereinafter referred to as an "Acquiring Person"), or (ii) during any 24-consecutive-month period, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entry) at least 80 percent of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (d) Claim: shall mean any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by the company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suite or proceeding, whether civil, criminal, administrative, investigative or other. (e) Expenses: shall include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, being a witness in or participate in, any Claim relating to any Indemnifiable Event, together with interest, computed at the Company's average cost of funds for short-term borrowings, accrued from the date of incurrence of such expense to the date Indemnitee receives reimbursement therefore. (f) Indemnifiable Event: shall mean any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation of any type or kind, domestic or foreign, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of anything done or not done by Indemnitee in such capacity. Without limitation of any indemnification provided hereunder, an Indemnitee serving (i) another corporation, partnership, joint venture or trust of which 10 percent or more of the voting power or residual economic interest is held, directly or indirectly, by the Company, or (ii) any employee benefit plan of the Company or an entity referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (g) Reviewing Party: shall be (i) the Board of Directors acting by quorum consisting of directors who are not parties to the particular Claim with respect to which Indemnitee is seeking indemnification, or (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, (A) the Board of Directors upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in Section 2 of this Agreement and in Section 721 of the BCL has been met by the Indemnitee or (B) the shareholders upon a finding that the Indemnitee has met the applicable standard of conduct referred to in clause (ii) (A) of this definition. (h) Voting Securities: shall mean any securities of the Company which vote generally in the election of the directors. 2. Basic Indemnification Arrangement. If Indemnitee was, is or becomes at any time a party to, or witness or other participant in, or is threatened to be made a party to, or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law as soon as practicable but in any event no later than 30 days after written demand is presented to the Company, against any and all Expenses, judgements, fines (including excise taxes assessed on an Indemnitee with respect to an employee benefit plan), penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with, or in respect of, such Expenses, judgements, fines, penalties or amounts paid in settlement) of such Claim. If so requested by Indemnitee, the Company shall advance (within two business days of such request) any and all Expenses to Indemnitee (an "Expense Advance"). Notwithstanding anything in this Agreement to the contrary; (i) Indemnitee shall not be entitled to indemnification pursuant to this Agreement if a judgement or other final adjudication adverse to the Indemnitee establishes that Indemnitee's acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or that Indemnitee personally gained in fact a financial profit or other advantage to which Indemnitee was not legally entitled and (ii) prior to a Change in Control Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has jointed in or consented to the initiation of such Claim. 3. Payment. Notwithstanding the provision of Section 2, the obligations of the Company under Section 2 (which shall in no event be deemed to preclude any right to indemnification to which Indemnitee may be entitled under Section 723(a) of the BCL) shall be subject to the condition that the Reviewing Party shall have authorized such indemnification in the specific case by having determined that Indemnitee is permitted to be indemnified under the applicable standard of conduct set forth in Section 2 and applicable law. The Company shall promptly call a meeting of the Board of Directors with respect to a Claim and agrees to use its best efforts to facilitate a prompt determination by the Receiving Party with respect to the Claim. Indemnitee shall be afforded the opportunity to make submissions to the Reviewing Party with respect to the Claim. The obligation of the company to make an Expense Advance pursuant to Section 2 shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under Section 2 and applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees and undertakes to the full extent required by paragraph (a) of Section 725 of the BCL to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the State of New York having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. 4. Change in Control. If there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Board of Directors who were directors immediately prior to such Change in Control) then (i) all determinations by the Company pursuant to the first sentence of Section 3 hereof and Section 723(b) of the BCL shall be made pursuant to subparagraph (1) or (2)(A) of such Section 723(b) and (ii) with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or By- law of the Company now or hereinafter in effect relating to Claims for Indemnifiable Events (including, but not limited to, any option to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of the BCL) the Company (including the Board of Directors) shall seek legal advice from (and only from) special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company (or any subsidiary of the Company) or the Acquiring Person (or any affiliate or associate of such Acquiring Person) within the last five years (other than in connection with such matters) or indemnitee. Unless Indemnitee has theretofore selected counsel pursuant to this Section 4 and such counsel has been approved by the Company, any Approved Law Firm shall be deemed to satisfy the requirements set forth above. Such counsel, among otherthings, shall render its written opinion to the Company, the Board of Directors and Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising our of or relating to this Agreement or its engagement pursuant hereto. As used in this Section 4, the terms "affiliate" and "associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the date of this Agreement. 5. Indemnification for Additional Expenses. The Company shall indemnify Indemnitee against any and all expenses (including attorneys' fees) and, if requested by Indemnitee, shall (within two business days of such request) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any claim asserted or action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or By-law of the Company now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expenses payment or insurance recovery, as the case may be. 6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgements, fines, penalties and amounts paid in settlement of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereto to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified, to the extent permitted by law, against all Expenses incurred in connection with such Indemnifiable Event. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall, to the extent permitted by law, be on the Company to establish that Indemnitee is not so entitled. 7. Presumption. For purposes of this Agreement, the termination of any claim, action, suite or proceeding, whether civil or criminal, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the By-laws of the Company, the BCL or otherwise. To the extent that a change in the BCL (whether by statue or judicial decision) permits greater indemnification by agreement than would be afforded currently under the By-laws of the Company and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 9. Liability Insurance To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any director or officer of the Company. 10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern. 11. Amendments, Etc. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, By-law or otherwise) of the amounts otherwise Indemnifiable hereunder. 14. Specific Performance. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, the Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either at law or in equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue. 15. Binding Effect, Etc. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or of any other enterprise at the Company's request. 16. Severability. The provisions of this Agreement shall be severable if any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or other wise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 17. Governing Law. This Agreement shall be governed by, and be construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. Executed this 19th day of November, 1996. CHYRON CORPORATION /s/Michael Wellesley-Wesley Michael Wellesley-Wesley Chief Executive Officer /s/Donald P. Greenberg Donald P. Greenberg Indemnification Agreement: Chyron Corporation (New York) AGREEMENT, effective as of November 19, 1996 between Chyron Corporation, a New York corporation (the "Company"), and Ray Hartman (the "Indemnitee"). WHEREAS, it is essential to the Company to remain and attract as directors and officers the most capable persons available; and WHEREAS, Indemnitee is a director or officer of the Company; and WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment; and WHEREAS, the By-Laws of the Company provide: "The Corporation shall indemnify any person to the full extent permitted, and in the manner provided, by the New York Business Corporation Law ["BCL"], as the same now exists or may hereafter be amended" and WHEREAS, this Agreement satisfies the provision of Section 721 of the BCL: and WHEREAS, in recognition of the fact that the Indemnitee continues to serve as a director or officer of the Company in part in reliance on the aforesaid By-Laws and Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such By-Laws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such By-Laws or any change in the composition of the Company's Board of Directors or any acquisition transaction relating to the Company), and due to the potential inadequacy of the Company's directors' and officers' liability insurance coverage, the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to service the Company directly or, in its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Definitions. (a) Approved Law Firm: shall mean any law firm (i) located in New York City and (ii) rated "av" by Martindale-Hubbel Law Directory. (b) Board of Directors: shall mean the Board of Directors of the Company. (c) Change in Control: shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than any stockholder (and/or affiliate of such stockholder) on the date of this Agreement or a trustee or other fiduciary holding securities under an employee benefit plan of the Company in substantially the same portions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly of securities of the Company representing 15 percent or more of the totaling voting power represented by the Company's then outstanding Voting Securities (such person being hereinafter referred to as an "Acquiring Person"), or (ii) during any 24-consecutive-month period, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entry) at least 80 percent of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (d) Claim: shall mean any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by the company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suite or proceeding, whether civil, criminal, administrative, investigative or other. (e) Expenses: shall include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, being a witness in or participate in, any Claim relating to any Indemnifiable Event, together with interest, computed at the Company's average cost of funds for short-term borrowings, accrued from the date of incurrence of such expense to the date Indemnitee receives reimbursement therefore. (f) Indemnifiable Event: shall mean any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation of any type or kind, domestic or foreign, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of anything done or not done by Indemnitee in such capacity. Without limitation of any indemnification provided hereunder, an Indemnitee serving (i) another corporation, partnership, joint venture or trust of which 10 percent or more of the voting power or residual economic interest is held, directly or indirectly, by the Company, or (ii) any employee benefit plan of the Company or an entity referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (g) Reviewing Party: shall be (i) the Board of Directors acting by quorum consisting of directors who are not parties to the particular Claim with respect to which Indemnitee is seeking indemnification, or (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, (A) the Board of Directors upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in Section 2 of this Agreement and in Section 721 of the BCL has been met by the Indemnitee or (B) the shareholders upon a finding that the Indemnitee has met the applicable standard of conduct referred to in clause (ii) (A) of this definition. (h) Voting Securities: shall mean any securities of the Company which vote generally in the election of the directors. 2. Basic Indemnification Arrangement. If Indemnitee was, is or becomes at any time a party to, or witness or other participant in, or is threatened to be made a party to, or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law as soon as practicable but in any event no later than 30 days after written demand is presented to the Company, against any and all Expenses, judgements, fines (including excise taxes assessed on an Indemnitee with respect to an employee benefit plan), penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with, or in respect of, such Expenses, judgements, fines, penalties or amounts paid in settlement) of such Claim. If so requested by Indemnitee, the Company shall advance (within two business days of such request) any and all Expenses to Indemnitee (an "Expense Advance"). Notwithstanding anything in this Agreement to the contrary; (i) Indemnitee shall not be entitled to indemnification pursuant to this Agreement if a judgement or other final adjudication adverse to the Indemnitee establishes that Indemnitee's acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or that Indemnitee personally gained in fact a financial profit or other advantage to which Indemnitee was not legally entitled and (ii) prior to a Change in Control Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has jointed in or consented to the initiation of such Claim. 3. Payment. Notwithstanding the provision of Section 2, the obligations of the Company under Section 2 (which shall in no event be deemed to preclude any right to indemnification to which Indemnitee may be entitled under Section 723(a) of the BCL) shall be subject to the condition that the Reviewing Party shall have authorized such indemnification in the specific case by having determined that Indemnitee is permitted to be indemnified under the applicable standard of conduct set forth in Section 2 and applicable law. The Company shall promptly call a meeting of the Board of Directors with respect to a Claim and agrees to use its best efforts to facilitate a prompt determination by the Receiving Party with respect to the Claim. Indemnitee shall be afforded the opportunity to make submissions to the Reviewing Party with respect to the Claim. The obligation of the company to make an Expense Advance pursuant to Section 2 shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under Section 2 and applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees and undertakes to the full extent required by paragraph (a) of Section 725 of the BCL to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the State of New York having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. 4. Change in Control. If there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Board of Directors who were directors immediately prior to such Change in Control) then (i) all determinations by the Company pursuant to the first sentence of Section 3 hereof and Section 723(b) of the BCL shall be made pursuant to subparagraph (1) or (2)(A) of such Section 723(b) and (ii) with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or By- law of the Company now or hereinafter in effect relating to Claims for Indemnifiable Events (including, but not limited to, any option to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of the BCL) the Company (including the Board of Directors) shall seek legal advice from (and only from) special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company (or any subsidiary of the Company) or the Acquiring Person (or any affiliate or associate of such Acquiring Person) within the last five years (other than in connection with such matters) or indemnitee. Unless Indemnitee has theretofore selected counsel pursuant to this Section 4 and such counsel has been approved by the Company, any Approved Law Firm shall be deemed to satisfy the requirements set forth above. Such counsel, among otherthings, shall render its written opinion to the Company, the Board of Directors and Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising our of or relating to this Agreement or its engagement pursuant hereto. As used in this Section 4, the terms "affiliate" and "associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the date of this Agreement. 5. Indemnification for Additional Expenses. The Company shall indemnify Indemnitee against any and all expenses (including attorneys' fees) and, if requested by Indemnitee, shall (within two business days of such request) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any claim asserted or action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or By-law of the Company now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expenses payment or insurance recovery, as the case may be. 6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgements, fines, penalties and amounts paid in settlement of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereto to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified, to the extent permitted by law, against all Expenses incurred in connection with such Indemnifiable Event. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall, to the extent permitted by law, be on the Company to establish that Indemnitee is not so entitled. 7. Presumption. For purposes of this Agreement, the termination of any claim, action, suite or proceeding, whether civil or criminal, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the By-laws of the Company, the BCL or otherwise. To the extent that a change in the BCL (whether by statue or judicial decision) permits greater indemnification by agreement than would be afforded currently under the By-laws of the Company and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 9. Liability Insurance To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any director or officer of the Company. 10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern. 11. Amendments, Etc. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, By-law or otherwise) of the amounts otherwise Indemnifiable hereunder. 14. Specific Performance. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, the Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either at law or in equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue. 15. Binding Effect, Etc. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or of any other enterprise at the Company's request. 16. Severability. The provisions of this Agreement shall be severable if any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or other wise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 17. Governing Law. This Agreement shall be governed by, and be construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. Executed this 19th day of November, 1996. CHYRON CORPORATION /s/Michael Wellesley-Wesley Michael Wellesley-Wesley Chief Executive Officer /s/Ray Hartman Ray Hartman Indemnification Agreement: Chyron Corporation (New York) AGREEMENT, effective as of November 19, 1996 between Chyron Corporation, a New York corporation (the "Company"), and Roger Henderson (the "Indemnitee"). WHEREAS, it is essential to the Company to remain and attract as directors and officers the most capable persons available; and WHEREAS, Indemnitee is a director or officer of the Company; and WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment; and WHEREAS, the By-Laws of the Company provide: "The Corporation shall indemnify any person to the full extent permitted, and in the manner provided, by the New York Business Corporation Law ["BCL"], as the same now exists or may hereafter be amended" and WHEREAS, this Agreement satisfies the provision of Section 721 of the BCL: and WHEREAS, in recognition of the fact that the Indemnitee continues to serve as a director or officer of the Company in part in reliance on the aforesaid By-Laws and Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such By-Laws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such By-Laws or any change in the composition of the Company's Board of Directors or any acquisition transaction relating to the Company), and due to the potential inadequacy of the Company's directors' and officers' liability insurance coverage, the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to service the Company directly or, in its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Definitions. (a) Approved Law Firm: shall mean any law firm (i) located in New York City and (ii) rated "av" by Martindale-Hubbel Law Directory. (b) Board of Directors: shall mean the Board of Directors of the Company. (c) Change in Control: shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than any stockholder (and/or affiliate of such stockholder) on the date of this Agreement or a trustee or other fiduciary holding securities under an employee benefit plan of the Company in substantially the same portions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly of securities of the Company representing 15 percent or more of the totaling voting power represented by the Company's then outstanding Voting Securities (such person being hereinafter referred to as an "Acquiring Person"), or (ii) during any 24-consecutive-month period, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entry) at least 80 percent of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (d) Claim: shall mean any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by the company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suite or proceeding, whether civil, criminal, administrative, investigative or other. (e) Expenses: shall include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, being a witness in or participate in, any Claim relating to any Indemnifiable Event, together with interest, computed at the Company's average cost of funds for short-term borrowings, accrued from the date of incurrence of such expense to the date Indemnitee receives reimbursement therefore. (f) Indemnifiable Event: shall mean any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation of any type or kind, domestic or foreign, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of anything done or not done by Indemnitee in such capacity. Without limitation of any indemnification provided hereunder, an Indemnitee serving (i) another corporation, partnership, joint venture or trust of which 10 percent or more of the voting power or residual economic interest is held, directly or indirectly, by the Company, or (ii) any employee benefit plan of the Company or an entity referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (g) Reviewing Party: shall be (i) the Board of Directors acting by quorum consisting of directors who are not parties to the particular Claim with respect to which Indemnitee is seeking indemnification, or (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, (A) the Board of Directors upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in Section 2 of this Agreement and in Section 721 of the BCL has been met by the Indemnitee or (B) the shareholders upon a finding that the Indemnitee has met the applicable standard of conduct referred to in clause (ii) (A) of this definition. (h) Voting Securities: shall mean any securities of the Company which vote generally in the election of the directors. 2. Basic Indemnification Arrangement. If Indemnitee was, is or becomes at any time a party to, or witness or other participant in, or is threatened to be made a party to, or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law as soon as practicable but in any event no later than 30 days after written demand is presented to the Company, against any and all Expenses, judgements, fines (including excise taxes assessed on an Indemnitee with respect to an employee benefit plan), penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with, or in respect of, such Expenses, judgements, fines, penalties or amounts paid in settlement) of such Claim. If so requested by Indemnitee, the Company shall advance (within two business days of such request) any and all Expenses to Indemnitee (an "Expense Advance"). Notwithstanding anything in this Agreement to the contrary; (i) Indemnitee shall not be entitled to indemnification pursuant to this Agreement if a judgement or other final adjudication adverse to the Indemnitee establishes that Indemnitee's acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or that Indemnitee personally gained in fact a financial profit or other advantage to which Indemnitee was not legally entitled and (ii) prior to a Change in Control Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has jointed in or consented to the initiation of such Claim. 3. Payment. Notwithstanding the provision of Section 2, the obligations of the Company under Section 2 (which shall in no event be deemed to preclude any right to indemnification to which Indemnitee may be entitled under Section 723(a) of the BCL) shall be subject to the condition that the Reviewing Party shall have authorized such indemnification in the specific case by having determined that Indemnitee is permitted to be indemnified under the applicable standard of conduct set forth in Section 2 and applicable law. The Company shall promptly call a meeting of the Board of Directors with respect to a Claim and agrees to use its best efforts to facilitate a prompt determination by the Receiving Party with respect to the Claim. Indemnitee shall be afforded the opportunity to make submissions to the Reviewing Party with respect to the Claim. The obligation of the company to make an Expense Advance pursuant to Section 2 shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under Section 2 and applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees and undertakes to the full extent required by paragraph (a) of Section 725 of the BCL to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the State of New York having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. 4. Change in Control. If there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Board of Directors who were directors immediately prior to such Change in Control) then (i) all determinations by the Company pursuant to the first sentence of Section 3 hereof and Section 723(b) of the BCL shall be made pursuant to subparagraph (1) or (2)(A) of such Section 723(b) and (ii) with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or By- law of the Company now or hereinafter in effect relating to Claims for Indemnifiable Events (including, but not limited to, any option to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of the BCL) the Company (including the Board of Directors) shall seek legal advice from (and only from) special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company (or any subsidiary of the Company) or the Acquiring Person (or any affiliate or associate of such Acquiring Person) within the last five years (other than in connection with such matters) or indemnitee. Unless Indemnitee has theretofore selected counsel pursuant to this Section 4 and such counsel has been approved by the Company, any Approved Law Firm shall be deemed to satisfy the requirements set forth above. Such counsel, among otherthings, shall render its written opinion to the Company, the Board of Directors and Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising our of or relating to this Agreement or its engagement pursuant hereto. As used in this Section 4, the terms "affiliate" and "associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the date of this Agreement. 5. Indemnification for Additional Expenses. The Company shall indemnify Indemnitee against any and all expenses (including attorneys' fees) and, if requested by Indemnitee, shall (within two business days of such request) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any claim asserted or action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or By-law of the Company now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expenses payment or insurance recovery, as the case may be. 6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgements, fines, penalties and amounts paid in settlement of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereto to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified, to the extent permitted by law, against all Expenses incurred in connection with such Indemnifiable Event. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall, to the extent permitted by law, be on the Company to establish that Indemnitee is not so entitled. 7. Presumption. For purposes of this Agreement, the termination of any claim, action, suite or proceeding, whether civil or criminal, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the By-laws of the Company, the BCL or otherwise. To the extent that a change in the BCL (whether by statue or judicial decision) permits greater indemnification by agreement than would be afforded currently under the By-laws of the Company and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 9. Liability Insurance To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any director or officer of the Company. 10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern. 11. Amendments, Etc. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, By-law or otherwise) of the amounts otherwise Indemnifiable hereunder. 14. Specific Performance. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, the Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either at law or in equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue. 15. Binding Effect, Etc. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or of any other enterprise at the Company's request. 16. Severability. The provisions of this Agreement shall be severable if any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or other wise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 17. Governing Law. This Agreement shall be governed by, and be construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. Executed this 19th day of November, 1996. CHYRON CORPORATION /s/Michael Wellesley-Wesley Michael Wellesley-Wesley Chief Executive Officer /s/Roger Henderson Roger Henderson Indemnification Agreement: Chyron Corporation (New York) AGREEMENT, effective as of November 19, 1996 between Chyron Corporation, a New York corporation (the "Company"), and Isaac Hersly (the "Indemnitee"). WHEREAS, it is essential to the Company to remain and attract as directors and officers the most capable persons available; and WHEREAS, Indemnitee is a director or officer of the Company; and WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment; and WHEREAS, the By-Laws of the Company provide: "The Corporation shall indemnify any person to the full extent permitted, and in the manner provided, by the New York Business Corporation Law ["BCL"], as the same now exists or may hereafter be amended" and WHEREAS, this Agreement satisfies the provision of Section 721 of the BCL: and WHEREAS, in recognition of the fact that the Indemnitee continues to serve as a director or officer of the Company in part in reliance on the aforesaid By-Laws and Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such By-Laws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such By-Laws or any change in the composition of the Company's Board of Directors or any acquisition transaction relating to the Company), and due to the potential inadequacy of the Company's directors' and officers' liability insurance coverage, the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to service the Company directly or, in its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Definitions. (a) Approved Law Firm: shall mean any law firm (i) located in New York City and (ii) rated "av" by Martindale-Hubbel Law Directory. (b) Board of Directors: shall mean the Board of Directors of the Company. (c) Change in Control: shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than any stockholder (and/or affiliate of such stockholder) on the date of this Agreement or a trustee or other fiduciary holding securities under an employee benefit plan of the Company in substantially the same portions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly of securities of the Company representing 15 percent or more of the totaling voting power represented by the Company's then outstanding Voting Securities (such person being hereinafter referred to as an "Acquiring Person"), or (ii) during any 24-consecutive-month period, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's shareholders was approved by a vote of at least two- thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entry) at least 80 percent of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (d) Claim: shall mean any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by the company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suite or proceeding, whether civil, criminal, administrative, investigative or other. (e) Expenses: shall include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, being a witness in or participate in, any Claim relating to any Indemnifiable Event, together with interest, computed at the Company's average cost of funds for short-term borrowings, accrued from the date of incurrence of such expense to the date Indemnitee receives reimbursement therefore. (f) Indemnifiable Event: shall mean any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation of any type or kind, domestic or foreign, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of anything done or not done by Indemnitee in such capacity. Without limitation of any indemnification provided hereunder, an Indemnitee serving (i) another corporation, partnership, joint venture or trust of which 10 percent or more of the voting power or residual economic interest is held, directly or indirectly, by the Company, or (ii) any employee benefit plan of the Company or an entity referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (g) Reviewing Party: shall be (i) the Board of Directors acting by quorum consisting of directors who are not parties to the particular Claim with respect to which Indemnitee is seeking indemnification, or (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, (A) the Board of Directors upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in Section 2 of this Agreement and in Section 721 of the BCL has been met by the Indemnitee or (B) the shareholders upon a finding that the Indemnitee has met the applicable standard of conduct referred to in clause (ii) (A) of this definition. (h) Voting Securities: shall mean any securities of the Company which vote generally in the election of the directors. 2. Basic Indemnification Arrangement. If Indemnitee was, is or becomes at any time a party to, or witness or other participant in, or is threatened to be made a party to, or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law as soon as practicable but in any event no later than 30 days after written demand is presented to the Company, against any and all Expenses, judgements, fines (including excise taxes assessed on an Indemnitee with respect to an employee benefit plan), penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with, or in respect of, such Expenses, judgements, fines, penalties or amounts paid in settlement) of such Claim. If so requested by Indemnitee, the Company shall advance (within two business days of such request) any and all Expenses to Indemnitee (an "Expense Advance"). Notwithstanding anything in this Agreement to the contrary; (i) Indemnitee shall not be entitled to indemnification pursuant to this Agreement if a judgement or other final adjudication adverse to the Indemnitee establishes that Indemnitee's acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or that Indemnitee personally gained in fact a financial profit or other advantage to which Indemnitee was not legally entitled and (ii) prior to a Change in Control Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has jointed in or consented to the initiation of such Claim. 3. Payment. Notwithstanding the provision of Section 2, the obligations of the Company under Section 2 (which shall in no event be deemed to preclude any right to indemnification to which Indemnitee may be entitled under Section 723(a) of the BCL) shall be subject to the condition that the Reviewing Party shall have authorized such indemnification in the specific case by having determined that Indemnitee is permitted to be indemnified under the applicable standard of conduct set forth in Section 2 and applicable law. The Company shall promptly call a meeting of the Board of Directors with respect to a Claim and agrees to use its best efforts to facilitate a prompt determination by the Receiving Party with respect to the Claim. Indemnitee shall be afforded the opportunity to make submissions to the Reviewing Party with respect to the Claim. The obligation of the company to make an Expense Advance pursuant to Section 2 shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under Section 2 and applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees and undertakes to the full extent required by paragraph (a) of Section 725 of the BCL to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the State of New York having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. 4. Change in Control. If there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Board of Directors who were directors immediately prior to such Change in Control) then (i) all determinations by the Company pursuant to the first sentence of Section 3 hereof and Section 723(b) of the BCL shall be made pursuant to subparagraph (1) or (2)(A) of such Section 723(b) and (ii) with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or By- law of the Company now or hereinafter in effect relating to Claims for Indemnifiable Events (including, but not limited to, any option to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of the BCL) the Company (including the Board of Directors) shall seek legal advice from (and only from) special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company (or any subsidiary of the Company) or the Acquiring Person (or any affiliate or associate of such Acquiring Person) within the last five years (other than in connection with such matters) or indemnitee. Unless Indemnitee has theretofore selected counsel pursuant to this Section 4 and such counsel has been approved by the Company, any Approved Law Firm shall be deemed to satisfy the requirements set forth above. Such counsel, among otherthings, shall render its written opinion to the Company, the Board of Directors and Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising our of or relating to this Agreement or its engagement pursuant hereto. As used in this Section 4, the terms "affiliate" and "associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the date of this Agreement. 5. Indemnification for Additional Expenses. The Company shall indemnify Indemnitee against any and all expenses (including attorneys' fees) and, if requested by Indemnitee, shall (within two business days of such request) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any claim asserted or action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or By-law of the Company now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expenses payment or insurance recovery, as the case may be. 6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgements, fines, penalties and amounts paid in settlement of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereto to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified, to the extent permitted by law, against all Expenses incurred in connection with such Indemnifiable Event. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall, to the extent permitted by law, be on the Company to establish that Indemnitee is not so entitled. 7. Presumption. For purposes of this Agreement, the termination of any claim, action, suite or proceeding, whether civil or criminal, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the By-laws of the Company, the BCL or otherwise. To the extent that a change in the BCL (whether by statue or judicial decision) permits greater indemnification by agreement than would be afforded currently under the By-laws of the Company and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 9. Liability Insurance To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any director or officer of the Company. 10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern. 11. Amendments, Etc. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, By-law or otherwise) of the amounts otherwise Indemnifiable hereunder. 14. Specific Performance. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, the Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either at law or in equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue. 15. Binding Effect, Etc. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or of any other enterprise at the Company's request. 16. Severability. The provisions of this Agreement shall be severable if any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or other wise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 17. Governing Law. This Agreement shall be governed by, and be construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. Executed this 19th day of November, 1996. CHYRON CORPORATION /s/Michael Wellesley-Wesley Michael Wellesley-Wesley Chief Executive Officer /s/Isaac Hersly Isaac Hersly Indemnification Agreement: Chyron Corporation (New York) AGREEMENT, effective as of November 19, 1996 between Chyron Corporation, a New York corporation (the "Company"), and Alan J. Hirschfield (the "Indemnitee"). WHEREAS, it is essential to the Company to remain and attract as directors and officers the most capable persons available; and WHEREAS, Indemnitee is a director or officer of the Company; and WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment; and WHEREAS, the By-Laws of the Company provide: "The Corporation shall indemnify any person to the full extent permitted, and in the manner provided, by the New York Business Corporation Law ["BCL"], as the same now exists or may hereafter be amended" and WHEREAS, this Agreement satisfies the provision of Section 721 of the BCL: and WHEREAS, in recognition of the fact that the Indemnitee continues to serve as a director or officer of the Company in part in reliance on the aforesaid By-Laws and Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such By-Laws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such By-Laws or any change in the composition of the Company's Board of Directors or any acquisition transaction relating to the Company), and due to the potential inadequacy of the Company's directors' and officers' liability insurance coverage, the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to service the Company directly or, in its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Definitions. (a) Approved Law Firm: shall mean any law firm (i) located in New York City and (ii) rated "av" by Martindale-Hubbel Law Directory. (b) Board of Directors: shall mean the Board of Directors of the Company. (c) Change in Control: shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than any stockholder (and/or affiliate of such stockholder) on the date of this Agreement or a trustee or other fiduciary holding securities under an employee benefit plan of the Company in substantially the same portions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly of securities of the Company representing 15 percent or more of the totaling voting power represented by the Company's then outstanding Voting Securities (such person being hereinafter referred to as an "Acquiring Person"), or (ii) during any 24-consecutive-month period, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's shareholders was approved by a vote of at least two- thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entry) at least 80 percent of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (d) Claim: shall mean any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by the company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suite or proceeding, whether civil, criminal, administrative, investigative or other. (e) Expenses: shall include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, being a witness in or participate in, any Claim relating to any Indemnifiable Event, together with interest, computed at the Company's average cost of funds for short-term borrowings, accrued from the date of incurrence of such expense to the date Indemnitee receives reimbursement therefore. (f) Indemnifiable Event: shall mean any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation of any type or kind, domestic or foreign, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of anything done or not done by Indemnitee in such capacity. Without limitation of any indemnification provided hereunder, an Indemnitee serving (i) another corporation, partnership, joint venture or trust of which 10 percent or more of the voting power or residual economic interest is held, directly or indirectly, by the Company, or (ii) any employee benefit plan of the Company or an entity referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (g) Reviewing Party: shall be (i) the Board of Directors acting by quorum consisting of directors who are not parties to the particular Claim with respect to which Indemnitee is seeking indemnification, or (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, (A) the Board of Directors upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in Section 2 of this Agreement and in Section 721 of the BCL has been met by the Indemnitee or (B) the shareholders upon a finding that the Indemnitee has met the applicable standard of conduct referred to in clause (ii) (A) of this definition. (h) Voting Securities: shall mean any securities of the Company which vote generally in the election of the directors. 2. Basic Indemnification Arrangement. If Indemnitee was, is or becomes at any time a party to, or witness or other participant in, or is threatened to be made a party to, or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law as soon as practicable but in any event no later than 30 days after written demand is presented to the Company, against any and all Expenses, judgements, fines (including excise taxes assessed on an Indemnitee with respect to an employee benefit plan), penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with, or in respect of, such Expenses, judgements, fines, penalties or amounts paid in settlement) of such Claim. If so requested by Indemnitee, the Company shall advance (within two business days of such request) any and all Expenses to Indemnitee (an "Expense Advance"). Notwithstanding anything in this Agreement to the contrary; (i) Indemnitee shall not be entitled to indemnification pursuant to this Agreement if a judgement or other final adjudication adverse to the Indemnitee establishes that Indemnitee's acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or that Indemnitee personally gained in fact a financial profit or other advantage to which Indemnitee was not legally entitled and (ii) prior to a Change in Control Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has jointed in or consented to the initiation of such Claim. 3. Payment. Notwithstanding the provision of Section 2, the obligations of the Company under Section 2 (which shall in no event be deemed to preclude any right to indemnification to which Indemnitee may be entitled under Section 723(a) of the BCL) shall be subject to the condition that the Reviewing Party shall have authorized such indemnification in the specific case by having determined that Indemnitee is permitted to be indemnified under the applicable standard of conduct set forth in Section 2 and applicable law. The Company shall promptly call a meeting of the Board of Directors with respect to a Claim and agrees to use its best efforts to facilitate a prompt determination by the Receiving Party with respect to the Claim. Indemnitee shall be afforded the opportunity to make submissions to the Reviewing Party with respect to the Claim. The obligation of the company to make an Expense Advance pursuant to Section 2 shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under Section 2 and applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees and undertakes to the full extent required by paragraph (a) of Section 725 of the BCL to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the State of New York having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. 4. Change in Control. If there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Board of Directors who were directors immediately prior to such Change in Control) then (i) all determinations by the Company pursuant to the first sentence of Section 3 hereof and Section 723(b) of the BCL shall be made pursuant to subparagraph (1) or (2)(A) of such Section 723(b) and (ii) with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or By- law of the Company now or hereinafter in effect relating to Claims for Indemnifiable Events (including, but not limited to, any option to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of the BCL) the Company (including the Board of Directors) shall seek legal advice from (and only from) special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company (or any subsidiary of the Company) or the Acquiring Person (or any affiliate or associate of such Acquiring Person) within the last five years (other than in connection with such matters) or indemnitee. Unless Indemnitee has theretofore selected counsel pursuant to this Section 4 and such counsel has been approved by the Company, any Approved Law Firm shall be deemed to satisfy the requirements set forth above. Such counsel, among otherthings, shall render its written opinion to the Company, the Board of Directors and Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising our of or relating to this Agreement or its engagement pursuant hereto. As used in this Section 4, the terms "affiliate" and "associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the date of this Agreement. 5. Indemnification for Additional Expenses. The Company shall indemnify Indemnitee against any and all expenses (including attorneys' fees) and, if requested by Indemnitee, shall (within two business days of such request) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any claim asserted or action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or By-law of the Company now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expenses payment or insurance recovery, as the case may be. 6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgements, fines, penalties and amounts paid in settlement of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereto to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified, to the extent permitted by law, against all Expenses incurred in connection with such Indemnifiable Event. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall, to the extent permitted by law, be on the Company to establish that Indemnitee is not so entitled. 7. Presumption. For purposes of this Agreement, the termination of any claim, action, suite or proceeding, whether civil or criminal, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the By-laws of the Company, the BCL or otherwise. To the extent that a change in the BCL (whether by statue or judicial decision) permits greater indemnification by agreement than would be afforded currently under the By-laws of the Company and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 9. Liability Insurance To the extent the Company maintains an insurance policy or olicies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any director or officer of the Company. 10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern. 11. Amendments, Etc. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, By-law or otherwise) of the amounts otherwise Indemnifiable hereunder. 14. Specific Performance. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, the Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either at law or in equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue. 15. Binding Effect, Etc. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or of any other enterprise at the Company's request. 16. Severability. The provisions of this Agreement shall be severable if any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or other wise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 17. Governing Law. This Agreement shall be governed by, and be construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. Executed this 19th day of November, 1996. CHYRON CORPORATION /s/Michael Wellesley-Wesley Michael Wellesley-Wesley Chief Executive Officer /s/Alan J. Hirschfield Alan J. Hirschfield Indemnification Agreement: Chyron Corporation (New York) AGREEMENT, effective as of November 19, 1996 between Chyron Corporation, a New York corporation (the "Company"), and Patricia Lampe (the "Indemnitee"). WHEREAS, it is essential to the Company to remain and attract as directors and officers the most capable persons available; and WHEREAS, Indemnitee is a director or officer of the Company; and WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment; and WHEREAS, the By-Laws of the Company provide: "The Corporation shall indemnify any person to the full extent permitted, and in the manner provided, by the New York Business Corporation Law ["BCL"], as the same now exists or may hereafter be amended" and WHEREAS, this Agreement satisfies the provision of Section 721 of the BCL: and WHEREAS, in recognition of the fact that the Indemnitee continues to serve as a director or officer of the Company in part in reliance on the aforesaid By-Laws and Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such By-Laws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such By-Laws or any change in the composition of the Company's Board of Directors or any acquisition transaction relating to the Company), and due to the potential inadequacy of the Company's directors' and officers' liability insurance coverage, the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to service the Company directly or, in its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Definitions. (a) Approved Law Firm: shall mean any law firm (i) located in New York City and (ii) rated "av" by Martindale-Hubbel Law Directory. (b) Board of Directors: shall mean the Board of Directors of the Company. (c) Change in Control: shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than any stockholder (and/or affiliate of such stockholder) on the date of this Agreement or a trustee or other fiduciary holding securities under an employee benefit plan of the Company in substantially the same portions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly of securities of the Company representing 15 percent or more of the totaling voting power represented by the Company's then outstanding Voting Securities (such person being hereinafter referred to as an "Acquiring Person"), or (ii) during any 24-consecutive-month period, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entry) at least 80 percent of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (d) Claim: shall mean any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by the company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suite or proceeding, whether civil, criminal, administrative, investigative or other. (e) Expenses: shall include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, being a witness in or participate in, any Claim relating to any Indemnifiable Event, together with interest, computed at the Company's average cost of funds for short-term borrowings, accrued from the date of incurrence of such expense to the date Indemnitee receives reimbursement therefore. (f) Indemnifiable Event: shall mean any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation of any type or kind, domestic or foreign, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of anything done or not done by Indemnitee in such capacity. Without limitation of any indemnification provided hereunder, an Indemnitee serving (i) another corporation, partnership, joint venture or trust of which 10 percent or more of the voting power or residual economic interest is held, directly or indirectly, by the Company, or (ii) any employee benefit plan of the Company or an entity referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (g) Reviewing Party: shall be (i) the Board of Directors acting by quorum consisting of directors who are not parties to the particular Claim with respect to which Indemnitee is seeking indemnification, or (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, (A) the Board of Directors upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in Section 2 of this Agreement and in Section 721 of the BCL has been met by the Indemnitee or (B) the shareholders upon a finding that the Indemnitee has met the applicable standard of conduct referred to in clause (ii)(A) of this definition. (h) Voting Securities: shall mean any securities of the Company which vote generally in the election of the directors. 2. Basic Indemnification Arrangement. If Indemnitee was, is or becomes at any time a party to, or witness or other participant in, or is threatened to be made a party to, or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law as soon as practicable but in any event no later than 30 days after written demand is presented to the Company, against any and all Expenses, judgements, fines (including excise taxes assessed on an Indemnitee with respect to an employee benefit plan), penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with, or in respect of, such Expenses, judgements, fines, penalties or amounts paid in settlement) of such Claim. If so requested by Indemnitee, the Company shall advance (within two business days of such request) any and all Expenses to Indemnitee (an "Expense Advance"). Notwithstanding anything in this Agreement to the contrary; (i) Indemnitee shall not be entitled to indemnification pursuant to this Agreement if a judgement or other final adjudication adverse to the Indemnitee establishes that Indemnitee's acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or that Indemnitee personally gained in fact a financial profit or other advantage to which Indemnitee was not legally entitled and (ii) prior to a Change in Control Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has jointed in or consented to the initiation of such Claim. 3. Payment. Notwithstanding the provision of Section 2, the obligations of the Company under Section 2 (which shall in no event be deemed to preclude any right to indemnification to which Indemnitee may be entitled under Section 723(a) of the BCL) shall be subject to the condition that the Reviewing Party shall have authorized such indemnification in the specific case by having determined that Indemnitee is permitted to be indemnified under the applicable standard of conduct set forth in Section 2 and applicable law. The Company shall promptly call a meeting of the Board of Directors with respect to a Claim and agrees to use its best efforts to facilitate a prompt determination by the Receiving Party with respect to the Claim. Indemnitee shall be afforded the opportunity to make submissions to the Reviewing Party with respect to the Claim. The obligation of the company to make an Expense Advance pursuant to Section 2 shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under Section 2 and applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees and undertakes to the full extent required by paragraph (a) of Section 725 of the BCL to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the State of New York having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. 4. Change in Control. If there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Board of Directors who were directors immediately prior to such Change in Control) then (i) all determinations by the Company pursuant to the first sentence of Section 3 hereof and Section 723(b) of the BCL shall be made pursuant to subparagraph (1) or (2)(A) of such Section 723(b) and (ii) with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or By- law of the Company now or hereinafter in effect relating to Claims for Indemnifiable Events (including, but not limited to, any option to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of the BCL) the Company (including the Board of Directors) shall seek legal advice from (and only from) special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company (or any subsidiary of the Company) or the Acquiring Person (or any affiliate or associate of such Acquiring Person) within the last five years (other than in connection with such matters) or indemnitee. Unless Indemnitee has theretofore selected counsel pursuant to this Section 4 and such counsel has been approved by the Company, any Approved Law Firm shall be deemed to satisfy the requirements set forth above. Such counsel, among otherthings, shall render its written opinion to the Company, the Board of Directors and Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising our of or relating to this Agreement or its engagement pursuant hereto. As used in this Section 4, the terms "affiliate" and "associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the date of this Agreement. 5. Indemnification for Additional Expenses. The Company shall indemnify Indemnitee against any and all expenses (including attorneys' fees) and, if requested by Indemnitee, shall (within two business days of such request) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any claim asserted or action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or By-law of the Company now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expenses payment or insurance recovery, as the case may be. 6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgements, fines, penalties and amounts paid in settlement of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereto to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified, to the extent permitted by law, against all Expenses incurred in connection with such Indemnifiable Event. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall, to the extent permitted by law, be on the Company to establish that Indemnitee is not so entitled. 7. Presumption. For purposes of this Agreement, the termination of any claim, action, suite or proceeding, whether civil or criminal, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the By-laws of the Company, the BCL or otherwise. To the extent that a change in the BCL (whether by statue or judicial decision) permits greater indemnification by agreement than would be afforded currently under the By-laws of the Company and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 9. Liability Insurance To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any director or officer of the Company. 10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern. 11. Amendments, Etc. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, By-law or otherwise) of the amounts otherwise Indemnifiable hereunder. 14. Specific Performance. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, the Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either at law or in equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue. 15. Binding Effect, Etc. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or of any other enterprise at the Company's request. 16. Severability. The provisions of this Agreement shall be severable if any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or other wise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 17. Governing Law. This Agreement shall be governed by, and be construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. Executed this 19th day of November, 1996. CHYRON CORPORATION /s/Michael Wellesley-Wesley Michael Wellesley-Wesley Chief Executive Officer /s/Patricia Lampe Patricia Lampe Indemnification Agreement: Chyron Corporation (New York) AGREEMENT, effective as of November 19, 1996 between Chyron Corporation, a New York corporation (the "Company"), and Wesley W. Lang Jr. (the "Indemnitee"). WHEREAS, it is essential to the Company to remain and attract as directors and officers the most capable persons available; and WHEREAS, Indemnitee is a director or officer of the Company; and WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment; and WHEREAS, the By-Laws of the Company provide: "The Corporation shall indemnify any person to the full extent permitted, and in the manner provided, by the New York Business Corporation Law ["BCL"], as the same now exists or may hereafter be amended" and WHEREAS, this Agreement satisfies the provision of Section 721 of the BCL: and WHEREAS, in recognition of the fact that the Indemnitee continues to serve as a director or officer of the Company in part in reliance on the aforesaid By-Laws and Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such By-Laws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such By-Laws or any change in the composition of the Company's Board of Directors or any acquisition transaction relating to the Company), and due to the potential inadequacy of the Company's directors' and officers' liability insurance coverage, the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to service the Company directly or, in its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Definitions. (a) Approved Law Firm: shall mean any law firm (i) located in New York City and (ii) rated "av" by Martindale-Hubbel Law Directory. (b) Board of Directors: shall mean the Board of Directors of the Company. (c) Change in Control: shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than any stockholder (and/or affiliate of such stockholder) on the date of this Agreement or a trustee or other fiduciary holding securities under an employee benefit plan of the Company in substantially the same portions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly of securities of the Company representing 15 percent or more of the totaling voting power represented by the Company's then outstanding Voting Securities (such person being hereinafter referred to as an "Acquiring Person"), or (ii) during any 24-consecutive-month period, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entry) at least 80 percent of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (d) Claim: shall mean any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by the company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suite or proceeding, whether civil, criminal, administrative, investigative or other. (e) Expenses: shall include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, being a witness in or participate in, any Claim relating to any Indemnifiable Event, together with interest, computed at the Company's average cost of funds for short-term borrowings, accrued from the date of incurrence of such expense to the date Indemnitee receives reimbursement therefore. (f) Indemnifiable Event: shall mean any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation of any type or kind, domestic or foreign, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of anything done or not done by Indemnitee in such capacity. Without limitation of any indemnification provided hereunder, an Indemnitee serving (i) another corporation, partnership, joint venture or trust of which 10 percent or more of the voting power or residual economic interest is held, directly or indirectly, by the Company, or (ii) any employee benefit plan of the Company or an entity referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (g) Reviewing Party: shall be (i) the Board of Directors acting by quorum consisting of directors who are not parties to the particular Claim with respect to which Indemnitee is seeking indemnification, or (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, (A) the Board of Directors upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in Section 2 of this Agreement and in Section 721 of the BCL has been met by the Indemnitee or (B) the shareholders upon a finding that the Indemnitee has met the applicable standard of conduct referred to in clause (ii) (A) of this definition. (h) Voting Securities: shall mean any securities of the Company which vote generally in the election of the directors. 2. Basic Indemnification Arrangement. If Indemnitee was, is or becomes at any time a party to, or witness or other participant in, or is threatened to be made a party to, or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law as soon as practicable but in any event no later than 30 days after written demand is presented to the Company, against any and all Expenses, judgements, fines (including excise taxes assessed on an Indemnitee with respect to an employee benefit plan), penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with, or in respect of, such Expenses, judgements, fines, penalties or amounts paid in settlement) of such Claim. If so requested by Indemnitee, the Company shall advance (within two business days of such request) any and all Expenses to Indemnitee (an "Expense Advance"). Notwithstanding anything in this Agreement to the contrary; (i) Indemnitee shall not be entitled to indemnification pursuant to this Agreement if a judgement or other final adjudication adverse to the Indemnitee establishes that Indemnitee's acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or that Indemnitee personally gained in fact a financial profit or other advantage to which Indemnitee was not legally entitled and (ii) prior to a Change in Control Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has jointed in or consented to the initiation of such Claim. 3. Payment. Notwithstanding the provision of Section 2, the obligations of the Company under Section 2 (which shall in no event be deemed to preclude any right to indemnification to which Indemnitee may be entitled under Section 723(a) of the BCL) shall be subject to the condition that the Reviewing Party shall have authorized such indemnification in the specific case by having determined that Indemnitee is permitted to be indemnified under the applicable standard of conduct set forth in Section 2 and applicable law. The Company shall promptly call a meeting of the Board of Directors with respect to a Claim and agrees to use its best efforts to facilitate a prompt determination by the Receiving Party with respect to the Claim. Indemnitee shall be afforded the opportunity to make submissions to the Reviewing Party with respect to the Claim. The obligation of the company to make an Expense Advance pursuant to Section 2 shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under Section 2 and applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees and undertakes to the full extent required by paragraph (a) of Section 725 of the BCL to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the State of New York having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. 4. Change in Control. If there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Board of Directors who were directors immediately prior to such Change in Control) then (i) all determinations by the Company pursuant to the first sentence of Section 3 hereof and Section 723(b) of the BCL shall be made pursuant to subparagraph (1) or (2)(A) of such Section 723(b) and (ii) with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or By- law of the Company now or hereinafter in effect relating to Claims for Indemnifiable Events (including, but not limited to, any option to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of the BCL) the Company (including the Board of Directors) shall seek legal advice from (and only from) special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company (or any subsidiary of the Company) or the Acquiring Person (or any affiliate or associate of such Acquiring Person) within the last five years (other than in connection with such matters) or indemnitee. Unless Indemnitee has theretofore selected counsel pursuant to this Section 4 and such counsel has been approved by the Company, any Approved Law Firm shall be deemed to satisfy the requirements set forth above. Such counsel, among otherthings, shall render its written opinion to the Company, the Board of Directors and Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising our of or relating to this Agreement or its engagement pursuant hereto. As used in this Section 4, the terms "affiliate" and "associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the date of this Agreement. 5. Indemnification for Additional Expenses. The Company shall indemnify Indemnitee against any and all expenses (including attorneys' fees) and, if requested by Indemnitee, shall (within two business days of such request) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any claim asserted or action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or By-law of the Company now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expenses payment or insurance recovery, as the case may be. 6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgements, fines, penalties and amounts paid in settlement of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereto to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified, to the extent permitted by law, against all Expenses incurred in connection with such Indemnifiable Event. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall, to the extent permitted by law, be on the Company to establish that Indemnitee is not so entitled. 7. Presumption. For purposes of this Agreement, the termination of any claim, action, suite or proceeding, whether civil or criminal, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the By-laws of the Company, the BCL or otherwise. To the extent that a change in the BCL (whether by statue or judicial decision) permits greater indemnification by agreement than would be afforded currently under the By-laws of the Company and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 9. Liability Insurance To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any director or officer of the Company. 10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern. 11. Amendments, Etc. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, By-law or otherwise) of the amounts otherwise Indemnifiable hereunder. 14. Specific Performance. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, the Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either at law or in equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue. 15. Binding Effect, Etc. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or of any other enterprise at the Company's request. 16. Severability. The provisions of this Agreement shall be severable if any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or other wise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 17. Governing Law. This Agreement shall be governed by, and be construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. Executed this 19th day of November, 1996. CHYRON CORPORATION /s/Michael Wellesley-Wesley Michael Wellesley-Wesley Chief Executive Officer /s/Wesley W. Lang, Jr. Wesley W. Lang, Jr. Indemnification Agreement: Chyron Corporation (New York) AGREEMENT, effective as of November 19, 1996 between Chyron Corporation, a New York corporation (the "Company"), and Eugene Mr. Weber (the "Indemnitee"). WHEREAS, it is essential to the Company to remain and attract as directors and officers the most capable persons available; and WHEREAS, Indemnitee is a director or officer of the Company; and WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment; and WHEREAS, the By-Laws of the Company provide: "The Corporation shall indemnify any person to the full extent permitted, and in the manner provided, by the New York Business Corporation Law ["BCL"], as the same now exists or may hereafter be amended" and WHEREAS, this Agreement satisfies the provision of Section 721 of the BCL: and WHEREAS, in recognition of the fact that the Indemnitee continues to serve as a director or officer of the Company in part in reliance on the aforesaid By-Laws and Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such By-Laws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such By-Laws or any change in the composition of the Company's Board of Directors or any acquisition transaction relating to the Company), and due to the potential inadequacy of the Company's directors' and officers' liability insurance coverage, the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to service the Company directly or, in its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Definitions. (a) Approved Law Firm: shall mean any law firm (i) located in New York City and (ii) rated "av" by Martindale-Hubbel Law Directory. (b) Board of Directors: shall mean the Board of Directors of the Company. (c) Change in Control: shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than any stockholder (and/or affiliate of such stockholder) on the date of this Agreement or a trustee or other fiduciary holding securities under an employee benefit plan of the Company in substantially the same portions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly of securities of the Company representing 15 percent or more of the totaling voting power represented by the Company's then outstanding Voting Securities (such person being hereinafter referred to as an "Acquiring Person"), or (ii) during any 24-consecutive-month period, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's shareholders was approved by a vote of at least two- thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entry) at least 80 percent of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (d) Claim: shall mean any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by the company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suite or proceeding, whether civil, criminal, administrative, investigative or other. (e) Expenses: shall include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, being a witness in or participate in, any Claim relating to any Indemnifiable Event, together with interest, computed at the Company's average cost of funds for short-term borrowings, accrued from the date of incurrence of such expense to the date Indemnitee receives reimbursement therefore. (f) Indemnifiable Event: shall mean any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation of any type or kind, domestic or foreign, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of anything done or not done by Indemnitee in such capacity. Without limitation of any indemnification provided hereunder, an Indemnitee serving (i) another corporation, partnership, joint venture or trust of which 10 percent or more of the voting power or residual economic interest is held, directly or indirectly, by the Company, or (ii) any employee benefit plan of the Company or an entity referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (g) Reviewing Party: shall be (i) the Board of Directors acting by quorum consisting of directors who are not parties to the particular Claim with respect to which Indemnitee is seeking indemnification, or (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, (A) the Board of Directors upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in Section 2 of this Agreement and in Section 721 of the BCL has been met by the Indemnitee or (B) the shareholders upon a finding that the Indemnitee has met the applicable standard of conduct referred to in clause (ii) (A) of this definition. (h) Voting Securities: shall mean any securities of the Company which vote generally in the election of the directors. 2. Basic Indemnification Arrangement. If Indemnitee was, is or becomes at any time a party to, or witness or other participant in, or is threatened to be made a party to, or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law as soon as practicable but in any event no later than 30 days after written demand is presented to the Company, against any and all Expenses, judgements, fines (including excise taxes assessed on an Indemnitee with respect to an employee benefit plan), penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with, or in respect of, such Expenses, judgements, fines, penalties or amounts paid in settlement) of such Claim. If so requested by Indemnitee, the Company shall advance (within two business days of such request) any and all Expenses to Indemnitee (an "Expense Advance"). Notwithstanding anything in this Agreement to the contrary; (i) Indemnitee shall not be entitled to indemnification pursuant to this Agreement if a judgement or other final adjudication adverse to the Indemnitee establishes that Indemnitee's acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or that Indemnitee personally gained in fact a financial profit or other advantage to which Indemnitee was not legally entitled and (ii) prior to a Change in Control Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has jointed in or consented to the initiation of such Claim. 3. Payment. Notwithstanding the provision of Section 2, the obligations of the Company under Section 2 (which shall in no event be deemed to preclude any right to indemnification to which Indemnitee may be entitled under Section 723(a) of the BCL) shall be subject to the condition that the Reviewing Party shall have authorized such indemnification in the specific case by having determined that Indemnitee is permitted to be indemnified under the applicable standard of conduct set forth in Section 2 and applicable law. The Company shall promptly call a meeting of the Board of Directors with respect to a Claim and agrees to use its best efforts to facilitate a prompt determination by the Receiving Party with respect to the Claim. Indemnitee shall be afforded the opportunity to make submissions to the Reviewing Party with respect to the Claim. The obligation of the company to make an Expense Advance pursuant to Section 2 shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under Section 2 and applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees and undertakes to the full extent required by paragraph (a) of Section 725 of the BCL to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the State of New York having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. 4. Change in Control. If there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Board of Directors who were directors immediately prior to such Change in Control) then (i) all determinations by the Company pursuant to the first sentence of Section 3 hereof and Section 723(b) of the BCL shall be made pursuant to subparagraph (1) or (2)(A) of such Section 723(b) and (ii) with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or By- law of the Company now or hereinafter in effect relating to Claims for Indemnifiable Events (including, but not limited to, any option to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of the BCL) the Company (including the Board of Directors) shall seek legal advice from (and only from) special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company (or any subsidiary of the Company) or the Acquiring Person (or any affiliate or associate of such Acquiring Person) within the last five years (other than in connection with such matters) or indemnitee. Unless Indemnitee has theretofore selected counsel pursuant to this Section 4 and such counsel has been approved by the Company, any Approved Law Firm shall be deemed to satisfy the requirements set forth above. Such counsel, among otherthings, shall render its written opinion to the Company, the Board of Directors and Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising our of or relating to this Agreement or its engagement pursuant hereto. As used in this Section 4, the terms "affiliate" and "associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the date of this Agreement. 5. Indemnification for Additional Expenses. The Company shall indemnify Indemnitee against any and all expenses (including attorneys' fees) and, if requested by Indemnitee, shall (within two business days of such request) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any claim asserted or action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or By-law of the Company now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expenses payment or insurance recovery, as the case may be. 6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgements, fines, penalties and amounts paid in settlement of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereto to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified, to the extent permitted by law, against all Expenses incurred in connection with such Indemnifiable Event. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall, to the extent permitted by law, be on the Company to establish that Indemnitee is not so entitled. 7. Presumption. For purposes of this Agreement, the termination of any claim, action, suite or proceeding, whether civil or criminal, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the By-laws of the Company, the BCL or otherwise. To the extent that a change in the BCL (whether by statue or judicial decision) permits greater indemnification by agreement than would be afforded currently under the By-laws of the Company and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 9. Liability Insurance To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any director or officer of the Company. 10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern. 11. Amendments, Etc. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, By-law or otherwise) of the amounts otherwise Indemnifiable hereunder. 14. Specific Performance. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, the Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either at law or in equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue. 15. Binding Effect, Etc. This Agreement shall be binding upon, inure to the benefit of, and be hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or of any other enterprise at the Company's request. 16. Severability. The provisions of this Agreement shall be severable if any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or other wise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 17. Governing Law. This Agreement shall be governed by, and be construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. Executed this 19th day of November, 1996. CHYRON CORPORATION /s/Michael Wellesley-Wesley Michael Wellesley-Wesley Chief Executive Officer /s/Eugene M. Weber Eugene M. Weber Indemnification Agreement: Chyron Corporation (New York) AGREEMENT, effective as of November 19, 1996 between Chyron Corporation, a New York corporation (the "Company"), and Michael Wellesley-Wesley (the "Indemnitee"). WHEREAS, it is essential to the Company to remain and attract as directors and officers the most capable persons available; and WHEREAS, Indemnitee is a director or officer of the Company; and WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment; and WHEREAS, the By-Laws of the Company provide: "The Corporation shall indemnify any person to the full extent permitted, and in the manner provided, by the New York Business Corporation Law ["BCL"], as the same now exists or may hereafter be amended" and WHEREAS, this Agreement satisfies the provision of Section 721 of the BCL: and WHEREAS, in recognition of the fact that the Indemnitee continues to serve as a director or officer of the Company in part in reliance on the aforesaid By-Laws and Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such By-Laws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such By-Laws or any change in the composition of the Company's Board of Directors or any acquisition transaction relating to the Company), and due to the potential inadequacy of the Company's directors' and officers' liability insurance coverage, the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to service the Company directly or, in its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Definitions. (a) Approved Law Firm: shall mean any law firm (i) located in New York City and (ii) rated "av" by Martindale-Hubbel Law Directory. (b) Board of Directors: shall mean the Board of Directors of the Company. (c) Change in Control: shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than any stockholder (and/or affiliate of such stockholder) on the date of this Agreement or a trustee or other fiduciary holding securities under an employee benefit plan of the Company in substantially the same portions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly of securities of the Company representing 15 percent or more of the totaling voting power represented by the Company's then outstanding Voting Securities (such person being hereinafter referred to as an "Acquiring Person"), or (ii) during any 24-consecutive-month period, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entry) at least 80 percent of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (d) Claim: shall mean any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by the company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suite or proceeding, whether civil, criminal, administrative, investigative or other. (e) Expenses: shall include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, being a witness in or participate in, any Claim relating to any Indemnifiable Event, together with interest, computed at the Company's average cost of funds for short-term borrowings, accrued from the date of incurrence of such expense to the date Indemnitee receives reimbursement therefore. (f) Indemnifiable Event: shall mean any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation of any type or kind, domestic or foreign, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of anything done or not done by Indemnitee in such capacity. Without limitation of any indemnification provided hereunder, an Indemnitee serving (i) another corporation, partnership, joint venture or trust of which 10 percent or more of the voting power or residual economic interest is held, directly or indirectly, by the Company, or (ii) any employee benefit plan of the Company or an entity referred to in clause (i), in any capacity shall be deemed to be doing so at the request of the Company. (g) Reviewing Party: shall be (i) the Board of Directors acting by quorum consisting of directors who are not parties to the particular Claim with respect to which Indemnitee is seeking indemnification, or (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, (A) the Board of Directors upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in Section 2 of this Agreement and in Section 721 of the BCL has been met by the Indemnitee or (B) the shareholders upon a finding that the Indemnitee has met the applicable standard of conduct referred to in clause (ii) (A) of this definition. (h) Voting Securities: shall mean any securities of the Company which vote generally in the election of the directors. 2. Basic Indemnification Arrangement. If Indemnitee was, is or becomes at any time a party to, or witness or other participant in, or is threatened to be made a party to, or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law as soon as practicable but in any event no later than 30 days after written demand is presented to the Company, against any and all Expenses, judgements, fines (including excise taxes assessed on an Indemnitee with respect to an employee benefit plan), penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with, or in respect of, such Expenses, judgements, fines, penalties or amounts paid in settlement) of such Claim. If so requested by Indemnitee, the Company shall advance (within two business days of such request) any and all Expenses to Indemnitee (an "Expense Advance"). Notwithstanding anything in this Agreement to the contrary; (i) Indemnitee shall not be entitled to indemnification pursuant to this Agreement if a judgement or other final adjudication adverse to the Indemnitee establishes that Indemnitee's acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or that Indemnitee personally gained in fact a financial profit or other advantage to which Indemnitee was not legally entitled and (ii) prior to a Change in Control Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has jointed in or consented to the initiation of such Claim. 3. Payment. Notwithstanding the provision of Section 2, the obligations of the Company under Section 2 (which shall in no event be deemed to preclude any right to indemnification to which Indemnitee may be entitled under Section 723(a) of the BCL) shall be subject to the condition that the Reviewing Party shall have authorized such indemnification in the specific case by having determined that Indemnitee is permitted to be indemnified under the applicable standard of conduct set forth in Section 2 and applicable law. The Company shall promptly call a meeting of the Board of Directors with respect to a Claim and agrees to use its best efforts to facilitate a prompt determination by the Receiving Party with respect to the Claim. Indemnitee shall be afforded the opportunity to make submissions to the Reviewing Party with respect to the Claim. The obligation of the company to make an Expense Advance pursuant to Section 2 shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under Section 2 and applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees and undertakes to the full extent required by paragraph (a) of Section 725 of the BCL to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the State of New York having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. 4. Change in Control. If there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Board of Directors who were directors immediately prior to such Change in Control) then (i) all determinations by the Company pursuant to the first sentence of Section 3 hereof and Section 723(b) of the BCL shall be made pursuant to subparagraph (1) or (2)(A) of such Section 723(b) and (ii) with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or By- law of the Company now or hereinafter in effect relating to Claims for Indemnifiable Events (including, but not limited to, any option to be rendered pursuant to subparagraph (2)(A) of Section 723(b) of the BCL) the Company (including the Board of Directors) shall seek legal advice from (and only from) special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company (or any subsidiary of the Company) or the Acquiring Person (or any affiliate or associate of such Acquiring Person) within the last five years (other than in connection with such matters) or indemnitee. Unless Indemnitee has theretofore selected counsel pursuant to this Section 4 and such counsel has been approved by the Company, any Approved Law Firm shall be deemed to satisfy the requirements set forth above. Such counsel, among otherthings, shall render its written opinion to the Company, the Board of Directors and Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising our of or relating to this Agreement or its engagement pursuant hereto. As used in this Section 4, the terms "affiliate" and "associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the date of this Agreement. 5. Indemnification for Additional Expenses. The Company shall indemnify Indemnitee against any and all expenses (including attorneys' fees) and, if requested by Indemnitee, shall (within two business days of such request) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any claim asserted or action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or By-law of the Company now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expenses payment or insurance recovery, as the case may be. 6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgements, fines, penalties and amounts paid in settlement of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereto to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified, to the extent permitted by law, against all Expenses incurred in connection with such Indemnifiable Event. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proof shall, to the extent permitted by law, be on the Company to establish that Indemnitee is not so entitled. 7. Presumption. For purposes of this Agreement, the termination of any claim, action, suite or proceeding, whether civil or criminal, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the By-laws of the Company, the BCL or otherwise. To the extent that a change in the BCL (whether by statue or judicial decision) permits greater indemnification by agreement than would be afforded currently under the By-laws of the Company and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 9. Liability Insurance To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any director or officer of the Company. 10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern. 11. Amendments, Etc. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, By-law or otherwise) of the amounts otherwise Indemnifiable hereunder. 14. Specific Performance. The parties recognize that if any provision of this Agreement is violated by the Company, Indemnitee may be without an adequate remedy at law. Accordingly, in the event of any such violation, the Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings, either at law or in equity, to obtain damages, to enforce specific performance, to enjoin such violation, or to obtain any relief or any combination of the foregoing as Indemnitee may elect to pursue. 15. Binding Effect, Etc. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or of any other enterprise at the Company's request. 16. Severability. The provisions of this Agreement shall be severable if any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or other wise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 17. Governing Law. This Agreement shall be governed by, and be construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. Executed this 19th day of November, 1996. CHYRON CORPORATION /s/Daniel DeWolf Daniel DeWolf Secretary /s/Michael Wellesley-Wesley Michael Wellesely-Wesley CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF CHYRON CORPORATION UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW THE UNDERSIGNED, being the President and the Secretary of Chyron Corporation ("the Corporation") do hereby certify as follows: 1. The name of the Corporation is Chyron Corporation. The name under which the Corporation was formed is The Computer Exchange, Inc. 2. The Certificate of Incorporation of the Corporation was filed by the Department of State on April 8, 1966. 3. (a) The Certificate of Incorporation is amended to effect a reverse stock split (the "Slit") of shares of common stock of the Corporation, par value $.01 per share, (the "Common Stock") on the basis of issuing one (1) share of Common Stock in exchange for each three (3) shares of Common Stock. (b) To effect the foregoing, Paragraph FOURTH (a) of the Certificate of Incorporation is hereby amended to read as follows: "(a) The aggregate number of shares which the Corporation shall have authority to issue is 151,000,000 of which 1,000,000 shares shall be Preferred Stock issuable in series, of par value of $1.00 per share, and 150,000,000 shares shall be Common Stock of the par value of $.01 per share. (b) Except as hereinafter set forth and subject to limitations prescribed by law, including the provisions of Section 1123(a)(6) of the United States Bankruptcy Code, 11 U.S.C. Section 101 et seq. the Board of Directors of the Corporation is authorized to provide for the issuance of shares of Preferred Stock in one or more series, to establish the number of shares in each series, to fix the designation, relative rights, preferences and limitations of the shares of such series and to cause to be filed in the Department of State of New York, such certificates as may be required in connection therewith by the Business Corporation Law of New York. 4. Prior to the Split, there are 97,147,241 shares of Common Stock issued and 52,852,759 of unissued shares of Common Stock. Pursuant to the Split, each three (3) previously outstanding issued shares of Common Stock, par value $.01 per share, of the Corporation shall thereby and thereupon be reclassified into one (1) validly issued, fully paid, and nonassessable share of Common Stock, par value $.01 per share, of the Corporation. In lieu of receiving fractional shares, a shareholder shall receive cash. As result of the Split, there will be 33,382,413 shares of Common Stock issued and 116,617,587 unissued shares of Common Stock. 5. This Amendment to the Certificate of Incorporation of the Corporation was authorized by vote of the Board of Directors followed by the affirmative vote of the holders of a majority of all outstanding shares entitled to vote thereon at a special meeting of the shareholders of the Corporation duly called and held on the 24th day of January, 1997, a quorum being present. IN WITNESS WHEREOF, we have signed this Certificate on the 7th day of February, 1997 and we affirm the statements contained therein as true under penalties of perjury. /s/ Isaac Hersly /s/ Daniel I. DeWolf Isaac Hersly Daniel I. DeWolf President Secretary
EX-1 3 [ARTICLE] 5 [PERIOD-TYPE] YEAR [FISCAL-YEAR-END] DEC-31-1996 [PERIOD-END] DEC-31-1996 [CASH] 4,555 [SECURITIES] 0 [RECEIVABLES] 25,237 [ALLOWANCES] 0 [INVENTORY] 23,502 [CURRENT-ASSETS] 63,000 [PP&E] 12,701 [DEPRECIATION] 0 [TOTAL-ASSETS] 91,403 [CURRENT-LIABILITIES] 21,133 [BONDS] 0 [PREFERRED-MANDATORY] 0 [PREFERRED] 0 [COMMON] 324 [OTHER-SE] 0 [TOTAL-LIABILITY-AND-EQUITY] 91,403 [SALES] 82,608 [TOTAL-REVENUES] 0 [CGS] 39,941 [TOTAL-COSTS] 27,602 [OTHER-EXPENSES] 0 [LOSS-PROVISION] 0 [INTEREST-EXPENSE] 1,666 [INCOME-PRETAX] 13,399 [INCOME-TAX] 4,745 [INCOME-CONTINUING] 0 [DISCONTINUED] 0 [EXTRAORDINARY] 0 [CHANGES] 0 [NET-INCOME] 8,654 [EPS-PRIMARY] 0.27 [EPS-DILUTED] 0
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