-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Ser7a4iCyFVNHSRYcGvO01HtteSfTgKI1HdMsbD15RaI8FlJmfYOiNluUG7hHbUT DE6WTp4t/BLSOl4lX57kzw== 0000912057-94-001055.txt : 19940328 0000912057-94-001055.hdr.sgml : 19940328 ACCESSION NUMBER: 0000912057-94-001055 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940325 FILED AS OF DATE: 19940325 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHRIS CRAFT INDUSTRIES INC CENTRAL INDEX KEY: 0000020067 STANDARD INDUSTRIAL CLASSIFICATION: 4833 IRS NUMBER: 941461226 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 34 SEC FILE NUMBER: 001-02999 FILM NUMBER: 94518033 BUSINESS ADDRESS: STREET 1: 767 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10153 BUSINESS PHONE: 2124074898 MAIL ADDRESS: STREET 1: 6301 NW 5TH WAY STREET 2: SUITE 2100 CITY: FT. LAUDERDALE STATE: FL ZIP: 33309 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL AUTOMOTIVE FIBRES INC DATE OF NAME CHANGE: 19681112 DEF 14A 1 DEF 14A SCHEDULE 14A (RULE 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the registrant /X/ Filed by a party other than the registrant / / Check the appropriate box: / / Preliminary proxy statement /X/ Definitive proxy statement / / Definitive additional materials / / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12 _____________________CHRIS-CRAFT INDUSTRIES, INC.____________________ (Name of Registrant as specified in Its Charter) ____________________________________________________________________ (Name of Person(s) Filing Proxy Statement) Payment of filing fee (Check the appropriate box): /X/ $125 per Exchange Act Rule 0-11(a)(l)(ii), 14a-6(i)(l), or 14a-6(j)(2). / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). (1) Title of each class of securities to which transaction applies: -------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: -------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: -------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: -------------------------------------------------------------------- / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount previously paid: -------------------------------------------------------------------- (2) Form, schedule or registration statement no.: -------------------------------------------------------------------- (3) Filing party: -------------------------------------------------------------------- (4) Date filed: -------------------------------------------------------------------- [LOGO] NOTICE OF ANNUAL MEETING OF STOCKHOLDERS APRIL 28, 1994 TO THE STOCKHOLDERS OF CHRIS-CRAFT INDUSTRIES, INC.: The annual meeting of the stockholders of Chris-Craft Industries, Inc. ("Chris-Craft") will be held at the Arizona Biltmore, 24th Street & Missouri, Phoenix, Arizona 85016 on April 28, 1994, at 9:00 A.M., for the purpose of considering and acting upon the following matters: (1) Election of directors. (2) Approval and adoption of the 1994 Management Incentive Plan. (3) Approval and adoption of the 1994 Director Stock Option Plan. (4) Approval of performance-based compensation for: (a) the chief executive officer (b) the executive vice-president (5) A stockholder's proposal relating to inclusion of women and minorities on the Board of Directors, if such proposal is brought before the meeting. (6) Ratification of the selection of Price Waterhouse as auditors of Chris-Craft for the year ending December 31, 1994. (7) Such other business as may properly come before the meeting or any adjournment thereof. The Board of Directors has fixed the close of business on February 28, 1994 as the record date for the determination of stockholders entitled to notice of, and to vote at, the meeting. You are cordially invited to attend the meeting. Arrangements have been made for interested stockholders to visit our Phoenix television station, KUTP, after the meeting. Whether or not you plan to attend the meeting, you are urged promptly to complete, date and sign the enclosed proxy and to mail it to Chris-Craft in the enclosed envelope, which requires no postage if mailed in the United States. Return of your proxy does not deprive you of your right to attend the meeting and to vote your shares in person. Dated: New York, New York March 25, 1994 By Order of the Board of Directors, BRIAN C. KELLY, SECRETARY CHRIS-CRAFT INDUSTRIES, INC. 767 FIFTH AVENUE, NEW YORK, NEW YORK 10153 ------------------- PROXY STATEMENT ----------------- This Proxy Statement is furnished in connection with the solicitation of proxies by and on behalf of the Board of Directors of Chris-Craft for use at the annual meeting of stockholders on April 28, 1994 and at any adjournment thereof. March 25, 1994 is the approximate date on which this Proxy Statement and the accompanying form of proxy are first being mailed to stockholders. As of February 28, 1994, the record date for the meeting, Chris-Craft had outstanding 20,152,297 shares of Common Stock, 7,361,797 shares of Class B Common Stock, 297,287 shares of $1.40 Convertible Preferred Stock and 73,399 shares of Prior Preferred Stock, being the classes of stock entitled to vote at the meeting. Each share of Common Stock entitles its holder to one vote, and each share of Class B Common Stock entitles its holder to ten votes. Each share of $1.40 Convertible Preferred Stock entitles its holder to 29.2 votes, or 203.7 votes if he was the holder of such share on November 10, 1986 (or is a "Permitted Transferee," as defined in Chris-Craft's Restated Certificate of Incorporation). Each share of Prior Preferred Stock entitles its holder to .3 vote, or 6.3 votes if he was the holder of such share on November 10, 1986 (or is a Permitted Transferee). Notwithstanding the foregoing, if the holder of record of a share of Class B Common Stock, $1.40 Convertible Preferred Stock or Prior Preferred Stock is a broker or dealer in securities, a bank or voting trustee or a nominee of any such, or if such share is otherwise held of record by a nominee of the beneficial owner of such share, then such share of Class B Common Stock entitles such record holder to one vote, such share of $1.40 Convertible Preferred Stock entitles such record holder to 29.2 votes, and such share of Prior Preferred Stock entitles such record holder to .3 vote, except to the extent that such record holder establishes to Chris-Craft's satisfaction, pursuant to procedures set forth in Chris-Craft's Restated Certificate of Incorporation, that such share has been held continuously since November 10, 1986 or its later issuance by a named beneficial owner (whose address must also be specified). The proxy solicited by this Proxy Statement is revocable at any time before it is voted. The presence at the meeting in person or by proxy of stockholders entitled to cast a majority of the votes at the meeting constitutes a quorum. The election of directors is decided by a plurality of the votes cast. The favorable vote of holders of shares entitling them to cast a majority of votes entitled to be cast by holders present or represented at the meeting is required to approve the 1994 Management Incentive Plan and the 1994 Director Stock Option Plan. The favorable vote of holders of shares entitling them to cast a majority of votes cast on the respective proposals is required to approve the executive performance-based compensation for the chief executive officer and the executive vice president. Abstentions have the same legal effect as a vote against the 1994 Management Incentive Plan and the 1994 Director Stock Option Plan, and have no effect with respect to performance-based compensation for the two executive officers. Broker non-votes have no effect on the proposals being acted upon. The proxies named in the enclosed form of proxy and their substitutes will vote the shares represented by the enclosed form of proxy, if the proxy appears to be valid on its face, and, where a choice is specified by means of the ballot on the form of proxy, will vote in accordance with each specification so made. ELECTION OF DIRECTORS NOMINEES OF THE BOARD OF DIRECTORS The proxy will be voted as specified thereon and, in the absence of contrary instruction, will be voted for the reelection of Howard Arvey, Lawrence R. Barnett, James J. Rochlis, and John C. Siegel as directors until the third annual meeting following the April 28, 1994 meeting, and for the election of Dr. Jeane J. Kirkpatrick as director until the second annual meeting following the 1994 meeting and until their respective successors are elected and qualified. Information with respect to each such nominee, as well as the seven present directors whose terms of office expire at the first or second annual meeting following the April 28, 1994 meeting, is set forth below:
AGE, HAS SERVED OTHER POSITIONS WITH CHRIS-CRAFT, PRINCIPAL OCCUPATION FEBRUARY 28, AS DIRECTOR NAME AND CERTAIN OTHER DIRECTORSHIPS 1994 SINCE - ------------------------------- ------------------------------------------------------ ----------------- ------------- NOMINEES FOR THREE-YEAR TERM Howard Arvey................... Of Counsel, Wildman, Harrold, Allen & Dixon, Chicago 72 1975 law firm Lawrence R. Barnett............ Consultant, retired Executive Vice President, 80 1963 Chris-Craft; Director, United Television, Inc. ("UTV") (1) James J. Rochlis............... Consultant, retired Executive Vice President, 77 1958 Chris-Craft John C. Siegel................. Senior Vice President; Director, BHC and UTV 41 1994 NOMINEE FOR TWO-YEAR TERM Jeane J. Kirkpatrick........... Leavey Professor of Government, Georgetown University; 67 -- Senior Fellow, the American Enterprise Institute for Public Policy Research INCUMBENT DIRECTORS--TWO-YEAR REMAINING TERM Norman Perlmutter.............. Chairman of the Board and Chief Executive Officer, 60 1975 Heitman Financial Ltd., real estate financial services; Director, McArthur/Glen Realty Corp., United Asset Management Corporation and UTV Evan C Thompson................ Executive Vice President, Chris-Craft and President, 51 1982 Television Division; Director, UTV William D. Siegel.............. Senior Vice President; Director, BHC 38 1994 INCUMBENT DIRECTORS--ONE-YEAR REMAINING TERM David F. Linowes............... Professor of Political Economy and Public Policy and 76 1958 Boeschenstein Professor Emeritus, University of Illinois Alvin R. Rozelle............... Retired Commissioner, National Football League 68 1968 Herbert J. Siegel.............. Chairman of the Board and President, Chris-Craft; 65 1959 Chairman of the Board, BHC and UTV T. Chandler Hardwick, III...... Headmaster, Blair Academy, independent secondary 41 1994 school - --------- (1) UTV is a majority owned subsidiary of BHC Communications, Inc. ("BHC"), which is a majority owned subsidiary of Chris-Craft.
2 The principal occupation of each of the directors for the past five years is stated in the foregoing table, except that, until January 1, 1992, Mr. Arvey was a partner of Arvey, Hodes, Costello & Burman, a Chicago law firm. In case a nominee shall become unavailable for election, which is not expected, it is intended that the proxy solicited hereby will be voted for whomever the present Board of Directors shall designate to fill such vacancy. Two Senior Vice Presidents and nominees for the Board of Directors of Chris-Craft, John C. Siegel and William D. Siegel, are sons of Herbert J. Siegel. COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS Chris-Craft has established standing audit and compensation committees, among others, to assist the Board of Directors in discharging its responsibilities. Chris-Craft has no nominating committee. The Audit Committee reviews Chris-Craft's internal controls, the objectivity of its financial reporting and the scope and results of the auditing engagement. It meets with appropriate Chris-Craft financial personnel and independent public accountants in connection with these reviews. This committee recommends to the Board the appointment of the independent public accountants, subject to ratification by the stockholders at the annual meeting, to serve as auditors for the following year in examining the corporate accounts. The public accountants periodically meet with the Audit Committee and have access to the committee at any time. The committee held two meetings during 1993. Its members are Messrs. Arvey and Linowes. The Compensation Committee makes recommendations to the Board with respect to the compensation of officers. Its members are Messrs. Arvey, Linowes and Rozelle. The Committee held four meetings during 1993. The Board Compensation Committee Report on Executive Compensation appears on page 10. Chris-Craft's Board of Directors held 8 meetings during 1993. During that period, Mr. Rozelle attended fewer than 75% of the aggregate number of meetings held by the Board of Directors and the committee of the Board on which he served. VOTING SECURITIES OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The management of Chris-Craft has been informed that, as of February 28, 1994, the persons and groups identified in Table I below, including all directors, nominees for director, executive officers and all owners known to Chris-Craft of more than 5% of any class of Chris-Craft voting securities, owned beneficially, within the meaning of Securities and Exchange Commission ("SEC") Rule 13d-3, the securities of Chris-Craft reflected in such table. Except as reflected in Tables II and III, as of February 28, 1994, each director or executive officer of Chris-Craft disclaims beneficial ownership of securities of any Chris-Craft subsidiary. Except as otherwise specified, the named beneficial owner claims sole investment and voting power as to the securities reflected in the tables. 3 I. BENEFICIAL OWNERSHIP OF CHRIS-CRAFT STOCK
$1.40 CONVERTIBLE CLASS B PREFERRED COMMON COMMON STOCK(2)(3) STOCK(2)(3)(4) STOCK(3)(5)(6) -------------------- -------------------- -------------------- NUMBER OF PERCENT NUMBER OF PERCENT NUMBER OF PERCENT BENEFICIAL OWNER(1) SHARES OF CLASS SHARES OF CLASS SHARES OF CLASS - ---------------------------------------- --------- -------- --------- -------- --------- -------- Howard Arvey............................ 100 * 57,428 * 93,386 * Lawrence R. Barnett(7).................. 50,900 17.1% 1,924,895 23.0% 2,929,573 13.0% T. Chandler Hardwick, III............... -- -- -- -- 5,000 -- Jeane J. Kirkpatrick.................... -- -- -- -- 5,000 * David F. Linowes........................ 10,605 3.6% 208,073 2.7% 360,385 1.8% Joelen K. Merkel(8)..................... -- -- 20,114 * 57,965 * Norman Perlmutter....................... -- -- 5,551 * 39,200 * James J. Rochlis........................ 16,199 5.4% 975,263 12.7% 1,656,230 7.8% Alvin R. Rozelle........................ -- -- 939 * 39,036 * Herbert J. Siegel(9).................... 167,057 56.2% 4,555,854 42.9% 6,766,501 25.6% John C. Siegel(10)...................... 6,000 2.0% 384,842 5.1% 504,026 2.4% William D. Siegel(10)................... 5,315 1.8% 329,987 4.4% 588,199 2.9% Evan C Thompson(11)..................... 130 * 633,668 8.6% 1,262,992 6.0% All directors and executive officers as a group, including the directors and executive officers named above(12) (14 persons).............................. 255,684 86.0% 7,914,553 64.1% 12,098,325 38.7% The Equitable Companies Incorporated(13)...................... -- -- 1,153,490 15.7% 1,366,512 6.4% Gabelli & Company, Inc., Gabelli Funds, Inc., GAMCO Investors, Inc., and Mario J. Gabelli(14)........................ -- -- 1,226,788 16.7% 5,232,255 24.5% The Gabelli Equity Trust Inc.(15)....... -- -- 482,086 6.6% 482,086 2.3% - --------- * Less than 1%. (1) The address of The Equitable Companies Incorporated is 787 Seventh Avenue, New York, New York 10019; the address of Gabelli & Company, Inc., Gabelli Funds, Inc., GAMCO Investors, Inc., and Mario J. Gabelli, The Gabelli Value Fund, Inc. and The Gabelli Equity Trust Inc. is One Corporate Center, Rye, New York 10580; the address of each other beneficial owner named in the table is c/o Chris-Craft Industries, Inc., 767 Fifth Avenue, New York, New York 10153. (2) Each share of $1.40 Convertible Preferred Stock is convertible into 9.73794 shares of Common Stock and 19.47587 shares of Class B Common Stock, except that if such share of $1.40 Convertible Preferred Stock was transferred after November 10, 1986 other than to a Permitted Transferee, such share is convertible into 29.21381 shares of Common Stock. Each share of Class B Common Stock is convertible into one share of Common Stock. (3) At December 31, 1993, (a) the Trustee of the Chris-Craft Employees' Stock Purchase Plan (the "Stock Purchase Plan") held 364,323 shares of Class B Common Stock, 464,855 shares of Common Stock and 246 shares of $1.40 Convertible Preferred Stock (representing 5%, 2% and less than 1% of the outstanding shares of the respective classes at February 28, 1994), and (b) the Trustees under the Chris-Craft Profit Sharing Plan (the "Profit Sharing Plan") held 150,000 shares of Class B Common Stock (representing 2% of the outstanding shares of the class at February 28, 1994). A committee
(NOTES CONTINUED ON NEXT PAGE) 4 appointed by the Board of Directors of Chris-Craft to administer the Stock Purchase Plan is empowered to direct voting of the shares held by the Trustee under that plan, and the Trustees under the Profit Sharing Plan are empowered to vote and dispose of the shares held by that plan. Herbert J. Siegel, James J. Rochlis and Lawrence R. Barnett are the members of the committee under the Stock Purchase Plan and are the Trustees under the Profit Sharing Plan. The numbers of shares set forth in the table with respect to each director or named executive officer other than Herbert J. Siegel, James J. Rochlis and Lawrence R. Barnett exclude shares held in the Profit Sharing Plan and include, with respect to the Stock Purchase Plan, only shares vested at December 31, 1993. The numbers of shares set forth in the table with respect to each of Herbert J. Siegel, James J. Rochlis, Lawrence R. Barnett and all directors and executive officers as a group include all shares held in the Profit Sharing Plan and the Stock Purchase Plan as of December 31, 1993. If, at February 28, 1994, the shares of $1.40 Convertible Preferred Stock held in the Stock Purchase Plan at December 31, 1993 had been converted and the Class B Common Stock issuable upon such conversion had been added to the Class B Common Stock then held in the Stock Purchase Plan and the Profit Sharing Plan, the shares of Class B Common Stock held in the two plans would represent 7% of the Class B Common Stock that would have been outstanding; if, at February 28, 1994, the shares of $1.40 Convertible Preferred Stock held in the Stock Purchase Plan at December 31, 1993 had been converted, the Class B Common Stock then held in the Stock Purchase Plan and the Profit Sharing Plan, or issuable upon conversion of the $1.40 Convertible Preferred Stock held in the Stock Purchase Plan, had been converted, and the Common Stock issuable upon such conversions had been added to the Common Stock then held in such plans, the shares of Common Stock held in the two plans would represent 5% of the Common Stock that would have been outstanding. (4) Includes shares of Class B Common Stock issuable upon conversion of the $1.40 Convertible Preferred Stock reflected in the table opposite the identified person or group. In accordance with SEC rules, the percentages shown have been computed assuming that the only shares converted are those shares reflected opposite the identified person or group. (5) Includes shares of Common Stock issuable upon conversion of the $1.40 Convertible Preferred Stock and Class B Common Stock reflected in the table opposite the identified person or group. In accordance with SEC rules, the percentages shown have been computed assuming that the only shares converted are those shares reflected opposite the identified person or group. (6) Includes with respect to the following directors the indicated numbers of shares issuable on exercise of options previously granted under the 1989 Director Stock Option Plan or to be granted immediately following the 1994 annual meeting of stockholders under the 1994 Director Stock Option Plan, if adopted; Howard Arvey, 30,873; Lawrence R. Barnett, 43,250; T. Chandler Hardwick, III, 5,000; Jeane J. Kirkpatrick, 5,000; David F. Linowes, 48,876; Norman Perlmutter, 30,873; James J. Rochlis, 48,876; Alvin R. Rozelle, 37,624. (7) Ownership includes 10,919 shares of Class B Common Stock owned by a charitable foundation of which Mr. Barnett and certain members of his family are the directors. (8) Ownership includes 17,166 shares of Common Stock issuable pursuant to a currently exercisable stock option. (9) Ownership includes 110,000 shares of Common Stock issuable pursuant to a currently exercisable stock option and excludes an option for 300,000 shares to be granted pursuant to Chris-Craft's 1994 Management Incentive Plan and 13,000 shares of $1.40 Convertible Preferred Stock, 60,711 shares of Class B Common Stock and 11,330 shares of Common Stock owned by the director's wife. (10) Ownership includes 34,333 shares of Common Stock issuable pursuant to currently exercisable stock options.
(NOTES CONTINUED ON NEXT PAGE) 5 (11) Ownership includes 259,368 shares of Common Stock issuable pursuant to currently exercisable stock options, and excludes an option for 200,000 shares to be granted pursuant to Chris-Craft's 1994 Management Incentive Plan. (12) Ownership includes all shares held in the Stock Purchase Plan and the Profit Sharing Plan as of December 31, 1993 (see Note 3), all other shares reflected in the table with respect to directors and named executive officers, and all other shares, including an additional 6,866 shares of Common Stock issuable pursuant to currently exercisable stock options, held by an executive officer of Chris-Craft not named in the table. Of the shares held in the Stock Purchase Plan, 116 shares of $1.40 Convertible Preferred Stock, 223,022 shares of Class B Common Stock and 363,254 shares of Common Stock were held for the accounts of employees other than directors or executive officers. (13) Shared voting power is claimed as to 77,511 shares of Common Stock. Information is furnished herein in reliance on Amendment No. 5 to Schedule 13G with respect to Class B Common Stock and Amendment No. 12 to Schedule 13G with respect to Common Stock of The Equitable Companies Incorporated, each dated February 9, 1994 filed with the SEC jointly with AXA and Alpha Assurances I.A.R.D. Mutuelle, Alpha Assurances Vie Mutuelle, AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, and Uni Europe Assurance Mutuelle, as a group. (14) Voting power is disclaimed as to 1,011,951 shares of Common Stock and 544,143 shares of Class B Common Stock, and both shared voting and shared investment power are claimed as to 22,962 shares. Information is furnished herein in reliance on Amendment No. 24 to Schedule 13D of the named owners dated October 13, 1993, filed with the SEC. (15) The named owners disclaim investment power respecting the referenced shares. Information is furnished herein in reliance on Schedule 13Gs of the named owners, respectively dated February 19, 1993 and February 15, 1994, filed with the SEC.
II. BENEFICIAL OWNERSHIP OF BHC CLASS A COMMON STOCK
NUMBER BENEFICIAL OWNER OF SHARES(1) - ----------------------------------------------------------------------------------------------------- ------------- Howard Arvey......................................................................................... 650 Lawrence R. Barnett(2)............................................................................... 309 T. Chandler Hardwick, III............................................................................ -- Jeane J. Kirkpatrick................................................................................. -- David F. Linowes..................................................................................... 151 Joelen K. Merkel(3).................................................................................. 200 Norman Perlmutter.................................................................................... -- James J. Rochlis(2).................................................................................. 1,109 Alvin R. Rozelle..................................................................................... -- Herbert J. Siegel(2)................................................................................. 538 John C. Siegel....................................................................................... -- William D. Siegel.................................................................................... 231 Evan C Thompson...................................................................................... -- All Chris-Craft directors and executive officers as a group, including the directors and executive officers named above (14 persons)(2)......................... 2,570 - --------- (1) Each amount shown represents less than 1% of the class. In accordance with SEC rules, percentages have been computed deeming as not outstanding 226,503 shares of BHC Class A Common Stock held by UTV. (2) Ownership includes 309 shares held in the Chris-Craft Profit Sharing Plan, of which Messrs. Siegel, Barnett and Rochlis are Trustees. See Note 3 to Table I. (3) Shares are owned jointly with the executive officer's husband.
6 III. BENEFICIAL OWNERSHIP OF UTV COMMON STOCK
NUMBER PERCENT OF OF BENEFICIAL OWNER SHARES CLASS - ---------------------------------------------------------------------------------------- ------- ---- Howard Arvey............................................................................ -- -- Lawrence R. Barnett(1).................................................................. 229,155 2.2% T. Chandler Hardwick, III............................................................... -- -- Jeane J. Kirkpatrick.................................................................... -- -- David F. Linowes........................................................................ -- -- Joelen K. Merkel........................................................................ -- -- Norman Perlmutter....................................................................... 2,000 * James J. Rochlis........................................................................ -- -- Alvin R. Rozelle........................................................................ -- -- Herbert J. Siegel(1)(2)................................................................. 229,155 2.2% John C. Siegel.......................................................................... 229,155 2.2% William D. Siegel....................................................................... -- -- Evan C Thompson......................................................................... 25,000 * All Chris-Craft directors and executive officers as a group, including the directors and executive officers named above (14 persons)(1)............ 256,155 2.5% - --------- * Less than 1% (1) At December 31, 1993, (a) the Trustee of the Employees' Stock Purchase Plan of UTV (the "UTV Stock Purchase Plan") held 219,155 shares of UTV Common Stock (representing 2.1% of the outstanding shares at February 28, 1994), and (b) the Trustees under the UTV Profit Sharing Plan held 10,000 shares of UTV Common Stock (representing less than 1% of the outstanding shares at February 28, 1994). A committee appointed by the Board of Directors of UTV to administer the UTV Stock Purchase Plan is empowered to direct voting of the shares held by the Trustee under that plan, and the Trustees under the UTV Profit Sharing Plan are empowered to vote and dispose of the shares held by that plan. Herbert J. Siegel, Lawrence R. Barnett, John C. Siegel and another executive officer of UTV are the members of the committee under the UTV Stock Purchase Plan and are the Trustees of the UTV Profit Sharing Plan. The numbers of shares set forth in the table with respect to each of Herbert J. Siegel, Lawrence R. Barnett, John C. Siegel and all directors and executive officers as a group include all shares held in the UTV Stock Purchase Plan and the UTV Profit Sharing Plan as of December 31, 1993. (2) Ownership excludes 666 shares owned by the director's wife.
7 EXECUTIVE COMPENSATION The following table sets forth all plan and non-plan compensation paid to the named individuals for services rendered in all capacities to Chris-Craft and its subsidiaries during the three years ended December 31, 1993. SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION ------- ANNUAL AWARDS COMPENSATION(1) ------- -------------------- SECURITIES SALARY BONUS UNDERLYING ALL OTHER NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS(#) COMPENSATION($) - --------------------------------------- ---- ------- ----------- ------- ------------ Herbert J. Siegel...................... 1993 884,975 3,677,785 -- 682,620 (2) Chairman of the Board 1992 860,034 1,298,187 -- 441,752 and President 1991 834,175 1,179,990 -- 521,878 Joelen K. Merkel....................... 1993 200,000 175,000 -- 60,472 (3) Vice President 1992 125,000 125,000 50,000 38,478 and Treasurer 1991 125,000 40,000 -- 27,882 John C. Siegel......................... 1993 450,000 350,000 -- 123,029 (4) Senior Vice President 1992 235,000 400,000 100,000 95,381 1991 235,000 135,000 -- 69,341 William D. Siegel...................... 1993 450,000 350,000 -- 122,856 (5) Senior Vice President 1992 235,000 700,000 100,000 140,256 1991 235,000 140,000 -- 70,091 Evan C Thompson........................ 1993 800,000 600,000 -- 225,279 (6) Executive Vice President 1992 750,000 300,000 100,000 166,413 and President, Television Division 1991 700,000 204,000 -- 149,441 - --------- (1) Excludes automobile allowance of $1,200 per month paid to each of the named individuals and perquisites and other personal benefits aggregating less than the lesser of $50,000 or 10% of the total annual salary and bonus reported for the named person. (2) Reflects Chris-Craft contributions, or accruals under the Benefit Equalization Plan in lieu of contributions and forfeiture allocations, of $271,990 with respect to the Stock Purchase Plan and $410,630 with respect to the Profit Sharing Plan. (3) Reflects Chris-Craft contributions, or accruals under the Benefit Equalization Plan in lieu of contributions and forfeiture allocations, of $24,077 with respect to the Stock Purchase Plan and $36,395 with respect to the Profit Sharing Plan. (4) Reflects Chris-Craft contributions, or accruals under the Benefit Equalization Plan in lieu of contributions and forfeiture allocations, of $48,384 with respect to the Stock Purchase Plan and $74,645 with respect to the Profit Sharing Plan. (5) Reflects Chris-Craft contributions, or accruals under the Benefit Equalization Plan in lieu of contributions and forfeiture allocations, of $48,211 with respect to the Stock Purchase Plan and $74,645 with respect to the Profit Sharing Plan. (6) Reflects Chris-Craft contributions, or accruals under the Benefit Equalization Plan in lieu of contributions and forfeiture allocations, of $96,634 with respect to the Stock Purchase Plan and $128,645 with respect to the Profit Sharing Plan.
No stock option was granted to any of the named individuals during 1993. 8 The following table sets forth information concerning each exercise of stock options during 1993 by each of the named individuals, along with the year-end value of unexercised options. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($) SHARES ACQUIRED VALUE -------------------------- ------------------------- NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - --------------------------- --------------- ----------- ----------- ------------- ---------- ------------- Herbert J. Siegel.......... 0 0 354,435 0 2,781,181 0 Joelen K. Merkel........... 10,564 214,477 17,166 34,333 130,807 261,621 John C. Siegel............. 70,882 1,056,426 34,333 68,666 251,622 503,244 William D. Siegel.......... 138,392 2,462,260 34,333 68,666 251,622 503,244 Evan C Thompson............ 106,326 2,177,057 259,368 68,666 1,303,645 523,242
EXECUTIVE OFFICER EMPLOYMENT AGREEMENTS Chris-Craft entered into employment agreements with Herbert J. Siegel and Evan C Thompson, as of January 1, 1994. The 1994 employment agreement with Herbert J. Siegel (Mr. Siegel's agreement) provides for his continued service as Chief Executive Officer for an initial term ending December 31, 1998, which term will extend automatically for one year as of the end of each of the first two years of the term, unless either party gives contrary notice to the other. Annual base salary is $950,000, subject to adjustment ("COLA adjustment") annually to reflect price level increases, as reported in a U.S. Department of Labor Consumer Price Index. Deferred compensation in the amount of $550,000 annually is credited to the deferred compensation account referred to under PERFORMANCE-BASED COMPENSATION FOR HERBERT J. SIEGEL AND EVAN C THOMPSON, as well as interest on the account balance, to be computed based on the yield of U.S. Treasury instruments maturing in five years. The account balance will be paid to Mr. Siegel in five annual installments after termination of the employment term. Mr. Siegel's agreement provides that in the event of any change in control of Chris-Craft during the employment term, the employment term will be extended automatically to the third anniversary following such change in control, if the employment term otherwise would have terminated before such third anniversary. Mr. Siegel has the right to terminate the employment term in the event of a diminution of his authority or other material breach by Chris-Craft of Mr. Siegel's agreement or the occurrence without his consent of specified fundamental changes in Chris-Craft. In the event of such termination, he is entitled to receive in lump sum, an amount equal to the base salary, deferred compensation and consulting fees that would have been payable to him through the term of the agreement (assuming no additional extensions of the employment term after such termination), plus an amount equal to the mean performance bonuses theretofore paid or payable to him multiplied by the number of years remaining in the employment term. If Mr. Siegel dies during the employment term, Mr. Siegel's estate is to receive for each of the three following 12-month periods an amount equal to "Average Annual Compensation"; and in the event of his disability, Mr. Siegel is to receive, annually for the remainder of the employment term, an amount equal to one-half of his Average Annual Compensation. "Average Annual Compensation" generally means the executive's average base salary plus bonus for a specified period prior to the event. Additionally, if any payment to Mr. Siegel pursuant to the agreement should be subject to the excise tax imposed on " golden parachutes" by Section 4999 of the Code, Chris-Craft will pay on his behalf or reimburse him in an amount equal to the sum of the excise tax and related interest and penalties, if any, plus any income taxes (and related penalties and interest) that may become payable by Mr. Siegel arising from Chris-Craft's compliance with such payment or reimbursement obligations, such that he would be in the same position as he would have been had no excise tax been imposed. During the consulting term, which will commence on expiration of the employment term and end 5 years thereafter, Mr. Siegel is to receive annual compensation of $500,000 (subject to COLA adjustment), is 9 required to devote not more than 20 hours in any month to Chris-Craft's affairs, and is prohibited from engaging in activity competitive with Chris-Craft. If Mr. Siegel dies during the consulting term, his estate is to receive the full consulting fee until the third anniversary of his death or the end of the consulting term, whichever is earlier; if he is disabled, he is entitled to receive one-half of the consulting fee until the end of the consulting term. For each year covered by Mr. Siegel's agreement, Chris-Craft will match on a cumulative basis up to $200,000 of his charitable contributions in addition to matching his contributions under any other charitable gift matching program of Chris-Craft or any subsidiary. As additional inducement to enter into Mr. Siegel's agreement, Chris-Craft has made "split-dollar" life insurance agreements with each of Mr. Siegel's two sons, pursuant to which, under each agreement, Chris-Craft procured and will pay the full amount of each annual premium for 15 years on last-to-die policies on the lives of Herbert J. Siegel and his wife. Each of the sons is the owner of policies having face amounts totaling $15 million, covered by his respective agreement and has the right to designate and change the beneficiaries thereunder. The cost of these policies will be shared between Chris-Craft and BHC in the respective proportions of 15% and 85% until they shall otherwise agree. The policies and the split-dollar agreements contemplate that an amount equal to the aggregate premiums paid, but without interest, will be repaid to Chris-Craft and BHC, upon the death of the last to die of the insureds or, prior thereto, upon the termination of the split-dollar agreements by the owners of the policies. The bonus provisions of Mr. Siegel's agreement being submitted for stockholder approval specify that Chris-Craft will pay Mr. Siegel a cash bonus equal to 1 1/2% of the amount by which Chris-Craft "Pre-tax Income" as defined, exceeds $36,000,000 for each fiscal year, as more fully described under PERFORMANCE-BASED COMPENSATION FOR HERBERT J. SIEGEL AND EVAN C THOMPSON. Mr. Thompson's 1994 employment agreement (Mr. Thompson's agreement) provides for his continued service in his current capacities on substantive terms similar to those specified in Mr. Siegel's agreement, except that there are three automatic one-year renewal terms, unless Mr. Thompson gives contrary notice respecting the first two or either party gives contrary notice respecting the third; annual deferred compensation is in the amount of $250,000, and Mr. Thompson can elect each year whether amounts deferred for such year will be paid in lump sum immediately, or over five years, after termination of the employment term; Mr. Thompson's consulting fee is $250,000 per year (subject to COLA adjustment) and the consulting term will end May 31, 2007; if Mr. Thompson dies during the employment term or the consulting term, a death benefit is payable until the earlier of the first anniversary of his death or the end of the consulting term; there is no split-dollar life insurance; Chris-Craft will match on a cumulative basis up to $100,000 of Mr. Thompson's charitable contributions during each year of the employment term; and the bonus and stock option arrangements are as follows: The bonus provisions of Mr. Thompson's agreement being submitted for stockholder approval specify that Chris-Craft will pay Mr. Thompson a cash bonus equal to 1% of the amount by which Chris-Craft's "TV Broadcast Cash Flow" for each fiscal year exceeds $20 million, up to $50 million, and 2% of the amount by which TV Broadcast Cash Flow exceeds $50 million, as more fully described under PERFORMANCE-BASED COMPENSATION FOR HERBERT J. SIEGEL AND EVAN C THOMPSON. The employment agreements provide that, if the 1994 Management Incentive Plan is approved by stockholders, Messrs. Siegel and Thompson will be granted stock options as set forth under 1994 MANAGEMENT INCENTIVE PLAN. Chris-Craft has also agreed, in the event of Mr. Siegel's death, to pay $2,000,000 to a beneficiary named by Mr. Siegel. Chris-Craft has purchased, and is the sole owner and beneficiary of, insurance on the life of Mr. Siegel and anticipates that the insurance benefits received by Chris-Craft will exceed the cost, after applicable income taxes, of paying the foregoing death benefit. ------------------- Benefits under the Chris-Craft Salaried Employees' Pension Plan are based on a participant's compensation, including salaries, bonuses and commissions. The plan provides a retirement annuity, generally based on specified percentages of annual compensation (for 1989 and subsequent years, generally 1.5% of the first $18,000 of compensation and 2.0% of the remainder) aggregated through the years of service. Estimated 10 annual benefits payable upon retirement after working to age 65 (including benefits payable under the predecessor pension plan and the Benefit Equalization Plan) are, for Joelen K. Merkel, John C. Siegel, William D. Siegel and Evan C Thompson, $226,675, $469,604, $ 574,018, and $768,761, respectively. Herbert J. Siegel, who has reached age 65, is currently receiving $79,874 per year from the predecessor pension plan, and as of February 28, 1994, has accrued an additional annual benefit of $720,680 under the current pension plan. Under the Executive Deferred Income Plan, Chris-Craft entered into an agreement with each participating employee, whereby the employee agreed to defer $1,000 per year of salary in each of four years, and Chris-Craft agreed to make annual payments in specified amounts for 10 years in the event of the employee's death or for 15 years commencing at age 60. The plan also provides supplemental disability benefits of $10,000 per year from the onset of a disability until annual payments commence at age 60 or death. Benefits under the plan do not depend on compensation and are payable in full if the employee has accumulated 20 years of service, or is employed by Chris-Craft, when the condition for payment occurs. Maximum annual benefits payable in the event of death of Mrs. Merkel and Messrs. John C. Siegel, William D. Siegel and Thompson would be $101,585, $ 109,677, $ 136,853 and $55,137, respectively, for 10 years. Annual benefits payable to Mrs. Merkel and Messrs. John C. Siegel, William D. Siegel and Thompson commencing at age 60 would be $ 76,798, $83,076, $103,305 and $31,898, respectively, for 15 years, assuming full vesting of benefits. After an employee has participated in the plan for four years, premiums for insurance on his life are paid through policy loans involving no direct out-of-pocket cost to Chris-Craft. Accordingly, since 1987, Chris-Craft has made no payments under the plan with respect to the participation of any Chris-Craft executive officer, other than for interest on policy loans and disability waiver premiums. BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Compensation Committee of the Board of Directors (the "Committee"), which is comprised of three directors who have never been employees of Chris-Craft, is responsible for reviewing the recommendations of the Chief Executive Officer (CEO) and making recommendations to the Board of Directors with respect to the salaries, bonuses, and other forms of compensation, including stock option grants, of Chris-Craft's executive officers. The Committee seeks to attract and retain executive officers of the highest caliber and motivate them to maximize the success of Chris-Craft's businesses by linking their compensation to performance. Each executive officer's cash compensation consists of two components: base salary and annual bonus. Base salary and bonus for the CEO was fixed by his employment agreement, which expired at the end of 1993. The contract, originally effective September 1, 1983, provided for an annual base salary that increased solely to reflect inflation and a performance based bonus equal to 1% of the amount by which Chris-Craft's "Adjusted Pre-tax Income" for the fiscal year exceeded $15,000,000. In 1993, Chris-Craft's Adjusted Pre-tax Income exceeded $15,000,000 by $369,615,000, resulting in a higher bonus for the CEO than in 1992 when Adjusted Pre-tax Income exceeded $15,000,000 by $130,371,000, as Chris-Craft realized significant gains on the disposition of its Time Warner securities in 1993. The salary of the Executive Vice President and President, Television Division was likewise fixed by contract that expired at the end of 1993; his bonus is based on the recommendation of the CEO and the Committee's evaluation of his performance. In determining his 1993 bonus, the Committee considered that Television Division operating income set an all time record and that Television Division revenues exceeded budgeted and prior year levels. In addition, in 1993, the Television Division President spearheaded the formation of a new television network. Based on the foregoing and the CEO's perception of compensation levels for senior executives of comparable entertainment and communications companies, the CEO recommended, and the Compensation Committee approved, a larger bonus than last year's. The remaining executive officers are not directly responsible for the operating results of particular businesses. Their salaries for 1993 were fixed at the end of the prior fiscal year, based on subjective perceptions of salaries paid by comparable companies for comparable positions and their bonuses were based on subjective assessments of the executive officers' success at fulfilling the duties and responsibilities of their respective positions and the particular tasks assigned to them. The Committee generally adopts 11 recommendations of the CEO, who bases his recommendations on past salary levels and his perception of the quality of their respective performances and attempts to match their salaries with his perception of salary levels at a small number of companies he considers comparable, which companies are not included in the S&P Broadcast Media Index but which operate in the entertainment industry. The CEO assesses executive officer performance in terms of normal responsibilities, assumption of extra responsibilities, and additional work related to special projects. No relative weight was assigned to any of the foregoing factors. Specifically, the bonuses of executive officers reflect their relative participation and performance, as perceived by the CEO, in various matters, including analysis and planning relating to government policies such as legislative and regulatory initiatives, analysis and negotiation of business acquisitions, planning new business ventures, and assumption of additional responsibilities. One executive officer's bonus was greater than in prior years, reflecting an assumption of greater responsibilities following retirement of another executive officer, while the bonuses of other executive officers were less than in the prior year because the prior year's bonus had reflected extraordinary transactions in that year. Each of the employment agreements for the CEO and the Executive Vice President provides that current compensation otherwise payable that is not deductible for federal income tax purposes under Section 162(m) of the Code, will be credited to a deferred compensation account and paid to the executive after his employment with Chris-Craft has terminated. No policy has been adopted with respect to Section 162(m) of the Code for the other executive officers, since their compensation levels are not in excess of $1 million. No stock option was granted to any of the named executive officers during 1993. HOWARD ARVEY DAVID F. LINOWES ALVIN R. ROZELLE PERFORMANCE GRAPH The following line graph compares cumulative total shareholder return for Chris-Craft Common Stock, the Standard & Poor's ("S&P") 500 index and the S&P Broadcast Media index, assuming the investment of $100 in each in December 1988 and the monthly reinvestment of dividends. The performance shown on the graph is not necessarily indicative of future performance. [GRAPH] 12 Pursuant to SEC rules, the material under the caption, Board Compensation Committee Report on Executive Compensation, through and including the line graph and related explanatory material, is not to be deemed "soliciting material" nor "filed" with the SEC. It is specifically excluded from any material incorporated by reference in Chris-Craft filings under the Securities Act of 1933 or Securities Exchange Act of 1934, whether such filings occur before or after the date of this proxy statement and notwithstanding anything to the contrary set forth in any such filing. COMPENSATION OF DIRECTORS Directors of Chris-Craft receive a retainer of $35,000 per year plus $7,500 per year for service on each of the Audit and Compensation Committees, $3,000 per year for service on each of the ERISA and Investment Committees and $1,000 per year for service on the Benefit Equalization Plan Committee. Officers of Chris-Craft receive no additional compensation as directors. In 1993, Directors of Chris-Craft received a retainer of $25,000 per year plus $1,000 for each meeting of the Board of Directors attended and $3,000 per year for service on each of the Audit, Compensation, ERISA and Investment Committees and $1,000 per year for service on the Benefit Equalization Plan Committee. Officers of Chris-Craft received no additional compensation for service as directors. Lawrence R. Barnett and James J. Rochlis, each a director and retired Executive Vice President of Chris-Craft, served as consultants to Chris-Craft during 1993, each for compensation of $75,000 annually, and are continuing, on a year-to-year basis, to serve as consultants for the same compensation. Messrs. Barnett and Rochlis are consulted from time to time, as operating officers deem necessary, to obtain their advice and the benefit of their experience with respect to those Chris-Craft operations for which they were responsible during their years of service as executive vice presidents of Chris-Craft. Mr. Barnett consults respecting films and other media entertainment for broadcast by Chris-Craft. Mr. Rochlis consults with respect to Chris-Craft's Industrial Division and Chris-Craft environmental matters. Chris-Craft also pays premiums for health insurance for these consultants, which totaled $13,996 for Mr. Barnett and $9,918 for Mr. Rochlis in 1993. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Lawrence R. Barnett and James J. Rochlis, each a director and retired Executive Vice President of Chris-Craft, served as consultants to Chris-Craft during 1993, as more fully described under EXECUTIVE COMPENSATION -- Compensation of Directors. Laurey J. Barnett, who is the daughter of Lawrence R. Barnett, a director of Chris-Craft, continued during 1993 to serve UTV as Vice President and Director of Programming. Her salary and bonus for 1993 aggregated $222,000; she received a monthly automobile allowance of $600; and she participated in UTV benefit plans on the same basis as other eligible employees. Ms. Barnett's employment continues in the same capacity and on the same terms, except that her current salary is at the rate of $155,000 per year. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Chris-Craft's executive officers and directors are required under the Securities Exchange Act of 1934 to file reports of ownership and changes in beneficial ownership of Chris-Craft equity securities with the SEC. Copies of those reports must also be furnished to Chris-Craft. Based solely on a review of the copies of reports furnished to Chris-Craft and written representations that no Forms 5 were required, Chris-Craft believes that during 1993 all filing requirements applicable to executive officers and directors were complied with, except as follows: Howard Arvey and Norman Perlmutter each filed their Forms 5 for 1993, respectively, one day and two days late due to the disruption in courier service as a result of severe weather conditions. 1994 MANAGEMENT INCENTIVE PLAN The Board of Directors has adopted the 1994 Management Incentive Plan (the "1994 Plan"), subject to stockholder approval. The Board of Directors believes that the 1994 Plan is desirable to attract and retain the best available talent and to encourage the highest level of performance. Fewer than 1,000 shares remain available for grant under the employee stock option plan most recently adopted by stockholders, the 1988 Management Incentive Plan. 13 The 1994 Plan is set forth as Exhibit A to this Proxy Statement, and the following description is qualified in its entirety by this reference thereto. Under the 1994 Plan, options to purchase an aggregate of 2,500,000 shares of Chris-Craft Common Stock, $.50 par value ("Common Stock"), may be granted from time to time to employees, including officers and directors who are employees, of Chris-Craft or of any subsidiary of Chris-Craft, who have been so employed for at least one year at the end of the fiscal year ended immediately prior to the grant of the option (provided that the Board of Directors may authorize the grant of an option to an employee who has not served for such period). The aggregate number of shares which may be subject to options granted to any one employee within any period of three years shall not exceed 500,000 shares. Approximately 100 persons, including six executive officers, are expected to be eligible to participate in the 1994 Plan. Pursuant to the respective employment agreements with Chris-Craft dated as of January 1, 1994, if the 1994 Management Incentive Plan is adopted by stockholders at the 1994 Annual Meeting, Chairman, President, and Chief Executive Officer, Herbert J. Siegel will receive a 10-year option covering 300,000 shares of Common Stock, and Executive Vice President and President, Television Division, Evan C Thompson will receive a 10-year option covering 200,000 shares of Common Stock. The 1994 Plan is to be administered by a committee (the "Committee"), appointed by the Board of Directors, which will consist of at least two disinterested directors. Initially, the members of the Committee will be Howard Arvey, David F. Linowes and Alvin R. Rozelle. The Committee is generally empowered to interpret the 1994 Plan, to prescribe rules and regulations relating thereto, to determine the terms of option agreements, to amend them with the consent of the optionee, to determine the employees to whom options are to be granted and to determine the number of shares subject to each option granted. The per share exercise price of each option is established by the Committee and in each instance will not be less than the fair market value of a share of the Common Stock on the date the option is granted (110% of fair market value on the date of grant of an ISO, as defined below, if the optionee owns stock possessing more than 10% of the total combined voting power of all classes of stock of Chris-Craft or any of its subsidiary corporations (a "10% Holder")). Upon exercise of an option, the optionee may pay the purchase price with securities of Chris-Craft previously acquired by him, if so permitted by the Committee or by the related option agreement. Options will be exercisable for a term determined by the Committee, which term will not be greater than ten years from the date of grant (five years for ISOs granted to a 10% Holder). Unless otherwise provided in an option agreement, generally an option will become fully exercisable three years from the date of grant or, subsequent to the first anniversary of the grant of the option, upon the earliest of the optionee's retirement, death, or permanent and total disability. Prior thereto, each option shall become exercisable as to one-third of the number of the shares covered thereby cumulatively upon each anniversary of the date of the grant. Except in the event of certain terminations of employment or death or permanent and total disability, no option may be exercised unless the holder thereof is then an employee of Chris-Craft or any subsidiary corporation. Options will not be transferable other than by will or the laws of descent and distribution and may be exercised during the optionee's lifetime only by the optionee or his guardian or legal representative. Options granted pursuant to the 1994 Plan may be designated as incentive stock options ("ISOs") with the attendant tax benefits provided under Section 422 of the Internal Revenue Code of 1986 (the "Code"). The 1994 Plan provides that the aggregate fair market value (determined at the time an ISO is granted) of the Common Stock subject to ISOs exercisable for the first time by an employee during any calendar year (under all plans of Chris-Craft and any subsidiary corporation) may not exceed $100,000. Stock appreciation rights ("SARs") may also be awarded to holders of options granted under the 1994 Plan at any time prior to the exercise in full of the related option and on the same terms and conditions. A SAR permits a holder of a related option to surrender the option with respect to all or any part of the shares covered thereby and to receive from Chris-Craft in exchange therefor a payment having an aggregate value equal to the Right Value of one share multiplied by the number of shares as to which the related option is surrendered. Payment may be made in the form of cash or Common Stock, in the discretion of the Committee. The Right Value of a share is the greater of (A) the amount by which the fair market value of one share when the SAR is exercised exceeds the option price per share and (B) the amount by which the 14 book value of one share when the SAR is exercised exceeds the book value of one share when the related option was granted, except that if the related option is an ISO, the Right Value is determined only pursuant to clause (A). Each SAR is exercisable for the same term and terminates under the same conditions as the related option. Upon any termination of employment that is either for cause or voluntary on the part of the employee and without the consent of Chris-Craft or any subsidiary corporation that is the employer, all options held by an optionee under the 1994 Plan, to the extent not theretofore exercised, will terminate, except that a non-ISO option held by an employee who continues after termination of employment to serve Chris-Craft as a consultant may continue in effect. If employment is otherwise terminated (except by reason of death or permanent and total disability), an option may be exercised at any time within three months after such termination, to the extent the optionee was entitled to do so at the date of termination of employment. If the optionee dies or becomes permanently and totally disabled subsequent to the first anniversary of the option grant, the option shall be exercisable as to all shares of Common Stock remaining subject to the option, and the optionee or his personal representative may exercise the option within nine months after the earlier of the commencement of such disability or death. The number of shares subject to option and the exercise price of options are subject to adjustment or cash settlement as the Committee determines appropriate in the event of changes in the outstanding Common Stock by reason of stock dividends, recapitalizations, mergers, and similar events. In the event of certain basic changes in Chris-Craft, including a change in control of Chris-Craft, in the discretion of the Committee, each option shall terminate simultaneously with such change in control, and Chris-Craft shall pay to the optionee in lieu thereof a cash settlement equal to the product of the Right Value of a share of Common Stock and the number of shares subject to the option, regardless whether any installment is then exercisable. The Board of Directors may suspend, terminate, modify or amend the 1994 Plan, provided, however, that (except for adjustments by reason of stock dividends, recapitalizations, mergers and similar events) any increase in the aggregate number of shares issuable upon the exercise of options, any reduction in the purchase price of the Common Stock covered by any option, any extension of the period during which options may be granted or increase in the maximum term of options, and any material modification in the requirements as to eligibility for participation in the 1994 Plan shall be subject to the approval of stockholders. No suspension, termination, modification or amendment of the 1994 Plan may adversely affect an optionee's rights under an option theretofore granted without the consent of the optionee. The 1994 Plan also authorizes the Board of Directors to cause Chris-Craft or any subsidiary to give or arrange for financing, including direct loans, secured or unsecured, or guaranties of loans by banks, which guaranties may be secured in whole or in part by assets of Chris-Craft or any subsidiary corporation, to any eligible participant in the 1994 Plan who shall have been employed by Chris-Craft or any subsidiary for at least two years at the end of the fiscal year ending immediately prior to arranging such financing, but the Board of Directors may in any specific case authorize financing for an employee who has not served for such period. Such financing shall be for the purpose of providing funds for the purchase by such person of Common Stock pursuant to the exercise of an option, for payment of taxes incurred in connection therewith, or otherwise to purchase or carry a stock investment in Chris-Craft. The maximum amount of loans made and liabilities for guaranties incurred by Chris-Craft in connection with all such financing outstanding at any time will not exceed $5,000,000. Each loan will bear interest. Each recipient of financing will be personally liable for the full amount of all financing extended to him. If authorized, such financing will be administered by a special committee of the Board consisting of not less than two directors, each of whom shall be a disinterested person. No option may be granted under the 1994 Plan or financing given or arranged after February 23, 2004, provided that financing given or arranged prior thereto may remain outstanding in accordance with such terms and conditions as may have been established by the Board of Directors or the committee administering such financing under the 1994 Plan. On March 16, 1994, the closing sale price of the Common Stock as reported in the consolidated transaction reporting system was $35.50 per share. 15 TAX CONSEQUENCES Chris-Craft has been advised as follows regarding the federal income tax consequences with respect to stock options, ISOs, SARs and payment in stock of the exercise price of options under the 1994 Plan. Optionees will not be taxed upon the grant of an option or a SAR. Except as noted below, at the time of exercise of an option other than an ISO, the optionee generally will recognize ordinary income in an amount equal to the excess of the fair market value of the shares over the option price, and Chris-Craft generally will be entitled to a deduction in the same amount. The shares acquired pursuant to the exercise of an option other than an ISO will have a basis to the optionee equal to their fair market value on, and a holding period commencing on the day after, the date of exercise. At the time of exercise of an ISO, the optionee will recognize no income, and Chris-Craft will not be entitled to any deduction; the optionee generally will have an item of tax preference equal to the excess of fair market value of the shares at such time over the option price. Upon exercise of a SAR, the optionee will be taxed at ordinary income rates on the amount of cash received or the fair market value of shares acquired, and Chris-Craft generally will be entitled to a deduction in the same amount. Upon the sale of a share acquired pursuant to the exercise of an option other than an ISO, any gain or loss will result in a capital gain or loss measured by the difference between the optionee's basis and the amount realized on such sale, provided the share sold is a capital asset in the hands of the holder. Upon the sale of a share acquired pursuant to the exercise of an ISO, any gain or loss will result in a capital gain or loss measured by the difference between the amount realized on such sale and the exercise price, provided the share sold is a capital asset in the hands of the holder. Such capital gain or loss will be long term gain or loss if at the time of sale the optionee held the share at least one year after its issuance to him following exercise and at least two years since the grant of the option. In the case of a disposition of a share having a shorter holding period (a "Premature Disposition"), a portion (or all) of such gain will be taxed at ordinary income rates to the extent of the lesser of (a) the excess of the fair market value of the share at the time of exercise over the option price and (b) the gain on the sale, and Chris-Craft will be entitled to a deduction in the same amount. If the optionee uses previously acquired shares of Common Stock to pay the exercise price of a stock option, the optionee will not ordinarily recognize taxable income to the extent that the number of new shares of Common Stock received does not exceed the number of previously acquired shares so used. If non-recognition treatment applies to the payment for option shares with previously acquired shares, the tax basis and holding period of the shares received without recognition of taxable income will be determined by reference to the basis and holding period of the shares surrendered as payment. If a greater number of shares of Common Stock is received upon exercise than the number of shares surrendered in payment of the option price, where an ISO is being exercised, such excess shares will have a zero basis in the hands of the holder; when an option other than an ISO is being exercised, the option holder will be required to include in gross income (and Chris-Craft will be entitled to deduct) an amount equal to the fair market value of the additional shares on the date the option is exercised less any cash paid for the shares, and the holding period will commence on the day after the exercise date. However, the Internal Revenue Service has announced that it will not issue advance rulings with respect to whether non-recognition treatment applies when an ISO is exercised by payment of the option price with shares of stock of the granting corporation. Moreover, if stock previously acquired by exercise of an ISO is transferred in connection with the exercise of another ISO, and if, at the time of such transfer, the stock so transferred has not been held for the holding period required in order to receive favorable treatment under the statutory stock option rules, then such transfer would be treated as a Premature Disposition. Accordingly, with respect to the shares so transferred, an option holder would recognize ordinary income under the rules governing Premature Disposition discussed earlier in this section. However, the shares so acquired upon exercise of an ISO can still qualify for ISO treatment, if all of the other ISO requirements are fulfilled. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE 1994 MANAGEMENT INCENTIVE PLAN. 16 1994 DIRECTOR STOCK OPTION PLAN The Board of Directors has adopted the 1994 Director Stock Option Plan (the "Director Option Plan"), subject to stockholder approval. The Board of Directors believes that the Director Option Plan is desirable to encourage ownership in Chris-Craft by outside directors, whose services are considered essential, by providing a further incentive to continue to serve as directors and, through utilization of the incentives provided by the Director Option Plan, to attract and retain experienced and qualified candidates to fill vacancies on the Board of Directors which may occur in the future. The Director Option Plan is set forth as Exhibit B to this Proxy Statement, and the following description is qualified in its entirety by this reference thereto. Under the Director Option Plan, options to purchase an aggregate of 300,000 shares of Chris-Craft Common Stock may be granted from time to time to persons who are now or shall become incumbent directors who are not, at the respective times, employees of Chris-Craft or any subsidiary ("Eligible Directors"). The aggregate number of shares that may be subject to options granted to any one director under the Director Option Plan shall not exceed 25,000 shares. Each Eligible Director will be granted an option for 5,000 shares immediately following each annual meeting, beginning 1994. If the Director Option Plan is adopted, no further grant will be awarded under the 1989 Director Stock Option Plan. Seven incumbent directors and nominees will be eligible to participate in the Director Option Plan, if it is approved by stockholders. The Director Option Plan is to be administered by the Board of Directors. The Board is generally empowered to interpret the Director Option Plan, to prescribe, amend and rescind rules and regulations relating to it and to determine the terms and provisions of the respective option agreements. The per share exercise price of each option shall equal the fair market value of a share of the Common Stock on the date of grant. Upon exercise of an option, the optionee may pay the purchase price with cash, securities of Chris-Craft already owned by him, or a combination of cash and securities. Each option granted under the Director Option Plan will be evidenced by a written agreement in such form as the Board will from time to time approve. If the Director Option Plan is approved, immediately following each annual meeting of stockholders commencing with the 1994 Annual Meeting, each director who is on that date an Eligible Director will automatically be granted an option to purchase 5,000 shares of Common Stock. Options will not be transferable other than by will or the laws of descent and distribution and may be exercised during the lifetime of the optionee only by him. No option will be exercisable after the expiration of the earliest of (i) five years from the date of grant, (ii) three months following (x) the retirement or resignation of the optionee as a director or (y) the failure of the optionee to be reelected as a director, or (iii) nine months following the total and permanent disability or death of the optionee. The number of shares subject to option and the exercise price of options are subject to appropriate adjustment by the Board in the event of changes in the outstanding Common Stock by reason of changes in Chris-Craft's corporate structure or capitalization, including stock dividends or stock splits. The Board of Directors may suspend, discontinue or amend the Director Option Plan provided, however, that (except for adjustments by reason of changes in Chris-Craft's corporate structure or capitalization) any change in the number of shares subject to the Director Option Plan, in the definition of the class of directors eligible to receive options or that will materially increase the benefits accruing to participants, shall require approval of stockholders. In addition, provisions of the Director Option Plan relating to the number of shares covered by an option at its initial grant and the exercise price may not be amended more frequently then once every six months, except to conform the plan to provisions of the Internal Revenue Code and ERISA. On March 16, 1994, the closing sale price of the Common Stock as reported in the Consolidated Transaction Reporting System was $35.50 per share. 17 TAX CONSEQUENCES Chris-Craft has been advised as follows regarding the federal income tax consequences applicable to the grant and exercise of options under the Director Option Plan: Optionees will not be taxed upon the grant of a stock option. Except as noted below, at the time of exercise of a stock option, the optionee generally will recognize ordinary income in an amount equal to the excess of the fair market value of the shares over the option price, and Chris-Craft generally will be entitled to a deduction in the same amount. The shares so acquired will have a basis to the optionee equal to their fair market value on, and a holding period commencing on the day after, the date of exercise. Upon the sale of a share so acquired, any gain or loss will result in a capital gain or loss measured by the difference between the optionee's basis and the amount realized on such sale, provided the share sold is a capital asset in the hands of the holder. If the optionee uses previously acquired shares of Common Stock to pay the exercise price of a stock option, the optionee will not ordinarily recognize taxable income to the extent that the number of new shares received upon exercise of the stock option does not exceed the number of previously acquired shares so used. If non-recognition treatment applies to the payment for option shares with previously acquired shares, the tax basis and holding period of the shares received without recognition of taxable income will be determined by reference to the basis and holding period of the shares surrendered as payment. If a greater number of shares of Common Stock is received upon exercise than the number of shares surrendered in payment of the option price, the option holder will be required to include in gross income (and Chris-Craft will be entitled to deduct) an amount equal to the fair market value of the additional shares on the date the stock option is exercised less any cash paid for the shares, and the holding period of the additional shares will commence on the day after the exercise date. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE 1994 DIRECTOR STOCK OPTION PLAN. PERFORMANCE-BASED COMPENSATION FOR HERBERT J. SIEGEL AND EVAN C THOMPSON Chris-Craft has entered into employment agreements with Chris-Craft's Chairman, President and Chief Executive, Herbert J. Siegel, and with Chris-Craft's Executive Vice President and President of its Television Division, Evan C Thompson, as of January 1, 1994; earlier employment agreements with each of them expired December 31, 1993. Under newly enacted Section 162(m) of the Code, compensation in excess of $1 million paid to the five highest-paid executive officers of a public company is not deductible expense for federal income tax purposes, with certain exceptions. One exception covers performance-based compensation that is approved by stockholders. The bonus provisions of each of the 1994 agreements are being submitted for approval by stockholders, with the intention that such approval will qualify those provisions for such exception. Each of the 1994 agreements provides that current compensation otherwise payable that is not deductible for federal income tax purposes will be credited to a deferred compensation account, and paid to the executive after his employment with Chris-Craft has terminated. Accordingly, if the bonus provisions of either 1994 agreement are not approved, or the bonus (or any portion thereof) otherwise payable to either executive is determined for any other reason to be nondeductible for federal income tax purposes, then after such determination, the nondeductible amount will not be paid currently, but will be credited to the executive's deferred compensation account. Information respecting provisions of the 1994 agreements other than the bonus provisions appears under EXECUTIVE OFFICER EMPLOYMENT AGREEMENTS. The bonus provisions of Mr. Siegel's agreement being submitted to stockholders for approval specify that Chris-Craft will pay Mr. Siegel a cash bonus equal to 1 1/2% of the amount by which Chris-Craft "Pre-tax Income" exceeds $36,000,000 for each fiscal year. For purposes of the 1994 agreement, "Pre-tax Income" means Chris-Craft income before provision for income taxes and minority interest, as such amount is reported on Chris-Craft's audited consolidated statements of income included in its annual report to stockholders; provided that, in determining such "Pre-tax Income," there will be excluded (i) any loss of any business commenced or newly acquired by Chris-Craft during (or within the six months next preceding commencement of) the employment term, if such business would at any time during such term constitute a 18 Development Stage Company under Securities and Exchange Commission Regulation S-X, assuming such business were organized as a separate entity, e.g., the broadcast television network currently under development, but only to the extent that the loss of such business, aggregated with the losses of all other such businesses (if any) so commenced or acquired, exceeds $10,000,000 in any fiscal year, and provided, further, that such losses incurred by any business shall not be so excluded for any fiscal year beginning after the fourth anniversary of the date of commencement or acquisition of such business by Chris-Craft; and (ii) any goodwill amortization (similarly determined) arising out of a business acquisition during the employment term. Mr. Siegel's bonus for 1993 would have been $5,229,000, if it had been computed under the foregoing formula and would have been $1,939,000 if it had been computed under the foregoing formula, but excluding extraordinary nonoperating income for gains realized on Chris-Craft's interest in Time Warner Inc. The Board of Directors has unanimously approved Mr. Siegel's agreement, and the Compensation Committee has adopted and established the bonus provisions as a "performance goal" as contemplated by Section 162(m) of the Code. The bonus provisions of Mr. Thompson's 1994 employment agreement being submitted to stockholders for approval specify that Chris-Craft will pay Mr. Thompson a cash bonus equal to 1% of the amount by which Chris-Craft's "TV Broadcast Cash Flow" for each year exceeds $20 million, up to $50 million, and 2% of the amount by which TV Broadcast Cash Flow exceeds $50 million (each of $20 million and $50 million, a "Base Amount"). The bonus computation will be adjusted if Chris-Craft acquires, in one or more transactions, additional television stations having aggregate mean TV Broadcast Cash Flow, for the three fiscal years of each such television station prior to its acquisition by Chris-Craft, exceeding $10 million, or disposes of a television station having mean TV Broadcast Cash Flow for the three fiscal years prior to its disposition by Chris-Craft exceeding $5 million. TV Broadcast Cash Flow for purposes of the bonus calculation means operating income plus depreciation and amortization of goodwill and programming contracts, minus payments on programming contracts.The Board of Directors will consider adjusting the bonus calculation and formulae if and at such time as Chris-Craft shall own 10 or more television stations or Mr. Thompson shall have chief operating responsibility for a business owned by Chris-Craft that derives revenues exceeding $25,000,000 other than from television broadcasting. Mr. Thompson's bonus for 1993 would have been $712,000, if it had been computed under the foregoing formula. The Board of Directors has unanimously approved Mr. Thompson's 1994 employment agreement, and the Compensation Committee has adopted and established the bonus provisions as a "performance goal" as contemplated by Section 162(m) of the Code. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE BONUS PROVISIONS OF EACH OF THE 1994 EMPLOYMENT AGREEMENTS. STOCKHOLDER PROPOSAL The Sisters of St. Francis of Philadelphia, Our Lady of Angels Convent-Glen Riddle, Aston Pennsylvania, 19014 have advised Chris-Craft that they will "submit for consideration and action by the shareholders" a resolution, and that they are the holder of record of 18,428 shares of Common Stock. The resolution together with the proponents' statement in support, and the recommendation of the Board of Directors with respect thereto, is set forth below: "Our company's Board of Directors includes neither women nor minorities. We believe that major corporations, aware that employees, customers and stockholders include a broad diversity in terms of sex and race, should have a Board that includes persons of diverse racial backgrounds and gender. "The Office of Federal Contract Compliance mandates that companies must not discriminate on the basis of race, sex, color, religion, national origin, disability, or veterans status. Women and minorities comprise over fifty percent of America's workforce and the U.S. Department of Labor reports their advancement is oftentimes hindered by artificial barriers -- glass ceilings. Our company must make a strong and continued commitment to use its available tools and resources to remove glass ceiling barriers, because it is our responsibility under the law, and the right thing to do. 19 "While racial and gender diversity among the purchasing population and the workforce has experienced an enormous increase, the Equal Employment Opportunity Commission reports 97% of senior ranks of corporations are occupied by white males. We believe our company needs to open up top management and the board to qualified people of all races and women. "We believe Boards of Directors of many corporations have benefitted from the perspectives of well qualified women and minority members. In addition, increasingly individual and institutional investors are voting their proxies against boards which are not representative and have no women or minorities. We believe it is not in our company's best long range interests to keep an all white male board, excluding women and minorities. It unfortunately gives the impression of an "exclusive club" closed to any perspectives beyond those in the inner sanctum. "Increasingly major corporations are broadening their boards by including women and minorities. We believe our company should show similar leadership. "BE IT RESOLVED, that shareholders request: "1. The nominating committee of the Board in its search for suitable Board candidates, make a greater effort to search for qualified women and minority candidates for nomination to the Board of Directors. "2. Report on our Corporation's efforts to encourage diversified representation on our Board of Directors. "3. Issue a statement publicly committing the company to a policy of board inclusiveness with the CEO's policy program for steps to take and the timeline expected to move in that direction." THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL. Chris-Craft does not discriminate on the basis of race, sex, color, religion, national origin, disability, or veteran status. Chris-Craft's policy is to comply with all laws, including those applicable to equal opportunity. Chris-Craft seeks the best qualified individuals for Board positions. The Board believes that stockholder interests would not be served by changes in the composition of the Board of Directors according to an arbitrary timetable. RATIFICATION OF SELECTION OF AUDITORS The stockholders are to take action upon ratification of the selection of Price Waterhouse as auditors of Chris-Craft for its fiscal year ending December 31, 1994. Representatives of Price Waterhouse are expected to be present at the meeting and will have the opportunity to make a statement if they desire to do so and be available to respond to appropriate questions. Price Waterhouse was the independent accountant for Chris-Craft for its fiscal year ended December 31, 1993. If the selection of Price Waterhouse is not ratified, or prior to the next annual meeting of stockholders such firm shall decline to act or otherwise become incapable of acting, or if its engagement shall be otherwise discontinued by the Board of Directors, the Board of Directors will appoint other independent public accountants whose selection for any period subsequent to the next annual meeting will be presented for stockholder approval at such meeting. On February 27, 1992, Price Waterhouse was engaged as the principal accountant for Chris-Craft, BHC and UTV, and Arthur Andersen & Co. ("Arthur Andersen"), which was the independent accountant for Chris-Craft, BHC and UTV for the year ended December 31, 1991, was replaced as their independent accountant, effective on completion of the 1991 audit. Arthur Andersen's reports on the financial statements of Chris-Craft, BHC and UTV for 1991 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. The decision to change accountants was approved by the audit committees of each of Chris-Craft, BHC and UTV. Since January 1, 1991 there were no disagreements between Chris-Craft, BHC or UTV and Arthur Andersen on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to Arthur Andersen's satisfaction, would have caused Arthur Andersen to make reference to the subject matter of the disagreements in connection with any such report. 20 SUBMISSION OF STOCKHOLDER PROPOSALS Stockholder proposals intended for inclusion in the proxy statement for the next annual meeting must be received by Chris-Craft at its principal executive offices by November 30, 1994. GENERAL The Board of Directors did not know, a reasonable time before the commencement of the solicitation, of any business constituting a proper subject for action by the stockholders to be presented to the meeting other than as set forth in this Proxy Statement. However, if any other matter should properly come before the meeting, the persons named in the enclosed form of proxy intend to vote such proxy in accordance with their best judgment. CHRIS-CRAFT'S 1993 FORM 10-K ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION, EXCLUSIVE OF EXHIBITS, WILL BE MAILED WITHOUT CHARGE TO ANY STOCKHOLDER ENTITLED TO VOTE AT THE MEETING, UPON WRITTEN REQUEST TO: BRIAN C. KELLY, SECRETARY, CHRIS-CRAFT INDUSTRIES, INC., 767 FIFTH AVENUE, NEW YORK, NEW YORK 10153. Chris-Craft will bear the entire cost of preparing, assembling, printing and mailing this Proxy Statement, the accompanying proxy and any additional material which may be furnished to stockholders. Solicitation material will be furnished to brokers, fiduciaries and other custodians to forward to beneficial owners of stock held in their names, and Chris-Craft will reimburse these organizations in accordance with the New York Stock Exchange schedule of charges for the cost of forwarding proxy material to such beneficial owners. The solicitation of proxies will also be made by the use of the mails and through direct communication with certain stockholders or their representatives by officers, directors or employees of Chris-Craft, who will receive no additional compensation therefor. Chris-Craft has engaged Georgeson & Company Inc. to solicit proxies and distribute materials to brokerage houses, banks, custodians and other nominee holders and will pay approximately $7,500 for these services, in addition to reimbursement of certain expenses. By Order of the Board of Directors, BRIAN C. KELLY, SECRETARY 21 EXHIBIT A CHRIS-CRAFT INDUSTRIES, INC. 1994 MANAGEMENT INCENTIVE PLAN 1. PURPOSE OF THE 1994 PLAN. Chris-Craft Industries, Inc. (the "Corporation") desires to attract and retain the best available talent and to encourage the highest level of performance. The 1994 Management Incentive Plan (the "1994 Plan") is intended to contribute significantly to the attainment of these objectives, by affording eligible employees of the Corporation or any of its parent or subsidiary corporations the opportunity to acquire and to increase their proprietary interests in the Corporation and by providing incentives for such employees to put forth maximum efforts for the success of the business. 2. SCOPE AND DURATION OF THE 1994 PLAN. Under the 1994 Plan, options ("Options") to purchase Common Stock of the Corporation, par value $.50 per share ("Common Stock"), and stock appreciation rights ("Rights"), may be granted. Rights may be granted only in association with Options. Options may, at the time of grant, also be designated as incentive stock options ("ISOs") with the attendant tax benefits provided under Section 422 of the Internal Revenue Code of 1986 (the "Code"). The aggregate fair market value (determined at the time an ISO is granted) of the Common Stock covered by ISOs exercisable for the first time by an employee during any calendar year (under all plans of the Corporation and any parent corporation or any of its subsidiary corporations), may not exceed $100,000. The aggregate number of shares of Common Stock reserved for grant from time to time under the 1994 Plan is 2,500,000, which shares may be authorized but unissued shares or shares which shall have been or which may be reacquired by the Corporation. The aggregate number of shares which may be subject to Options granted to any one employee within any period of three years under the 1994 Plan shall not exceed 500,000 shares. Such aggregate numbers shall be subject to adjustment as provided in paragraph 12. If an Option shall expire or terminate for any reason without having been exercised in full or surrendered in full in connection with the exercise of a Right, the shares represented by the portion thereof not so exercised or surrendered shall (unless the 1994 Plan shall have been terminated) become available for other Options to be granted under the 1994 Plan. The 1994 Plan shall become effective upon approval by the stockholders of the Corporation as provided in paragraph 13. No Option or Right shall be granted under the 1994 Plan after February 23, 2004. The grant of an Option or a Right is sometimes referred to herein as an award thereof. 3. ADMINISTRATION OF THE 1994 PLAN. The Board of Directors shall appoint a 1994 Plan Committee (the "Committee") to administer the 1994 Plan, except as otherwise specifically provided in the 1994 Plan. The Committee shall consist of not less than two members of the Board of Directors, each of whom shall be a disinterested person (as hereinafter defined). The Board of Directors may from time to time appoint members of the Committee in substitution for or in addition to members previously appointed and may fill vacancies, however caused, in the Committee. The Committee shall have plenary authority in its discretion, subject to and not inconsistent with the express provisions of the 1994 Plan, to direct the grant of Options, to determine the number of shares and purchase price of the Common Stock covered by each Option, the employees to whom, and the time or times at which, Options shall be granted and may be exercised; to designate Options as ISOs; to direct the grant of Rights in connection with any Option; to interpret the 1994 Plan; to prescribe, amend, and rescind rules and regulations relating to the 1994 Plan, including, without limitation, such rules and regulations as it shall deem advisable so that transactions involving Options or Rights may qualify for exemption under such rules and regulations as the Securities and Exchange Commission may promulgate from time to time exempting transactions from Section 16 (b) of the Securities Exchange Act of 1934 (the "Exchange Act"); to determine the terms and provisions of and to cause the Corporation to enter into, agreements with employees in connection with awards made under the 1994 Plan ("Agreements"), which Agreements may A-1 vary from one another as the Committee shall deem appropriate; to amend any such Agreements from time to time, with the consent of the optionee; and to make all other determinations it may deem necessary or advisable for the administration of the 1994 Plan. Any interpretation or determination made by the Committee pursuant to the foregoing shall be conclusive and binding upon any person having or claiming any interest under the 1994 Plan. The Committee shall hold its meetings at such times and places as it shall deem advisable. Members may participate in meetings through conference telephone or similar arrangements. A majority of the members of the Committee shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. Any decision or determination reduced to writing and signed by all of the members shall be fully as effective as if it had been made by a majority vote at a meeting duly called and held. The Committee may appoint a secretary, shall keep minutes of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable. The Committee may delegate to one or more of its members or to one or more agents such administrative duties as the Committee may deem advisable and may employ (or authorize any person to whom it has delegated duties as aforesaid to employ) one or more persons to render advice with respect to any responsibility the Committee (or such person) may have under the 1994 Plan. 4. ELIGIBILITY: FACTORS TO BE CONSIDERED IN GRANTING AWARDS. Options may be granted only to employees (including officers and directors who are employees) of the Corporation or of any parent or subsidiary corporation who shall have been so employed for a period of at least one year at the end of the fiscal year ended immediately prior to the grant; provided that the Board of Directors may, in any specific case, authorize an award to an employee who shall not have served for such a period. In determining the persons to whom awards shall be made and the number of shares to be covered by each option, the Committee shall take into account the duties of the respective persons, their present and potential contributions to the success of the Corporation or any parent or subsidiary corporation, the anticipated number of years of effective service remaining, and such other factors as the Committee, in its discretion, shall deem relevant in connection with accomplishing the purposes of the 1994 Plan. No person shall be eligible for an Option grant if he shall have filed with the Secretary of the Corporation an instrument waiving such eligibility; provided that any such waiver may be revoked by filing with the Secretary of the Corporation an instrument of revocation, which revocation will be deemed effective upon such filing. Subject to the provisions of paragraph 2, more than one award under the 1994 Plan may be made to any employee. 5. OPTION PRICE. The purchase price per share of the Common Stock covered by each Option shall be established by the Committee, but in no event shall it be less than the fair market value (as hereinafter defined) of a share of Common Stock on the date the Option is granted. In the case of an individual who at the time the Option is granted owns stock possessing more than 10% of the total combined voting power of all classes of the stock of the Corporation or of its parent or a subsidiary corporation (a "10% Holder"), the purchase price of the Common Stock covered by any ISO shall in no event be less than 110% of the fair market value of the Common Stock on the date the ISO is granted. 6. TERM OF OPTIONS. The term of each Option shall be fixed by the Committee, but in no event shall it be more than 10 years from the date of grant, subject to earlier termination as provided in paragraphs 10 and 11. The term of an ISO granted to a 10% Holder shall be no more than 5 years from the date of grant. The term of any Option may be extended from time to time by the Committee, provided that no such extension shall extend the term beyond 10 years from the date of grant. 7. EXERCISE OF OPTIONS. (a) Subject to the provisions of the 1994 Plan, an Option granted under the 1994 Plan shall become fully exercisable on the third anniversary of the date of grant. Prior thereto, each Option shall become exercisable as to one-third of the number of shares originally covered thereby upon the first anniversary of the date of the grant of the Option; and as to an additional one-third upon the second anniversary of the date A-2 of the grant of the Option. Such installments shall be cumulative. Notwithstanding the foregoing, at any time subsequent to the first anniversary of the date of grant, the Committee may declare any Option immediately and fully exercisable, and Options shall automatically become fully exercisable upon the normal retirement or death or permanent and total disability of an optionee as provided in paragraphs 10 and 11. Except as provided in paragraphs 10 and 11, no Option may be exercised unless the optionee has remained an employee of the Corporation or any parent or subsidiary corporation (or any combination thereof) continuously from the date of grant. (b) An Option may be exercised as to any or all full shares as to which the Option is then exercisable; provided that an Option may not be exercised as to fewer than 100 shares (or less than all the shares as to which the Option is then exercisable, if fewer than 100 shares). (c) The purchase price of the shares as to which an Option is exercised shall be paid in full in cash at the time of exercise; provided that, if permitted by the related Agreement or by the Committee, the purchase price may be paid, in whole or in part, by surrender or delivery to the Corporation of securities of the Corporation having a fair market value on the date of exercise equal to the portion of the purchase price being so paid. In addition, the optionee shall, upon notification of the amount due and prior to or concurrently with delivery to the optionee of a certificate representing such shares, pay promptly any amount necessary to satisfy applicable federal, state or local tax requirements. (d) No person shall have the rights of a stockholder with respect to shares covered by an Option until such person becomes the holder of record of such shares. 8. AWARD AND EXERCISE OF RIGHTS. (a) A Right may be awarded by the Committee in association with any Option either at the time such Option is granted or at any time prior to the exercise in full, termination, or expiration of such Option. Each such Right shall be subject to the same terms and conditions as the related Option and shall be exercisable only to the extent such Option is exercisable, and the Right Value, as hereinafter defined, is a positive amount. (b) A Right shall entitle the optionee to surrender to the Corporation unexercised the related Option (or any portion or portions thereof which the optionee from time to time shall determine to surrender for this purpose) and to receive in exchange therefor, subject to the provisions of the 1994 Plan and such rules and regulations as from time to time may be established by the Committee, a payment having an aggregate value equal to the product of (A) the Right Value of one share, as hereinafter defined, and (B) the number of shares covered by the Option, or portion thereof that is surrendered. For purposes of the 1994 Plan, the Right Value of one share shall be the greater of (x) the excess of (i) the fair market value of one share on the date on which the Right is exercised, over (ii) the option price per share of the surrendered Option, or (y) the excess of (i) the book value of one share as of the last day of the fiscal quarter of the Corporation ended immediately prior to the date on which the Right is exercised, over (ii) the book value of one share as of the last day of the fiscal quarter of the Corporation ended immediately prior to the date of the grant of the surrendered Option, except that if the surrendered Option is an ISO, the Right Value shall be determined only pursuant to (x). For purposes of the 1994 Plan, the book value of one share shall be determined by dividing the Shareholders' Investment as of the relevant date (after eliminating such portion of such Shareholders' Investment as of the Committee shall determine to be applicable to securities of the Corporation other than Common Stock) by the number of shares issued and outstanding at such date. The Committee may also make such adjustments to Shareholders Investment as the Committee, in its sole discretion, shall consider appropriate, in view of the purpose of the 1994 Plan, to reflect any unusual or non-recurring transaction or any extraordinary income or expense item. The date on which the Committee or the Corporation shall receive notice from the optionee of the exercise of a Right shall be considered the date on which the Right is exercised. Upon exercise of a Right, an optionee shall indicate to the Committee what portion of the payment he desires to receive in cash and what portion in shares of Common Stock of the Corporation; provided, that the Committee shall have sole discretion to determine in any case or cases that payment will be made in the form A-3 of all cash, all shares, or any combination thereof. If the optionee is to receive a portion of such payment in shares, the number of shares shall be determined by dividing the amount of such portion by the fair market value of one share on the date on which the Right is exercised. The number of shares that may be received pursuant to the exercise of a Right may not exceed the number of shares covered by the related Option, or portion thereof, that is surrendered. No fractional shares will be issued, but instead cash will be paid for any such fractional share. No payment will be required from the optionee upon exercise of a Right, except that the optionee shall, upon notification of the amount due and prior to or concurrently with delivery to the optionee of cash or a certificate representing shares, pay promptly any amount necessary to satisfy applicable federal, state or local tax requirements, and the Corporation shall have the right to deduct from any payment any taxes required by law to be withheld by the Corporation with respect to such payment. (c) Upon exercise of a Right, the number of shares subject to exercise under the related Option shall be reduced automatically by the number of shares represented by the Option, or portion thereof, that is surrendered. Shares subject to Options, or portions thereof, that are surrendered in connection with the exercise of Rights shall not be available for subsequent Option grants under the 1994 Plan. (d) Whether payments upon exercise of Rights are made in cash, shares or a combination thereof, the Committee shall have discretion as to the timing of the payments, including whether payment shall be made in a lump sum or in installments, but payment may not be deferred beyond the first business day of the fifteenth calendar month next following the month of exercise of a Right. Deferred payments may bear interest at a rate determined by the Committee. The Committee may make such other further provisions and adopt such rules and regulations as it shall deem appropriate, not inconsistent with the 1994 Plan, related to the timing of the exercise of a Right and the determination of the form and timing of payment to the optionee upon such exercise. 9. NON-TRANSFERABILITY OF OPTIONS AND RIGHTS. Options and Rights granted under the 1994 Plan shall not be transferable, other than by will or the laws of descent and distribution, and Options and Rights may be exercised, during the lifetime of the optionee, only by the optionee, or by his guardian or legal representative. 10. TERMINATION OF RELATIONSHIP TO THE CORPORATION. (a) In the event that any optionee shall cease to be an employee of the Corporation and of any parent or subsidiary corporation, other than by reason of death or permanent and total disability, any Option held by such optionee may be exercised (to the extent that the optionee was entitled to exercise such Option at the termination of such employment) at any time within three months after such termination, but not later than the date on which the Option, by its terms, otherwise would have expired; provided, however, that any Option held by an employee whose employment shall be terminated either (A) by the Corporation for cause or (B) voluntarily by the employee and without the consent of the Corporation or any parent or subsidiary corporation (which consent shall be presumed in the case of normal retirement), shall, to the extent not theretofore exercised, forthwith terminate. Notwithstanding the provisions of paragraph 7 specifying the installments in which an Option shall be exercisable, upon an optionee's actual retirement at any time subsequent to the first anniversary of the grant of the Option, the Option shall be exercisable (within the time periods set forth in this paragraph 10(a)) as to all shares of Common Stock remaining subject to the Option; provided, however, such acceleration shall not be applicable if the optionee retires prior to his normal retirement date and without the consent of the Corporation. (b) Awards made under the 1994 Plan shall not be affected by any change of duties or position so long as the optionee continues to be an employee of the Corporation, or any parent or subsidiary corporation. (c) Any Agreement may contain such provisions as the Committee shall approve with reference to the determination of the date employment terminates for purposes of the 1994 Plan and the effect of leaves of absence, which provisions may vary from one another. Without limiting the foregoing, any Agreement may provide, for purposes of paragraphs 7(a), 10 and 11, that, with respect to the award of non-ISO Options to which the Agreement relates, the optionee's employment shall be deemed not to terminate upon, and such A-4 optionee shall be deemed to continue to be employed until, the termination of the optionee's engagement as a consultant, if such engagement commences within three months after the optionee ceases to be an employee. (d) Nothing in the 1994 Plan or in any award made pursuant to the 1994 Plan shall confer upon any employee any right to continue in the employ of the Corporation or any parent or subsidiary corporation or affect the right of the Corporation or such parent or subsidiary corporation to terminate his employment at any time. 11. DEATH OR DISABILITY OF OPTIONEE. If an optionee shall die or become permanently and totally disabled within the meaning of Section 22(e)(3) of the Code, while he is employed by the Corporation or any parent or any subsidiary corporation, or within three months after the termination of his employment (other than termination for cause or voluntarily on the part of the optionee and without the consent of the Corporation or such parent or subsidiary corporation), such Option may be exercised as set forth herein by the guardian or legal representative of the optionee, or by the optionee, at any time within nine months after the earlier of the death or commencement of permanent and total disability of the optionee, but not later than the date on which the Option, by its terms, otherwise would have expired. Notwithstanding the provisions of paragraph 7 specifying the installments in which an Option shall be exercisable, upon the optionee's death or commencement of permanent and total disability at any time subsequent to the first anniversary of the grant of the Option, the Option shall be exercisable (within the time periods set forth in this paragraph 11) as to all shares of Common Stock remaining subject to the Option. 12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Notwithstanding any other provision of the 1994 Plan, each Agreement may contain such provisions as the Committee shall determine to be appropriate for the adjustment of the number and class of shares covered by such Option, the exercise prices and the number of shares as to which Options shall be exercisable at any time, and appropriate changes in Rights related to such Options, in the event of changes in the outstanding Common Stock of the Corporation by reason of stock dividends, split-ups, reverse splits, recapitalizations, mergers, consolidations, combinations or exchanges of shares, spin-offs, reorganizations, liquidations and the like. In the event of any such change in the outstanding Common Stock of the Corporation, the aggregate number of shares as to which Options may be granted under the 1994 Plan and to any employee shall be appropriately adjusted by the Committee, whose determination shall be conclusive. No adjustment shall be made in the requirements set forth in paragraph 7(b) with respect to the minimum number of shares that must be purchased upon any exercise. In the event that a (i) dissolution, liquidation, merger or consolidation of the Corporation, (ii) sale of all or substantially all of the assets of the Corporation or sale of substantially all of the assets or a majority of the stock of a subsidiary of which the optionee is then an employee, or (iii) change in control of the Corporation has occurred or is about to occur, then, if the Committee shall so determine, each Option under the 1994 Plan, if such event shall occur with respect to the Corporation, or each Option held by an employee of a subsidiary corporation respecting which such event shall occur, shall be terminated upon the occurrence of such event, and the Corporation shall pay the optionee in lieu thereof an amount equal to (i) the Right Value of one share at the close of business on the day next preceding occurrence of such event, multiplied by (ii) the full number of shares subject to the Option, without regard to whether any installment is then otherwise exercisable. For purposes of the 1994 Plan, the term "change in control" means an event or series of events that would be required to be described as a change in control of the Corporation in a proxy or information statement pursuant to Schedule 14A or 14C promulgated under the Act. The determination whether and when a change in control has occurred or is about to occur shall be made by vote of a majority of the persons who shall have constituted the Committee immediately prior to the occurrence of the event or series of events constituting such change in control. A-5 13. EFFECTIVENESS OF THE 1994 PLAN. The 1994 Plan shall become effective upon the approval thereof by a majority of the votes properly cast thereon at a meeting of stockholders of the Corporation duly called and held. The Committee thereafter may, in its discretion, make awards under the 1994 Plan, the exercise of which shall be expressly subject to the conditions that, at the time of exercise, (i) the shares of Common Stock reserved for purposes of the 1994 Plan shall be duly listed, upon official notice of issuance, upon the New York Stock Exchange, if shares of Common Stock are then so listed, and (ii) a Registration Statement under the Securities Act of 1933 (the "Securities Act") with respect to such shares shall be effective, or other provision satisfactory to the Committee shall have been made so that such shares may be issued without violation of the Securities Act. 14. TERMINATION AND AMENDMENT OF THE 1994 PLAN. The Board of Directors of the Corporation may, at any time prior to the termination of the 1994 Plan, suspend, terminate, modify or amend the 1994 Plan; provided that any increase in the aggregate number of shares reserved for issuance upon the exercise of Options, any increase in the maximum number of shares for which Options may be granted to any employee during any period, any reduction in the purchase price of the Common Stock covered by any Option, any extension of the period during which Options may be granted or increase beyond ten years in the maximum term of Options, any change in the formula for determining the amount payable upon exercise of a Right, or any material modification in the eligibility requirements for participation in the 1994 Plan, shall be subject to the approval of stockholders in the manner provided in paragraph 13, except that any such increase, reduction, or change that may result from any adjustment authorized by paragraph 12 or any modification or amendment based on any amendment of the Exchange Act, the Code or change in any regulation promulgated thereunder (to the extent permitted by the Exchange Act, the Code, the Securities and Exchange Commission or the Internal Revenue Service) shall not require such approval. No suspension, termination, modification or amendment of the 1994 Plan may, without the consent of the holder of an outstanding option, adversely affect the rights of such holder. 15. FINANCING FOR INVESTMENT IN STOCK OF THE CORPORATION. Until February 23, 2004, the Board of Directors may cause the Corporation or any subsidiary to give or arrange for financing, including direct loans, secured or unsecured, or guaranties of loans by banks, which guaranties may be secured in whole or in part by assets of the Corporation or any subsidiary, to any employee of the Corporation or any parent corporation or any subsidiary corporation who shall have been so employed for a period of at least two years at the end of the fiscal year ended immediately prior to the arranging of such financing; but the Board of Directors may, in any specific case, authorize financing for an employee who shall not have served for such period. Such financing shall be for the purpose of providing funds for any one or more of: the purchase by the employee of shares pursuant to the exercise of an Option; the payment of taxes incurred in connection with such exercise; or otherwise purchasing or carrying a stock investment in the Corporation. The maximum amount of financing given and liability incurred by the Corporation and its subsidiaries in connection with all such financing at any time outstanding shall not exceed $5,000,000. Such financing shall bear interest at a rate not less than the lowest rate that avoids imputation of interest at a higher rate under the Code. Each recipient of such financing shall be personally liable for the full amount of all financing extended to him. Such financing shall be based upon the judgment of the Board of Directors that such financing may reasonably be expected to benefit the Corporation, and that such financing as may be granted shall be consistent with the Certificate of Incorporation and By-Laws of the Corporation or such subsidiary, and applicable laws. If any such financing is authorized by the Board of Directors, such financing shall be administered by a special committee of the Board to be denominated the Stock Investment Financing Committee. Such Committee shall consist of not less than two directors, each of whom shall be a disinterested person. 16. SEVERABILITY. In the event that any one or more provisions of the 1994 Plan or any Agreement, or any action taken pursuant to the 1994 Plan or such Agreement, should, for any reason, be unenforceable or invalid in any respect under the laws of the United States, any state of the United States or any other government, such A-6 unenforceability or invalidity shall not affect any other provision of the 1994 Plan or of such or any other Agreement, but in such particular jurisdiction and instance the 1994 Plan, and the affected Agreement shall be construed as if such unenforceable or invalid provision had not been contained therein or if the action in question had not been taken thereunder. 17. EFFECT ON PRIOR OPTION PLANS. The adoption of the 1994 Plan shall have no effect on outstanding options previously granted by the Corporation. 18. CERTAIN DEFINITIONS. (a) The term "parent corporation" and "subsidiary corporation" shall have the meanings, with respect to the Corporation, set forth in Sections 425(e) and (f) of the Code, respectively. (b) The term "disinterested person" shall mean a director who is not, during the one year prior to service as an administrator of the 1994 Plan, or during such service, granted or awarded equity securities pursuant to the 1994 Plan or any other plan of the Corporation or any of its affiliates, except that: (A) participation in a formula plan meeting the conditions in paragraph (c)(2)(ii) of Rule 16b-3 promulgated under the Securities Exchange Act of 1934 ("Rule 16b-3") shall not disqualify a director from being a disinterested person, and (B) participation in an ongoing securities acquisition plan meeting the conditions in paragraph (d)(2)(i) of Rule 16b-3 shall not disqualify a director from being a disinterested person. (c) The term "fair market value" of a share of Common Stock shall mean as of the date on which such fair market value is to be determined the closing price of a share of Common Stock as reported in The Wall Street Journal (or a publication deemed equivalent to The Wall Street Journal for such purpose by the Committee) for the national securities exchanges and other securities markets which at the time are included in the stock price quotations of such publication. In the event that the Committee shall determine such stock price quotation is not representative of fair market value, the Committee may determine fair market value in such a manner as it shall deem appropriate under the circumstances. A-7 EXHIBIT B CHRIS-CRAFT INDUSTRIES, INC. 1994 DIRECTOR STOCK OPTION PLAN 1. PURPOSE The purpose of this 1994 Director Stock Option Plan (the "Plan") of Chris-Craft Industries, Inc. (the "Company"), is to encourage ownership in the Company by outside directors of the Company whose services are considered essential to the Company's continued progress and thus to provide them with a further incentive to continue to serve as directors of the Company. The Plan is also intended to assist the Company through utilization of the incentives provided by the Plan to attract and retain experienced and qualified candidates to fill vacancies in the Board of Directors which may occur in the future. 2. ADMINISTRATION The Plan will be administered by the Board of Directors (the "Board") of the Company. Subject to the express provisions of the Plan, the Board will have complete authority to interpret the Plan; to prescribe, amend, and rescind rules and regulations relating to it; to determine the terms and provisions of the respective option agreements (which need not be identical); and to make all other determinations necessary or advisable for the administration of the Plan. The Board's determinations on the matters referred to in this Section 2 will be conclusive. 3. PARTICIPATION IN THE PLAN Persons who are now or shall become incumbent directors of the Company who are not at the respective times employees of the Company or any subsidiary of the Company shall be eligible to participate in the Plan (an "Eligible Director"). A director of the Company shall not be deemed to be an employee of the Company solely by reason of the existence of a consulting contract or arrangement between such director and the Company or any subsidiary thereof pursuant to which the director agrees to provide consulting services to the Company or its subsidiaries on a regular or occasional basis for a stated consideration. 4. STOCK SUBJECT TO THE PLAN The stock subject to the Plan shall consist of 300,000 shares of Common Stock, $.50 par value, of the Company ("Common Stock"), as the same may be adjusted pursuant to Section 9. Subject to Section 9, options for not more than 25,000 shares may be granted to an Eligible Director pursuant to the Plan. Shares issuable on exercise of options granted under this Plan may, as the Board shall from time to time determine, be either authorized and unissued shares of Common Stock or issued shares of Common Stock that have been reacquired by the Company. If an option granted under the Plan shall expire or terminate for any reason without having been exercised in full, the shares represented by the portion thereof not so exercised shall (unless the Plan shall have been terminated) become available for other options to be granted under the Plan. 5. STOCK OPTIONS Each option granted under this Plan shall be evidenced by a written agreement in such form as the Board shall from time to time approve, which agreements shall comply with and be subject to the following terms and conditions: A. CURRENT SERVICE OPTIONS. Commencing in 1994, immediately following each annual meeting of stockholders of the Company, each director who is on that date an Eligible Director shall automatically be granted under the Plan an option to purchase 5,000 shares of Common Stock. B. OPTION PRICE PER SHARE. All options granted hereunder shall be exercisable at a price per share equal to the fair market value (as hereinafter defined) of a share of Common Stock on the date of the grant. For purposes of the Plan, the term "fair market value" of a share of Common Stock shall mean, as of the date on which such fair market value is to be determined, the closing price of a share of Common Stock as reported in The Wall Street Journal (or a publication or reporting service deemed B-1 equivalent to The Wall Street Journal for such purpose by the Board) as reported for the national securities exchanges and other securities markets which at the time are included in the stock price quotations of such publication. In the event that the Board shall determine such stock price quotation is not representative of fair market value, the Board may determine fair market value in such a manner as it shall deem appropriate under the circumstances. C. OPTIONS NONTRANSFERABLE. Each option granted under the Plan by its terms shall not be transferable by the optionee otherwise than by will, or by the laws of descent and distribution, and shall be exercisable during the lifetime of the optionee only by him. No option or interest therein may be transferred, assigned, pledged, or hypothecated by the optionee during his lifetime, whether by operation of law or otherwise, or be made subject to execution, attachment, or similar process. D. EXPIRATION OF OPTIONS. No option shall be exercisable after the expiration of the earliest of (i) five years from the date when such option was granted, (ii) three months following (x) the retirement or resignation of the optionee as a director of the Company or (y) the failure of the optionee to be re-elected a director of the Company, or (iii) nine months following the total and permanent disability or death of the optionee. E. EXERCISE OF OPTIONS. Options may be exercised at any time by notice to the Company, accompanied by payment of the full purchase price for the Common Stock as to which they are exercised, as well as any federal, state, and/or local income tax withholding required in connection with the exercise. Such purchase price shall be paid in full upon any exercise of an option (i) by cash, including a personal check payable to the order of the Company or (ii) by delivering at fair market value, valued as of the date of delivery, securities issued by the Company already owned by the optionee, or (iii) by any combination of (i) and (ii). F. NONSTATUTORY OPTIONS. No option granted under the Plan shall constitute an "incentive stock option" as that term is defined in the Internal Revenue Code of 1986. 6. MODIFICATION, EXTENSION, AND RENEWAL OF OPTIONS The Board shall have the power to modify, extend or renew outstanding options and authorize the grant of new options in substitution therefor, provided that such power may not be exercised in a manner which would (i) alter or impair any rights or obligations under any option previously granted without the written consent of the optionee or (ii) adversely affect the qualification of the Plan or any other stock-related plan of the Company under Rule 16b-3 adopted pursuant to the Securities Exchange Act of 1934, or any successor provision. 7. ASSIGNMENT The rights and benefits under this Plan may not be assigned and any attempted assignment of such rights and benefits shall be null and void. 8. LIMITATION OF RIGHTS A. NO RIGHT TO CONTINUE AS A DIRECTOR. Neither the Plan, nor the granting of an option or any other action taken pursuant to the Plan, shall constitute or be evidence of any agreement or understanding, express or implied, that the Company will retain a director for any period of time, or at any particular rate of compensation. B. NO STOCKHOLDERS' RIGHTS FOR OPTIONEES. An optionee or his representative shall have no rights as a stockholder with respect to the shares covered by his option until the date of the issuance to him or his representative of a stock certificate therefor. 9. CHANGES IN PRESENT COMMON STOCK In the event of any merger, consolidation, reorganization, recapitalization, stock dividend, stock split or other change in the corporate structure or capitalization affecting the Company's present Common Stock, B-2 appropriate adjustment shall be made by the Board in the number and kind of shares which are or may become subject to options granted or to be granted hereunder and the per share option price to be paid therefor. 10. EFFECTIVE DATE AND DURATION OF THE PLAN If adopted by the stockholders at their 1994 annual meeting, this Plan shall become effective as of February 24, 1994, the date of its adoption by the Board and shall terminate on February 23, 2004 (unless earlier discontinued by the Board), but such termination shall not affect the rights of the holder of any option outstanding on such date of termination. 11. AMENDMENT OF THE PLAN The Board may suspend or discontinue the Plan or revise or amend it in any respect whatsoever; provided, however, that without approval of the stockholders no revision or amendment shall change the number of shares subject to the Plan (except as provided in Section 9), change the definition of the class of directors eligible to receive options, or materially increase the benefits accruing to participants under the Plan. Notwithstanding the preceding sentence, none of Sections 3, 5.A, or 5.B shall be amended more than once every six months, other than to comport with changes in the Internal Revenue Code, the Employee Retirement Income Security Act, federal securities laws or the rules thereunder. 12. COMPLIANCE WITH LAW, ETC. Notwithstanding any other provision of this Plan or agreements made pursuant hereto, the Company shall not be required to issue or deliver any certificate or certificates for shares of Common Stock under this Plan prior to fulfillment of all of the following conditions: (i) Effectiveness of any registration or other qualification of such shares or the Company under any state or federal law or regulation which the Board shall, in its absolute discretion or upon the advice of counsel, deem necessary or advisable; and (ii) Grant of any other consent, approval or permit from any state or federal governmental agency or securities exchange which the Board shall, in its absolute discretion or upon the advice of counsel, deem necessary or advisable. 13. NOTICE Any notice to the Company required by this Plan shall be in writing addressed to the Secretary of the Company at its principal office, and shall be deemed delivered only when it is received by the Secretary. 14. GOVERNING LAW This Plan and all determinations made and actions taken pursuant hereto shall be governed by the law of the State of New York and construed accordingly. B-3 CHRIS-CRAFT INDUSTRIES, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS P R O X Y LAWRENCE R. BARNETT, JAMES J. ROCHLIS and BRIAN C. KELLY, and each of them, each with full power of substitution, hereby are authorized to vote, by a majority of those or their substitutes present and acting at the meeting or, if only one shall be present and acting, then that one, all of the shares of Chris-Craft Industries, Inc. that the undersigned would be entitled, if personally present, to vote at its 1994 annual meeting of stockholders and at any adjournment thereof, upon such business as may properly come before the meeting, including the items set forth on the reverse side and in the notice of annual meeting and the proxy statement. ELECTION OF DIRECTORS, NOMINEES: HOWARD ARVEY, LAWRENCE R. BARNETT, JEANE J. KIRKPATRICK, JAMES J. ROCHLIS AND JOHN C. SIEGEL PLEASE COMPLETE, DATE AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY. See Reverse side X 0287 PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3, 4(A), 4(B), AND 6 AND AGAINST PROPOSAL 5. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3, 4(A), 4(B), AND 6 AND AGAINST PROPOSAL 5. 1. Election of Directors (see other side) FOR AUTHORITY WITHHELD ALL AS TO ALL NOMINEES NOMINEES For, except authority withheld as to the following nominee(s):______________________________________ FOR AGAINST ABSTAIN 2. Adoption of 1994 Management Incentive Plan 3. Adoption of 1994 Director Stock Option Plan FOR AGAINST ABSTAIN 4(a). Approval of performance based executive compensation for chief executive officer. 4(b). Approval of performance based executive compensation for executive vice president. 5. Stockholder's proposal relating to inclusion of women and minorities on the Board of Directors. 6. Selection of Price Waterhouse as auditors. Shareholder name and address Note: Please sign exactly as your name appears hereon. If the named holder is a corporation, partnership, or other association, please sign its name and add your name and title. When signing as attorney, executor, administrator, trustee or guardian, please also give your full title. If shares are held jointly, EACH holder should sign. ___________________________________________ ___________________________________________ SIGNATURE(S) DATE EX-99.1 2 EXHIBIT 99.1 EMPLOYMENT AGREEMENT AGREEMENT made as of January 1, 1994 between CHRIS-CRAFT INDUSTRIES, INC., a Delaware corporation ("Chris-Craft"), and EVAN C THOMPSON (the "Executive"). This Agreement supersedes the Agreement made as of October 1, 1989 between Chris-Craft and the Executive. The Executive is now, and for many years has been, Executive Vice President and President of the Television Division of Chris-Craft. Chris-Craft wishes to secure the continued services of the Executive as its Executive Vice President and President of its Television Division for an additional extended period. In addition, because of the position the Executive holds with Chris-Craft and the position that he will hold during the term of his full-time employment under this Agreement, Chris-Craft wishes to secure the further services of the Executive as a consultant to Chris-Craft, and wishes to insure that the Executive will refrain from competing with Chris-Craft, after the termination of his full-time employment. In consideration of the covenants and agreements herein contained, the parties agree as follows: 1. EMPLOYMENT; TERM 1.1 Chris-Craft shall continue to employ the Executive, and the Executive shall continue to serve, as Executive Vice President and President, Television Division of Chris-Craft during the Employment Term (as defined in Section 1.2). 1.2 The term of the Executive's employment under Section 1.1 of this Agreement (the "Employment Term") shall commence on January 1, 1994 and end on December 31, 1998, unless extended as provided in this Section 1.2 or Section 8 or sooner terminated pursuant to the provisions of Section 9 or Section 10. On each of December 31, 1996 and December 31, 1997, the Employment Term shall be automatically extended for one additional year (so that, on each such December 31, the Employment Term shall have three years to run) without further action by the parties, unless Executive shall have served written notice upon Chris-Craft prior to December 31, 1996, or prior to December 31, 1997, as the case may be, that such extension shall not take place. On December 31, 1998, the Employment Term shall be automatically extended for one additional year without further action by the parties, unless one of the parties shall have served written notice upon the other party prior to October 1, 1998 that such extension shall not take place. If a notice that an extension shall not take place is served, the Employment Term shall not, thereafter, be extended. 2 2. DUTIES AND AUTHORITY. 2.1 During the Employment Term, the Executive shall devote his full business time and energies to the business and affairs of Chris-Craft and shall not accept other employment or permit such personal business interests as he may have to interfere with the performance of his duties hereunder. Executive's services for Chris-Craft shall include all executive services and duties commensurate with his position at Chris-Craft that may be requested of him for or on behalf of any television broadcasting or programming entity owned or operated by Chris-Craft or any affiliate of Chris-Craft ("Affiliate"), as defined in Rule 12b-2 of the Securities Exchange Act of 1934 (the "Exchange Act"). The Executive agrees, during the Employment Term, to use his best efforts, skill and abilities to promote Chris-Craft's interests; to serve as a director and officer of Chris-Craft and any of its domestic subsidiary corporations if elected by the Board of Directors or stockholders of Chris-Craft or any such subsidiary corporation; and to perform such duties (consistent with his status set forth below in this Section 2) as may be assigned to him by the Chief Executive Officer or Board of Directors of Chris-Craft. 2.2 Subject only to the direction and control of Chris-Craft's Chief Executive Officer and Chris-Craft's Board of Directors (which direction and control 3 shall be such as is customarily exercised over an executive vice president), the Executive shall perform all services and duties necessary or appropriate for the management of Chris-Craft's Television Division business. 2.3 Throughout the Employment Term, the Executive shall be elected to, and shall continue in, the office denominated that of Executive Vice President of Chris-Craft and President, Television Division, and shall continue to perform on behalf of Chris-Craft substantially the same functions, and have substantially the same authority, duties and responsibilities, as on the date hereof, and, except as provided in Sections 2.1 and 2.2, Chris-Craft shall not confer on any other officer or employee authority, responsibility or power superior or equal to the authority, responsibility or power vested in the Executive hereunder. 3. LOCATION. During the Employment Term, the Executive's services under this Agreement shall be performed principally in Beverly Hills, California, or elsewhere in the Metropolitan Los Angeles area. The parties, however, acknowledge and agree that the nature of the Executive's duties hereunder shall require reasonable domestic and international travel from time to time. 4 4. CASH COMPENSATION. 4.1 BASE SALARY. During the Employment Term, Chris-Craft shall pay to the Executive, in monthly or more frequent installments in accordance with Chris-Craft's regular payroll practices for senior executives, a base salary of not less than $950,000 per annum; provided, however, that such minimum base salary shall be adjusted upward, as of January 1, 1995, and as of each successive January 1 to the end of the Employment Term, in proportion to any increase in the Consumer Price Index, as defined in Section 4.5, between the December levels of the two immediately preceding years ("COLA Adjustment"). Each such adjustment shall be made retroactively when the Consumer Price Index for the December next preceding the date of such adjustment becomes available. It is understood that Chris-Craft may, at any time, in the discretion of its Board of Directors increase, but not decrease, the Executive's base salary. In the event that the Executive's base salary is adjusted by the Board pursuant to the last preceding sentence, the new base salary shall be adjusted upward, as of each following January 1, in proportion to any increase in the Consumer Price Index from the effective date of the last previous adjustment by the Board. 4.2 SECTION 162(M) LIMIT. 4.2.1 In no event shall the sum of the Executive's base salary and other Remuneration (as defined 5 in Section 4.2.2) for any calendar year exceed the Section 162(m) Limit (as defined in Section 4.2.2). Chris-Craft shall, to the extent foreseeable, reduce each regular cash compensation payment in any year by the proportion that (a) the excess of (i) the sum of all such regular cash compensation payments for such year over (ii) the Section 162(m) Limit bears to (b) the sum of all such regular cash compensation payments for such year and shall reduce or omit other cash compensation payments) (other than Excluded Remuneration) to the extent same would cause Remuneration in such year to exceed the Section 162(m) Limit, provided that in no event will cash compensation payable to the Executive during any calendar year be reduced below $750,000 (the "Minimum Annual Payment"). 4.2.2 For purposes of this Agreement, "Remuneration" shall mean "applicable employee remuneration" as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), or any successor or similar provision, which is paid or incurred with respect to the Executive by Chris-Craft or any Chris-Craft Affiliate, other than Excluded Remuneration; "Excluded Remuneration" shall mean any Gross-Up Payment or other payment required under Section 7 or any forgiveness of indebtedness under Section 7, or any payment required under Sections 10.1, 10.2 or 10.4; "Section 162(m) Limit" shall mean $1,000,000, subject to adjustment as provided in this 6 Section 4.2.2; and for purposes of this Section 4.2 only, "Chris-Craft Affiliate" shall mean any corporation which is a member of the same "controlled group" as Chris-Craft within the meaning of Section 414(b) of the Code, except that for this purpose Section 1563 of the Code shall be applied by substituting "50 percent" for "80 percent". If one or more amendments to Section 162(m) of the Code or any successor or similar provision shall change the amount of Remuneration for a year that is deductible by Chris-Craft or any Chris-Craft Affiliate for Federal income tax purposes, a corresponding change shall be made to the Section 162(m) Limit for purposes of this Agreement for all years to which any such amendment shall be applicable. Unless and until there is a Change in Law with respect to a taxable year of Chris-Craft, Chris-Craft and the Executive acknowledge and agree that subject to Stockholder Approval as defined in Section 4.4, Remuneration shall not include any amounts payable to the Executive pursuant to Section 4.4 hereof, and any amounts includible in the Executive's taxable income with respect to amounts described in Section 6.1(d). For purposes of the preceding sentence, "Change in Law" shall mean an amendment to Section 162(m), or the issuance or revision of one or more judicial decisions or administrative rules, regulations or other pronouncements, following the date hereof which, in the written legal opinion of counsel to Chris-Craft, will more likely than not result in the 7 inclusion of the amount in question in "applicable employee remuneration" as defined in Section 162(m) of the Code. 4.2.3 The provisions of this Section 4.2 shall be interpreted in a manner consistent with the intention of the parties that a deduction not be disallowed to Chris-Craft or any Chris-Craft Affiliate for Federal income tax purposes with respect to any Remuneration payable to the Executive under this Agreement by reason of Code Section 162(m) (other than subparagraph (4)(F) thereof) or any successor or similar provision (except for Excluded Remuneration) and the Minimum Annual Payment. 4.3 DEFERRED COMPENSATION. During the Employment Term, Chris-Craft shall credit to the Executive's Account (as defined in Section 4.3.1) the amount specified in Section 4.3.2. 4.3.1 Chris-Craft shall maintain, on its books, a special account, comprised of two sub-accounts, Subaccount A and Subaccount B, with respect to the Executive (the "Account"), in accordance with the terms of this Agreement, until Executive shall have been paid all amounts required by Section 4.3.3 to be paid to Executive with respect thereto. Prior to December 1 of each year, Chris-Craft's General Counsel and Secretary shall notify Executive of the option to select the periods to which compensation payable pursuant to this Section 4.3 will be deferred and, within fifteen (15) days following receipt of such notice, 8 Executive shall notify Chris-Craft's Vice President -- Finance, if Executive wishes that the Deferred Compensation (as defined in clause (a) of the first sentence of Section 4.3.2) be credited to Subaccount A, Subaccount B, or a combination of both Subaccount A and Subaccount B (any such combination to be specified in a manner that will not prevent Chris-Craft's Vice President-Finance from computing on a monthly basis the amounts to be credited to each subaccount in accordance with Section 4.3.2). Absent such notice from Executive, Deferred Compensation for such year shall be credited to Subaccount B. Deferred Compensation for 1994 shall be credited to Subaccount B. 4.3.2 During each year of the Employment Term, Chris-Craft shall credit, as of the end of each month, (a) to the appropriate Subaccount, an amount equal to the sum of (i) $20,833.33, subject to COLA Adjustment, plus (ii) the amounts by which all cash compensation payments or distributions during such month shall have been reduced or omitted pursuant to the last sentence of Section 4.2.1 (the "Deferred Compensation"); and (b) interest on each Subaccount balance as of the end of the preceding month, computed at a rate to be adjusted as of the last business day of each calendar quarter to equal the yield, as of the last day of such quarter, as reported in The Wall Street Journal, on U.S. Treasury Notes maturing in the month that is five years after the last month of such quarter (the 9 "Interest Rate"). Amounts credited to the Account, excluding interest, shall be deemed compensation for the year credited, for purposes of determining benefits respecting each of Chris-Craft's qualified employee benefit plans under Chris-Craft's Benefit Equalization Plan (the "BEP"). If no yield for such notes is so published as of the last day of a particular quarter, there shall be substituted the average of the yields so published for the months next preceding and following. If The Wall Street Journal is not published on the last day of a particular quarter, there shall be substituted the appropriate yield reported on the last previous day on which The Wall Street Journal was published. Following the Employment Term, Chris-Craft shall credit to Subaccount B, as of the last day of each month (based each month on a 30-day month and a 360-day year), interest on such Subaccount balance as of such date, computed at the Interest Rate. 4.3.3 On the January 15 first-occurring following the year in which expiration or termination of the Employment Term shall have occurred, Chris-Craft shall pay to the Executive a lump sum equal to the Subaccount A balance as of such January 15 (including interest accrued in accordance with Section 4.3.2 at the Interest Rate used for the last quarter of the previous year through such January 15), and Chris-Craft will have no further obligation to make any payment to the Executive with respect to Subaccount A. 10 On such January 15, Chris-Craft also shall pay to the Executive an amount equal to one-fifth of the Subaccount B balance as of such January 15 (including interest accrued through such January 15) (the "First Payment"), and the balance of such Subaccount shall be reduced by the amount of such First Payment. On each succeeding January 15, until Chris-Craft shall have made five payments with respect to Subaccount B (including the First Payment) pursuant to this Section 4.3.3, Chris-Craft shall pay to the Executive a sum equal to the amount of the First Payment, plus interest credited to Subaccount B through the date of such payment, from the first day after the date of the immediately preceding payment, and the balance shall be reduced by the amount of such sum, such that the entire Amount of Subaccount B plus any interest thereon shall have been paid to the Executive by the fourth anniversary of the First Payment. In the event that for tax purposes Chris-Craft treats any portion of Subaccount B in a manner consistent with the notion that Executive should include any unpaid amount (determined without regard to this sentence) in taxable income, Chris-Craft shall pay such amount to Executive at the time Executive would be treated as having received such income. 4.4 BONUS. 4.4.1 (a) In addition to his base salary and the deferred amounts referred to in Section 4.3.2 above, 11 the Executive shall be entitled to receive with respect to each fiscal year of Chris-Craft, or portion thereof, during the Employment Term, a bonus equal to 1% of the amount up to $50,000,000 by which Chris-Craft's "TV Broadcast Cash Flow" (as defined in Section 4.4.2) for the fiscal year in question exceeds $20,000,000 (the "Low Base Amount"), and 2% of the amount by which TV Broadcast Cash Flow exceeds $50,000,000 (the "High Base Amount") (each of the Low Base Amount and the High Base Amount, a "Base Amount"). (b) If Chris-Craft shall acquire, in one or more transactions, additional television stations having aggregate Mean TV Broadcast Cash Flow (as defined below) exceeding $10,000,000, the Proforma Amount shall be increased, or if Chris-Craft shall dispose of a television station having Mean TV Broadcast Cash Flow exceeding $5,000,000, the Pro Forma Amount shall be decreased, by (1) for the year during which the acquisition or disposition occurs, an amount equal to the Mean TV Broadcast Cash Flow of the television station (or stations) so acquired or disposed of, multiplied by a fraction, the numerator of which is the number of days remaining in such year following such acquisition or disposition and the denominator of which is 365, and (2) for any other year, an amount equal to the Mean TV Broadcast Cash Flow of the television station (or stations) so acquired or disposed of, and, in such event, Executive's bonus, shall be calculated solely pursuant to 12 whichever of the following two formulae as shall be applicable (but shall not be less than zero for any year): i) If Chris-Craft TV Broadcast Cash Flow for the year in question shall EXCEED the Pro Forma Amount, the bonus shall be equal to: 300,000 + .02 [((HIGH BASE AMOUNT/PRO FORMA AMOUNT) X (CHRIS-CRAFT TV BROADCAST CASH FLOW)) - HIGH BASE AMOUNT] ii) If Chris-Craft TV Broadcast Cash Flow for the fiscal year shall be LESS THAN the Pro Forma Amount, the bonus shall be equal to: .01 X [((HIGH BASE AMOUNT/PRO FORMA AMOUNT) X (CHRIS-CRAFT TV BROADCAST CASH FLOW)) - LOW BASE AMOUNT] (c) The Board of Directors will consider adjusting the base salary, the Base Amounts, and if applicable, the Pro Forma Amount, or the percentages or formulae used to calculate the bonus, if, and at such time as, Chris-Craft shall own ten or more television stations or the Executive shall have chief operating responsibility for a business owned by Chris-Craft that derives revenues (determined in accordance with generally accepted accounting principles) exceeding $25,000,000 other than from television broadcasting. Any such adjustment shall be determined and 13 approved in accordance with the procedures set forth in Section 162(m)(4)(C) of the Code or any similar or successor provision. In the event such determination and approval is not obtained, any adjustment shall be treated as Deferred Compensation payable in accordance with Section 4.3.2. (d) Subject to the approval of the stockholders of each of Chris-Craft and BHC Communications, Inc. at their respective 1994 annual meetings ("Stockholder Approval"), the bonus shall be paid to Executive as soon as practicable, but not later than March 31 of the year following the end of each such fiscal year. In the event Stockholder Approval is not obtained, the bonus amounts shall be treated as Deferred Compensation payable in accordance with Section 4.3.2. The amount of the bonus payable with respect to any fiscal year that includes but does not end on the last day of the Employment Term shall be determined by multiplying the bonus which would have been payable with respect to the whole of such fiscal year (if the whole of such fiscal year were within the Employment Term) by a fraction, the numerator of which is the number of days of such year included in the Employment Term and the denominator of which is 365. 4.4.2 As used in this Section 4.4, the term "TV Broadcast Cash Flow" shall mean operating income plus depreciation and amortization of good will and programming contracts, minus payments on programming 14 contracts as such items shall be determined in accordance with generally accepted accounting principles; "Chris-Craft TV Broadcast Cash Flow" for any year shall mean the TV Broadcast Cash Flow of television stations owned by Chris-Craft or any Affiliate of Chris-Craft during any portion of such year; "Mean TV Broadcast Cash Flow" shall mean the mean TV Broadcast Cash Flow of a television station for the three full fiscal years of such television station prior to acquisition or disposition by Chris-Craft; and, until increased or decreased pursuant to Section 4.4.1(b), the "Pro Forma Amount" shall equal the High Base Amount. 4.5 CONSUMER PRICE INDEX. The words "Consumer Price Index," as used in this Agreement shall mean the Consumer Price Index for All Urban Consumers, U.S. City Average, All Items (1982-84=100), as reported by the Bureau of Labor Statistics of the U.S. Department of Labor. In the event that this Consumer Price Index shall be superseded or shall be published by a different agency, then the superseding index shall be substituted for this Consumer Price Index in such a manner as to implement the intent of this Agreement that the Executive's base salary and Deferred Compensation shall be adjusted annually, beginning as of January 1, 1995, so that the purchasing power thereof shall be maintained at a level at least equivalent to the purchasing power thereof at January 1, 1994. 15 5. EXPENSES. In addition to the compensation provided in Section 4 and in Section 11, Chris-Craft will pay or reimburse the Executive for all reasonable expenses actually incurred or paid by him during the Employment Term or the Consulting Term (as defined in Section 11) in the performance of his services hereunder upon presentation of expense statements, vouchers, or such other supporting information as Chris-Craft may customarily require of its senior executives. 6. ADDITIONAL BENEFITS. 6.1 During the Employment Term: (a) The Executive will be entitled to reasonable annual vacation periods, not less than an aggregate of six weeks in each calendar year, with full pay and allowances. (b) The Executive will be eligible for sick leave in accordance with Chris-Craft's customary practice for senior executives. (c) The Executive will be entitled to participate in any insurance, pension, profit-sharing, stock option, stock purchase or other benefit plan of Chris-Craft now existing or hereafter adopted for the benefit of the employees generally or of the executives of Chris-Craft. (d) Upon approval of a new stock option plan by Chris-Craft stockholders at their 1994 annual 16 meeting, Chris-Craft shall grant the Executive a 10-year option covering 200,000 shares that shall be exercisable during the Employment Term and Consulting Term. (e) Chris-Craft shall match the Executive's contributions (including any contribution by any trust of which the Executive is the grantor) to recognized charities, during each year of the Employment Term, in an amount equal to the sum of (i) $100,000, plus (ii) the amount by which (x) the product obtained by multiplying $100,000 by the number of previous years in which this Agreement shall have been in effect shall exceed (y) the total amount of all matching contributions made by Chris-Craft pursuant to this sentence in such previous years. Matching contributions made by Chris-Craft pursuant hereto shall be in addition to any contributions made to match Executive's contributions under any other charitable gift matching program generally applicable with respect to contributions made by employees or directors of Chris-Craft or any of its subsidiaries. (f) The Executive shall be entitled to such additional benefits as may be granted to him from time to time by the Board of Directors of Chris-Craft. 6.2 No payment or benefit made or provided under this Agreement shall be deemed to constitute payment to the Executive, his legal representatives or beneficiaries 17 in lieu of, or in reduction of, any benefit or payment under an insurance, pension, profit-sharing or other benefit plan, and no payment under any such plan shall reduce any payment or benefit due under this Agreement. 7. CERTAIN ADDITIONAL PAYMENTS BY CHRIS-CRAFT 7.1 Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment, distribution or transfer by Chris-Craft or any Affiliate or other event occurring with respect to the Executive and Chris-Craft for the Executive's benefit (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (including pursuant to any of Chris-Craft's benefit plans)), determined without regard to any additional payment required under this Section 7 (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code (and any successor provision and any similar provision of state or local income tax law) (collectively, "Section 4999"), or any interest or penalty is incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest or penalty, hereinafter collectively to be referred to as the "Excise Tax"), then the Executive shall be entitled to receive or have paid to the Internal Revenue Service or other appropriate authority (and any relevant state or local authority) ("IRS") on his behalf an additional payment (a "Gross-Up Payment") in an 18 amount equal to the sum of (a) the Excise Tax plus (b) all other taxes, penalties and interest (including any excise tax imposed by Section 4999) paid or payable by Executive on account of the operation of this Section 7, such that, after payment by Executive of all such other taxes (including any interest or penalty imposed with respect to such taxes) and any Excise Tax imposed upon the Gross-Up Payment, Executive shall be in the same position as he would have been had no Excise Tax been imposed upon the Payments. 7.1.1 Subject to the provisions of Section 7.3, all determinations required to be made under this Section 7, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment, and the assumptions to be utilized in arriving at such determination, shall be made by Price Waterhouse or any other nationally recognized accounting firm (the "Accounting Firm") that shall be Chris-Craft's outside auditors at the time of such determination, which Accounting Firm shall provide detailed supporting calculations both to the Executive and Chris-Craft within 15 business days of the receipt of notice from Chris-Craft or the Executive that there has been a Payment that the person giving notice believes may be subject to the Excise Tax, or such earlier time as shall be requested by Chris-Craft. All fees and expenses of the Accounting Firm shall be borne solely by Chris-Craft. Any Gross-Up Payment, as determined pursuant 19 to this Section 7, shall be paid by Chris-Craft to the IRS on the Executive's behalf within five business days after the receipt of the Accounting Firm's determination. If the Accounting Firm shall determine that no Excise Tax is payable by the Executive, it shall furnish to the Executive written advice that failure to report the Excise Tax on the Executive's applicable federal income tax return would not be reasonably likely to result in the imposition of a penalty for fraud, negligence, or disregard of rules or regulations. Any determination by the Accounting Firm shall be binding upon Chris-Craft and the Executive in determining whether a Gross-Up Payment is required or the amount thereof (subject to Section 7.1.2 and 7.2), in the absence of material mathematical or legal error. 7.1.2 As a result of uncertainty in the application of Section 4999 of the Code that may exist at the time of the initial determination by the Accounting Firm, it may be possible that in making the calculations required to be made hereunder, the Accounting Firm shall determine that a Gross-Up Payment need not be made that properly should be made ("Underpayment") or that a Gross-Up Payment not properly needed to be made should be made ("Overpayment"). In the event that Chris-Craft shall exhaust or fail to adequately pursue its remedies pursuant to Section 7.2, and the Executive thereafter shall be required to make a payment of any Excise Tax, the Accounting 20 Firm shall determine the amount of the Underpayment that occurred, and Chris-Craft shall promptly pay the amount thereof to the IRS on the Executive's behalf. In the event that the Accounting Firm shall determine that an Overpayment was made, any such Overpayment shall be treated for all purposes as a loan to the Executive with interest at the applicable Federal rate provided for in Section 1274(d) of the Code; PROVIDED, HOWEVER, that the amount to be repaid by the Executive to Chris-Craft shall be reduced to the extent that any portion of the Overpayment to be repaid will not be offset by a corresponding reduction in tax by reason of such repayment of the Overpayment. 7.2 Executive shall give Chris-Craft written notice of any claim by the IRS that, if successful, would require the payment by Chris-Craft of a Gross-Up Payment. The Executive shall give such notice within ten business days after the Executive shall be informed in writing of such claim, provided that failure by the Executive to provide such notice shall not result in a waiver or forfeiture of any rights of Executive under this Section 7 except to the extent of actual damages suffered by Chris-Craft as a result of such failure; provided further that if such failure prevents the contest of such claim no payment shall be required with respect to such claim by Chris-Craft under this Section 7. The Executive shall not pay such claim prior to the expiration of 15 days following the date 21 on which the Executive gives such notice to Chris-Craft. If Chris-Craft shall notify the Executive in writing prior to the expiration of such 15-day period that Chris-Craft desires to contest such claim, the Executive shall: (a) give Chris-Craft any information reasonably requested by Chris-Craft relating to such claim, (b) take such action in connection with contesting such claim as Chris-Craft shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by Chris-Craft, (c) cooperate in good faith with Chris-Craft's contest of such claim, and (d) permit Chris-Craft to control any proceedings to the extent relating to such claim; PROVIDED, HOWEVER, that Chris-Craft shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed in relation to such claim, including all costs and expenses. Without limiting the foregoing provisions of this Section 7.2, and to the extent its actions do not 22 unreasonably interfere or prejudice the Executive's disputes with the IRS as to other issues, Chris-Craft shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the IRS in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as Chris-Craft shall determine; PROVIDED, HOWEVER, that if Chris-Craft shall direct the Executive to pay such claim and sue for a refund, Chris-Craft shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance, and further provided that any extension of the statute of limitations relating to taxes for the Executive's taxable year with respect to which such contested amount shall be claimed to be due shall be limited solely to such claim. Furthermore, Chris-Craft's control of the contest shall be limited to issues with respect to which 23 a Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the IRS to the extent that such settlement or contest would not be reasonably likely to have a material adverse effect on the issues with respect to the Gross-Up Payment. 7.3 If, after the Executive's receipt of an amount advanced by Chris-Craft pursuant to Section 7.2, the Executive shall become entitled to receive any refund with respect to such claim, the Executive shall promptly pay to Chris-Craft the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the Executive's receipt of an amount advanced by Chris-Craft pursuant to Section 7.2, a determination shall be made that the Executive shall not be entitled to any refund with respect to such claim, and Chris-Craft shall not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after Chris-Craft shall receive notice of such determination, then such advance shall be forgiven and shall not be required to be repaid, and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 7.4 This Section 7 shall remain in full force and effect following the termination of the Employment Term for any reason until the expiration of the statute of 24 limitations on the assessment of taxes applicable to the Executive for all periods in which the Executive may incur a liability for taxes (including Excise Taxes), interest or penalties arising out of the operation of this Agreement. 8. CHANGE IN CONTROL; EXTENSION OF TERM. 8.1 Chris-Craft, on behalf of itself and its stockholders, wishes to assure itself of continuity of management in the event of any Change in Control (as defined in Section 8.2 of this Agreement). Notwithstanding anything to the contrary in this Agreement, if a Change in Control (as defined in Section 8.2 hereof) shall occur during the Employment Term, and the Employment Term shall not have previously terminated for any reason (other than in connection with or as a result of a Change in Control), the Employment Term shall automatically be extended to the third anniversary of such Change in Control, if, pursuant to Section 1.2, the Employment Term otherwise might have terminated before such third anniversary. 8.2 For the purposes of this Agreement, a "Change in Control" shall mean: 8.2.1 The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act ("Rule 13d-3")) of 20% or more of the combined voting power of the then outstanding voting 25 securities of Chris-Craft entitled to vote generally in the election of directors (the "Outstanding Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change in Control: (v) any acquisition of a security (i) directly from Chris-Craft that is authorized by the Incumbent Board, as defined in Section 8.2.2, or (ii) of a class constituting a class of Outstanding Voting Securities on the date hereof that results from conversion of a security of any such class; (w) any acquisition by Chris-Craft; (x) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Chris-Craft or any corporation controlled by Chris-Craft; (y) any change in ownership of Outstanding Voting Securities by any Person identified or referred to in "Table I, Beneficial Ownership of Chris-Craft Stock," in Chris-Craft's Proxy Statement for its 1993 Annual Meeting of Stockholders, so long as (i) any such Person who is an officer or director of Chris-Craft remains such, or (ii) any Person that, with respect to a change in such Person's ownership of Outstanding Voting Securities, as of the date hereof, would have an obligation to make a filing under Rule 13d-3, would not be required, in connection with such change in ownership, to change from filing on Schedule 13G to Schedule 13D or to change any response to Schedule 13D, Item 4, other than paragraph (a) thereof or paragraph (j), as it might relate to paragraph (a); or (z) any acquisition by any 26 corporation pursuant to a reorganization, merger or consolidation, if, following such reorganization, merger or consolidation, the conditions described in clauses (a), (b), and (c) of Section 8.2.3 are satisfied; or 8.2.2 Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the stockholders of Chris-Craft, shall be approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or 8.2.3 Approval by the stockholders of Chris-Craft of a reorganization, merger or consolidation, in each case, unless, following such reorganization, merger or consolidation: (a) more than 60% of the combined voting power of the then outstanding voting securities of the corporation resulting from such reorganization, merger, or 27 consolidation, which may be Chris-Craft (the "Resulting Corporation"), entitled to vote generally in the election of directors (the "Resulting Corporation Voting Securities") shall then be owned beneficially, directly or indirectly, by all or substantially all of the Persons who were the beneficial owners of Outstanding Voting Securities immediately prior to such reorganization, merger, or consolidation, in substantially the same proportions as their respective ownerships of Outstanding Voting Securities immediately prior to such reorganization, merger or consolidation; (b) no Person (excluding Chris-Craft, any employee benefit plan (or related trust) of Chris-Craft, the Resulting Corporation, and any Person beneficially owning, immediately prior to such reorganization, merger or consolidation, directly or indirectly, 20% or more of the combined voting power of Outstanding Voting Securities) shall own beneficially, directly or indirectly, 20% or more of the combined voting power of the Resulting Corporation Voting Securities; and (c) at least a majority of the members of the board of directors of the Corporation shall have been members of the Incumbent Board at the time of the execution of the initial agreement providing for such reorganization, merger or consolidation; or 8.2.4 Approval by the stockholders of Chris-Craft of (a) a complete liquidation or dissolution of Chris-Craft or (b) the sale or other disposition of all or 28 substantially all of the assets of Chris-Craft, other than to a corporation (the "Buyer") with respect to which (i) following such sale or other disposition, more than 60% of the combined voting power of securities of Buyer entitled to vote generally in the election of directors ("Buyer Voting Securities"), shall be owned beneficially, directly or indirectly, by all or substantially all of the Persons who were the beneficial owners of the Outstanding Voting Securities immediately prior to such sale or other disposition, in substantially the same proportion as their respective ownerships of Outstanding Voting Securities, immediately prior to such sale or other disposition; (ii) no Person (excluding Chris-Craft and any employee benefit plan (or related trust) of Chris-Craft or Buyer and any Person that shall immediately prior to such sale or other disposition own beneficially, directly or indirectly, 20% or more of the combined voting power of Outstanding Voting Securities), shall own beneficially, directly or indirectly, 20% or more of the combined voting power of, Buyer Voting Securities; and (iii) at least a majority of the members of the board of directors of Buyer shall have been members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of Chris-Craft. 29 9. TERMINATION OF AGREEMENT FOR CAUSE. Chris-Craft may terminate this Agreement, and all of Chris-Craft's obligations hereunder except its obligation to pay to Executive amounts accrued to the date of termination, "for cause" upon 30 days written notice. As used in this Agreement, the term "for cause" shall mean and be limited to the following events: (a) the Executive's conviction (which conviction, through lapse of time or otherwise, is not subject to appeal) in a court of law of a felony involving moral turpitude; (b) the Executive's material breach of any of the covenants set forth in Section 12; (c) the Executive's dishonesty in the course of fulfilling his duties hereunder; or (d) the Executive's continuing, repeated, wilful failure or refusal to perform his duties in accordance with the terms of Section 2; PROVIDED, HOWEVER, that this Agreement may not be terminated for cause under the immediately preceding clause (d), unless the Executive shall have first received written notice from the Board of Directors of Chris-Craft advising him of the specific acts or omissions alleged to constitute a failure or refusal to perform his duties, and such failure or refusal to perform his duties continues after the Executive shall have had a reasonable opportunity to correct the acts or omissions cited in such notice. In no event shall the alleged incompetence of the Executive in the performance of 30 his duties hereunder be deemed grounds for termination of this Agreement for cause. 10. TERMINATION OTHER THAN FOR CAUSE. 10.1 DEATH. If the Executive shall die during the Employment Term, this Agreement, and all of Chris-Craft's obligations hereunder, shall terminate, except (a) with regard to payments from the Account pursuant to Section 4.3.3 (which Account shall include Deferred Compensation payable through the last day of the month in which his death occurred) and (b) that Chris-Craft shall pay to the Executive's estate, (i) within 30 days after his death, the base salary, and bonus with respect to the then current fiscal year, which would have been payable to the Executive under Section 4 had the Employment Term ended on the last day of the month in which his death occurred, and (ii) an amount (payable at the same time as salary is paid to other executive employees of Chris-Craft) equal to the Executive's "Average Annual Compensation" (as defined in Section 10.3) at the date of his death; such amount shall be payable for the 12-month period following the first day of the month following the month in which the Executive's death shall occur. 10.2 DISABILITY. If, during the Employment Term, the Executive shall become disabled (as defined in Chris-Craft's then existing disability policy) so that he shall be unable substantially to perform his services 31 hereunder, (a) for a period of six consecutive months or (b) for an aggregate of six months within any period of 12 consecutive months, then the Board of Directors of Chris-Craft may, at any time during the continuance of such disability, terminate the Employment Term on 30 days' prior written notice to the Executive. After such termination, the Executive shall have no further obligation to perform services for Chris-Craft pursuant to Section 2 but shall be entitled to receive from Chris-Craft, within 30 days after such termination, in lieu of the amounts which would otherwise be payable under Section 4, (i) the base salary, and bonus with respect to the then current fiscal year, which would have been payable to the Executive under Section 4, had the Employment Term ended on the last day of the month in which the Employment Term was terminated pursuant to this Section 10.2, and (ii) an amount (payable in equal monthly installments on the 15th day of each month) at an annual rate equal to one-half of the Executive's "Average Annual Compensation" (as defined in Section 10.3) at the date of the termination of the Employment Term, such amount to be payable for the period beginning on the first day of the month following the month in which the Employment Term shall have been terminated pursuant to this Section 10.2 and ending on the day on which the Employment Term would have ended (as extended, if theretofore extended) if not terminated pursuant to this Section 10.2. The Executive 32 shall have no obligation to accept any employment offered to him by others in order to minimize, or to be set off against, the amounts to which he is entitled pursuant to this Section 10.2. Chris-Craft shall not interpose any defense against payment of such amounts based on refusal of the Executive to seek or accept other employment. However, if the Executive shall obtain other employment, then amounts due to him pursuant to this Section 10.2 shall be reduced, PRO TANTO, by amounts actually received by him for services rendered in such other employment during the time amounts are payable pursuant to said Section 10.2. 10.3 AVERAGE ANNUAL COMPENSATION. As used in Sections 10.1 and 10.2, the term "Average Annual Compensation" shall mean the mean annual compensation received or receivable by the Executive pursuant to Section 4 (without regard to the effect of the provisions of Section 4.2) with respect to each of the three full fiscal years of Chris-Craft immediately preceding the date of the Executive's death (in the case of Section 10.1) or the date of the termination of the Employment Term (in the case of Section 10.2); provided, however, that if the Executive shall die, or the Employment Term shall be terminated due to Executive's disability, prior to January 1, 1997, the Average Annual Compensation shall be the mean of (i) the amount received or receivable by the Executive, or that would have become receivable by the Executive, pursuant to 33 Section 4 (including salary, Deferred Compensation and bonus and without regard to the effect of the provisions of Section 4.2) had he worked through December 31, 1994, and (ii) the mean amount received or receivable by the Executive pursuant to Section 4 (including salary, Deferred Compensation and bonus and without regard to the effect of the provisions of Section 4.2) for each full fiscal year of Chris-Craft, if any, beginning after December 31, 1994 and ending on the December 31 immediately preceding the date of the Executive's death or date of termination of the Employment Term due to Executive's disability, as the case may be. 10.4 TERMINATION BY EXECUTIVE. 10.4.1 Executive may, (but shall not be obligated to) terminate the Employment Term on 60 days' prior written notice given at any time within two years following a Change in Control or, if during the Employment Term, (a) the Executive shall not be elected (and continued) as a director of Chris-Craft or UTV and as Executive Vice President of Chris-Craft and President of Chris-Craft's Television Division, or Executive shall be removed from such board or office; or (b) Chris-Craft shall fail to cure a material breach of this Agreement within 10 days after notice; or (c) the Executive shall not be continuously afforded the authority, responsibilities and prerogatives contemplated in Section 2.2 and 2.3; or (d) Chris-Craft 34 shall materially reduce any benefit to which Executive is entitled pursuant to Section 6.1 and shall not have similarly reduced such benefit with respect to Chris-Craft senior executives generally; or (e) the Executive shall be required to perform his principal services under this Agreement at a place other than that set forth in Section 3. Such right to terminate the Employment Term shall be the Executive's exclusive remedy in the event of the occurrence of any of the events described in this Section 10.4.1. For purposes of clause (c) of the preceding sentence, the Executive shall be deemed not to have been continuously afforded the authority, responsibilities and prerogatives contemplated in Sections 2.2 and 2.3 if there shall occur any reduction in the scope, level or nature of the Executive's employment hereunder, or any demotion, any phasing out or assignment to others, of the duties contemplated in Section 2. For purposes of this Section 10.4, any determination made by the Executive in good faith that any of the events described in clauses (a) through (e) of the first sentence of Section 10.4.1 has occurred shall be conclusive. 10.4.2 If the Executive shall elect to terminate the Employment Term upon the occurrence of any event described in Section 10.4.1, or if Chris-Craft shall terminate this Agreement other than for cause or disability pursuant to Sections 9 and 10 hereof, then the Executive 35 shall have no further obligation to perform services for Chris-Craft pursuant to Section 2, but he shall be entitled to receive from Chris-Craft, 30 days after the date of termination of the Employment Term, for the period beginning on the date of such termination and running through the day on which the Employment Term would have ended (as extended, if theretofore extended) if not terminated pursuant to this Section 10, assuming no additional extensions of the Employment Term, and ending on the day on which the Consulting Term would have ended (the "Cutoff Date"), in lieu of the amounts that would otherwise be payable hereunder, a lump sum in cash of an amount equal to the aggregate of (a) compensation that would have been payable each year at the rate of the (i) base salary payable to the Executive pursuant to Section 4.1 and (ii) all amounts of Deferred Compensation payable to the Executive pursuant to Section 4.3 (each at the rate in effect on the date of the termination of the Employment Term (including any COLA Adjustment theretofore required to have been made)); (b) all consulting fees payable pursuant to Section 11 hereof subject to COLA Adjustment; and (c) an amount equal to the mean performance bonuses theretofore paid to or payable to the Executive pursuant to this Agreement, multiplied by the number of years remaining in the Employment Term at the date of termination (including the year in which the termination occurs). Notwithstanding the above, Deferred Compensation 36 amounts previously deferred and credited to the Account shall be paid in accordance with Section 4.3.3. In addition, until the Cutoff Date, Chris-Craft shall maintain, at its expense, all insurance coverages and medical and health benefits in respect of the Executive that shall have been in effect with respect to him prior to the occurrence of the event entitling the Executive to terminate this Agreement. 11. CONSULTING SERVICES. Unless the Employment Term shall theretofore have been terminated for cause pursuant to Section 9, or on account of the death of the Executive, during the period (i) beginning on the date of termination of the Employment Term (or, if the Employment Term shall have been terminated pursuant to Section 10.2 or 10.3, on the date the Employment Term would have ended (as extended, if theretofore extended) if it had not been terminated pursuant to said Section 10.2 or 10.3), and (ii) ending May 31, 2007 (the "Consulting Term"), the Executive shall render to Chris-Craft such consultation and advice as the Board of Directors or the Chief Executive Officer of Chris-Craft may request, subject to the Executive's reasonable convenience and other business activities; PROVIDED, HOWEVER, that the Executive shall not be required to devote more than 20 hours in any month to such services, which shall be performed at a time and place mutually convenient to both parties. For his consulting 37 services, the Executive shall receive, as a consulting fee, compensation at the rate of $250,000 per annum, payable in equal monthly installments; Chris-Craft shall also provide the Executive with an office and a secretary, as well as the use of such other facilities and amenities (including, as examples, any airplane or automotive transportation utilized by Chris-Craft) as Chris-Craft shall from time to time make available to its most senior officers. The consulting fee shall be adjusted upward, as of the beginning of the Consulting Term and as of each successive January 1 to the end of the Consulting Term, in proportion to any increase in the Consumer Price Index, as defined in Section 4.4, from the December 1993 level (as of the beginning of the Consulting Term) and from the December level of the prior year as of each successive January 1. Each such adjustment shall be made retroactively when the Consumer Price Index for the month next preceding the date of such adjustment becomes available. In addition, Executive shall be entitled to participate in each insurance plan or medical or health plan generally available to Chris-Craft senior executives. In the event that the Executive shall be discharged by Chris-Craft during the Consulting Term other than for cause (as defined in Section 9), he shall nevertheless be entitled to receive his full consulting fee for the remainder of the Consulting Term. If the Executive shall die during the Consulting Term, his estate shall be entitled to receive the 38 full consulting fee payable hereunder until the earlier to occur of (a) the first anniversary of the date of his death or (b) the end of the Consulting Term. If, during the Consulting Term, the Executive shall be disabled from performing his consulting services, and such disability shall continue for a period of six consecutive months or for an aggregate of six months within any period of 12 consecutive months, or if such disability shall exist at the start of the Consulting Term and shall be a continuation of a disability for which the Employment Term shall have been terminated pursuant to Section 10.2, and the Board of Directors of Chris-Craft, by written notice to the Executive (before the Executive shall recover from such disability) shall terminate the Executive's consulting services, the Executive shall have no further obligation to perform consulting services for Chris-Craft and shall be entitled to receive compensation at the rate of one-half of the consulting fee payable hereunder until the end of the Consulting Term. 12. PROTECTION OF CONFIDENTIAL INFORMATION; NON-COMPETITION. 12.1 The Executive agrees that, in view of the fact that his work for Chris-Craft will bring him into close contact with many confidential affairs of Chris-Craft not readily available to the public, he will not at any time (whether during the Employment Term, the Consulting Term, or thereafter) disclose to any person, firm, corporation, 39 partnership or other entity whatsoever (except Chris-Craft or any of its subsidiaries), or any officer, director, stockholder, partner, associate, employee, agent or representative of any such firm, corporation or other entity, any confidential information or trade secrets of Chris-Craft which may come into his possession during the Employment Term or the Consulting Term (the "Confidential Materials"). The term "Confidential Materials" does not include information which (i) at the time of disclosure or thereafter is generally available to or known by the public otherwise than by reason of the Executive's disclosure thereof in violation of this Agreement, (ii) is, was or becomes available to the Executive on a nonconfidential basis from a source other than Chris-Craft, provided that the Executive has no reason to believe that such source is or was bound by a confidentiality agreement with Chris-Craft, (iii) has been made available, or is made available, on an unrestricted basis to a third party by Chris-Craft, by an individual authorized to do so, or (iv) is known by the Executive prior to its disclosure to the Executive. The Executive may use and disclose Confidential Materials to the extent necessary to assert any right or defend against any claim arising under this Agreement or pertaining to Confidential Materials or their use, to the extent necessary to comply with any applicable statute, constitution, treaty, rule, regulation, ordinance or order, whether of the United 40 States, any state thereof, or any other jurisdiction applicable to the Executive, or if the Executive receives a request to disclose all or any part of the information contained in the Confidential Materials under the terms of a subpoena, order, civil investigative demand or similar process issued by a court of competent jurisdiction or by a governmental body or agency, whether of the United States or any state thereof, or any other jurisdiction applicable to the Executive. 12.2 During the Employment Term, Executive shall devote his full-time business energies, and time to the performance of this Agreement as set forth in Section 2.1 hereof. Executive's services during the Consulting Term shall be rendered on the basis set forth in Section 11. Executive shall not, either during the Employment Term or the Consulting Term, render services of any kind to others, engage in any other business activity or acquire any interest of any type in any other person or entity that would prevent his fulfilling his obligations under this Agreement or that Executive knows is in competition with Chris-Craft or any Affiliate. For purposes of this Agreement, a person or entity shall be deemed to be in competition with Chris-Craft or any Affiliate if he or it engages in any line of business substantially the same as any line of business that Chris-Craft or any Affiliate engages in or has a definitive plan to engage in during the 41 term of this Agreement, except that, during the Consulting Term, the engagement in such activity in a geographical market in which Chris-Craft or any Affiliate has not engaged for more than two years or in which Executive knows that Chris-Craft or any Affiliate has no definitive plan to engage or the engagement in a line of business that Chris-Craft has a definitive plan to engage in but, of which Executive had no knowledge at any time prior to Executive's engagement in such business, shall not be deemed in competition with Chris-Craft or an Affiliate. For purposes of this Section 12 only, the term "Affiliate" shall not include any entity that would constitute an Affiliate solely because it is under common control with Chris-Craft. 12.3 Notwithstanding anything to the contrary stated in this Agreement, Executive may acquire and/or retain, solely as an investment, and take customary actions to maintain and preserve Executive's ownership of: (a) securities of any corporation that are registered under Section 12(b) or 12(g) of the Exchange Act and that are publicly traded, as long as Executive is not part of any control group of such corporation and such securities, do not, or if they are convertible securities, if converted, together with all other securities of such corporation owned by the executive, would not, constitute more than one percent (1%) of the outstanding voting power of that corporation; 42 (b) any securities of a partnership, trust, corporation (other than a corporation that has securities covered by the preceding clause (a)) or other person so long as Executive remains a passive investor in that entity and does not become part of any control group thereof and so long as such entity is not, directly or indirectly, in competition with Chris-Craft or any Affiliate; and (c) securities of Chris-Craft or any Affiliate. 12.4 The parties hereto acknowledge that Executive's performance and services hereunder are of a special, unique, unusual, extraordinary and intellectual character, which cannot be reasonably or adequately compensated in an action at law for damages, and that a breach by Executive of the terms hereof will cause Chris-Craft irreparable injury. Executive agrees that Chris-Craft is entitled to injunctive and other equitable relief to prevent a breach or threatened breach of this Section 12, which shall be in addition to any other rights or remedies to which Chris-Craft may be entitled. 12.5 If any provisions of this Section 12 as applied to any circumstance shall be adjudged by a court to be invalid or unenforceable, the same shall in no way affect any other provision of this Section 12, the application of such provision in any other circumstances, or the validity 43 or enforceability of this Section 12. Chris-Craft and the Executive intend this Section 12 to be enforced as written. However, if any provision, or any part thereof, is held to be unenforceable because of the duration of such provision or the area covered thereby, or otherwise, Chris-Craft and the Executive agree that the court making such determination shall have the power to reduce the duration and/or area of such provision, and/or to delete specific words or phrases ("blue-penciling"), and in its reduced or blue-penciled form such provision shall then be enforceable and shall be enforced. 12.6 Chris-Craft and the Executive intend to, and do hereby, confer jurisdiction to enforce the covenants contained in this Section 12 upon the courts of any state of the United States and any other governmental jurisdiction within the geographical scope of such covenants. If the courts of any one or more of such states or jurisdictions shall hold such covenants wholly unenforceable by reason of the breadth of such scope or otherwise, it is the intention of Chris-Craft and the Executive that such determination shall not bar or in any way affect Chris-Craft's right to the relief provided above in the courts of any other state or jurisdiction within the geographical scope of such covenants, as to breaches of such covenants in such other respective states or jurisdictions, the above covenants as 44 they relate to each state or jurisdiction being, for this purpose, severable into diverse and independent covenants. 13. NOTICES. All notices, requests, consents and other communications, required or permitted to be given hereunder, shall be in writing and shall be deemed to have been duly given (a) if delivered personally, when delivered; (b) if delivered by overnight carrier, on the first business day following such delivery; (c) if delivered by registered or certified mail, return receipt requested, on the third business day after having been mailed. In any case, each such notice, request, or consent or other communication shall be addressed as follows or to such other address as either party shall designate by notice in writing to the other in accordance herewith 13.1 If to Chris-Craft: Chris-Craft Industries, Inc. 767 Fifth Avenue New York, New York 10153 Attention: Board of Directors with a copy to: Harold I. Kahen, Esq. Loeb and Loeb 345 Park Avenue New York, New York 10154 13.2 If to the Executive to him at his address set forth on the personnel records of Chris-Craft. 45 with a copy to: Kenneth Doran, Esq. Gibson, Dunn & Crutcher 2029 Century Park East Los Angeles, California 90067 14. GENERAL. 14.1 This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely in New York. 14.2 The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. 14.3 This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter hereof, and supersedes all prior agreements, arrangements and understandings, written or oral, between the parties. 14.4 This Agreement and the benefits hereunder are personal to Chris-Craft and are not assignable or transferable, nor may the services to be performed hereunder be assigned by Chris-Craft to any person, firm or corporation; PROVIDED, HOWEVER, that this Agreement and the benefits hereunder may be assigned by Chris-Craft to any corporation acquiring all or substantially all of the assets of Chris-Craft or to any corporation into which Chris-Craft may be merged or consolidated, and this Agreement and the 46 benefits hereunder will automatically be deemed assigned to any such corporation, subject, however, to the Executive's right to terminate the Employment Term to the extent provided in Section 10.3. In the event of any assignment of this Agreement to any corporation acquiring all or substantially all of the assets of Chris-Craft or to any other corporation into which Chris-Craft may be merged or consolidated, the responsibilities and duties assigned to the Executive by such successor corporation shall be the responsibilities and duties of, and compatible with the status of, a senior executive officer of such successor corporation. Chris-Craft may delegate any of its obligations hereunder to any subsidiary of Chris-Craft, provided that such delegation shall not relieve Chris-Craft of any of its obligations hereunder. 14.5 Whenever this Agreement provides for any payment to the Executive's estate, such payment may be made instead to such beneficiary or beneficiaries as the Executive may have designated by written notice to Chris-Craft. The Executive shall have the right to revoke any such designation and to redesignate a beneficiary or beneficiaries by written notice to Chris-Craft to such effect. 14.6 This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived, only by a written instrument 47 executed by both of the parties hereto, or in the case of a waiver, by the party waiving compliance. The failure of either party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by either party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 14.7 In case of any dispute or disagreement arising out of, or in connection with, this Agreement, until the final determination of such dispute or disagreement Chris-Craft shall continue to pay to the Executive all of the compensation provided in this Agreement, and the Executive shall be entitled to continue to receive all of the other benefits provided herein. If any such dispute or disagreement shall result in legal action between Chris-Craft and the Executive, the Executive shall be entitled to recover from Chris-Craft any actual expenses for attorney's fees and disbursements incurred by him in connection with the Executive's good faith maintenance or defense of such action, on an after-tax basis. During the pendency of any such action, Chris-Craft shall pay all actual attorney's fees and expenses incurred by the Executive in connection 48 therewith upon receipt of an undertaking by the Executive to repay such amounts as shall be found in such action as having been incurred in connection with the Executive's maintenance or defense of such action other than in good faith. Chris-Craft shall pay all reasonable attorneys' fees and expenses incurred by the Executive in connection with the negotiation of this Agreement. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written. CHRIS-CRAFT INDUSTRIES, INC. /s/ EVAN C THOMPSON By /s/ HERBERT I. SIEGEL -------------------- --------------------- Evan C Thompson Chairman 49 TABLE OF CONTENTS TO EMPLOYMENT AGREEMENT SECTION PAGE 1. EMPLOYMENT; TERM............................................. 1 2. DUTIES AND AUTHORITY......................................... 3 3. LOCATION..................................................... 4 4. CASH COMPENSATION............................................ 5 5. EXPENSES..................................................... 16 6. ADDITIONAL BENEFITS.......................................... 16 7. CERTAIN ADDITIONAL PAYMENTS BY CHRIS-CRAFT................... 18 8. CHANGE IN CONTROL; EXTENSION OF TERM......................... 25 9. TERMINATION OF AGREEMENT FOR CAUSE........................... 30 10. TERMINATION OTHER THAN FOR CAUSE............................. 31 11. CONSULTING SERVICES.......................................... 37 12. PROTECTION OF CONFIDENTIAL INFORMATION; NON-COMPETITION...... 39 13. NOTICES...................................................... 44 14. GENERAL...................................................... 45 50 EX-99.2 3 EXHIBIT 99.2 EMPLOYMENT AGREEMENT AGREEMENT made as of January 1, 1994 between CHRIS-CRAFT INDUSTRIES, INC., a Delaware corporation ("Chris-Craft"), and HERBERT J. SIEGEL (the "Executive"). This Agreement supersedes the Agreement made as of September 1, 1983 between Chris-Craft and the Executive. The Executive is now, and for many years has been, Chairman of the Board, President and Chief Executive Officer of Chris-Craft. Chris-Craft wishes to secure the continued services of the Executive as its Chief Executive Officer for an additional extended period. In addition, because of the position the Executive holds with Chris-Craft and the position that he will hold during the term of his full-time employment under this Agreement, Chris-Craft wishes to secure the further services of the Executive as a consultant to Chris-Craft, and wishes to insure that the Executive will refrain from competing with Chris-Craft, after the termination of his full time employment. In consideration of the covenants and agreements herein contained, the parties agree as follows: 1. EMPLOYMENT; TERM 1.1 Chris-Craft shall continue to employ the Executive, and the Executive shall continue to serve, as Chief Executive Officer of Chris-Craft during the Employment Term (as defined in Section 1.2). 1.2 The term of the Executive's employment under Section 1.1 of this Agreement (the "Employment Term") shall commence on January 1, 1994 and end on December 31, 1998, unless extended as provided in this Section 1.2 or Section 8 or sooner terminated pursuant to the provisions of Section 9 or Section 10. On each of January 1, 1995 and January 1, 1996, the Employment Term shall be automatically extended for one additional year (so that, on each such January 1, the Employment Term shall have five years to run) without further action by the parties, unless Chris-Craft shall have served written notice upon the Executive prior to October 1, 1994, or prior to October 1, 1995, as the case may be, that such extension shall not take place. If a notice that an extension shall not take place is served, the Employment Term shall not, thereafter, be extended. 2. DUTIES AND AUTHORITY. 2.1 During the Employment Term, the Executive shall devote his full business time and energies to the business and affairs of Chris-Craft and shall not accept other employment or permit such personal business interests as he may have to interfere with the performance of his duties hereunder. The Executive agrees, during the Employment Term, to use his best efforts, skill and abilities to promote Chris-Craft's interests; to serve as a 2 director and officer of Chris-Craft and any of its domestic subsidiary corporations if elected by the Board of Directors or stockholders of Chris-Craft or any such subsidiary corporation; and to perform such duties (consistent with his status set forth below in this Section 2) as may be assigned to him by the Board of Directors of Chris-Craft. 2.2 Subject only to the direction and control of Chris-Craft's Board of Directors (which direction and control shall be such as is customarily exercised over a chief executive officer), the Executive shall perform all services and duties necessary or appropriate for the management of Chris-Craft's business and that of its subsidiaries. 2.3 Throughout the Employment Term, the Executive shall be elected to, and shall continue in, the office denominated that of chief executive officer of Chris-Craft in the by-laws or other constitutional instruments of Chris-Craft (at the date hereof, the Office of Chairman of the Board is so denominated), and shall continue to perform on behalf of Chris-Craft substantially the same functions, and have substantially the same authority, duties and responsibilities, as on the date hereof, and Chris-Craft shall not confer on any other officer or employee authority, responsibility or power superior or equal to the authority, responsibility or power vested in the Executive hereunder. 3 3. LOCATION. During the Employment Term, the Executive's services under this Agreement shall be performed principally in New York, New York, or elsewhere in the New York City Metropolitan area. The parties, however, acknowledge and agree that the nature of the Executive's duties hereunder shall require reasonable domestic and international travel from time to time. 4. CASH COMPENSATION. 4.1 BASE SALARY. During the Employment Term, Chris-Craft shall pay to the Executive, in monthly or more frequent installments in accordance with Chris-Craft's regular payroll practices for senior executives, a base salary of not less than $950,000 per annum; provided, however, that such minimum base salary shall be adjusted upward, as of January 1, 1995, and as of each successive January 1 to the end of the Employment Term, in proportion to any increase in the Consumer Price Index, as defined in Section 4.5, between the December levels of the two immediately preceding years ("COLA Adjustment"). Each such adjustment shall be made retroactively when the Consumer Price Index for the December next preceding the date of such adjustment becomes available. It is understood that Chris-Craft may, at any time, in the discretion of its Board of Directors increase, but not decrease, the Executive's base salary. In the event that the Executive's base salary is 4 adjusted by the Board pursuant to the last preceding sentence, the new base salary shall be adjusted upward, as of each following January 1, in proportion to any increase in the Consumer Price Index from the effective date of the last previous adjustment by the Board. 4.2 SECTION 162(M) LIMIT. 4.2.1 In no event shall the sum of the Executive's base salary and other Remuneration (as defined in Section 4.2.2) for any calendar year exceed the Section 162(m) Limit (as defined in Section 4.2.2). Chris-Craft shall, to the extent foreseeable, reduce each regular cash compensation payment in any year by the proportion that (a) the excess of (i) the sum of all such regular cash compensation payments for such year over (ii) the Section 162(m) Limit bears to (b) the sum of all such regular cash compensation payments for such year and shall reduce or omit other cash compensation payments (other than Excluded Remuneration) to the extent same would cause Remuneration in such year to exceed the Section 162(m) Limit, provided that in no event will cash compensation payable to the Executive during any calendar year be reduced below $750,000 (the "Minimum Annual Payment"). 4.2.2 For purposes of this Agreement, "Remuneration" shall mean "applicable employee remuneration" as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), or any 5 successor or similar provision, which is paid or incurred with respect to the Executive by Chris-Craft or any Affiliate of Chris-Craft, other than Excluded Remuneration; "Excluded Remuneration" shall mean any Gross-Up Payment or other payment required under Section 7 or any forgiveness of indebtedness under Section 7, or any payment required under Sections 10.1, 10.2 and 10.4; "Affiliate" shall mean any corporation which is a member of the same "controlled group" as Chris-Craft within the meaning of Section 414(b) of the Code, except that for this purpose Section 1563 of the Code shall be applied by substituting "50 percent" for "80 percent"; and "Section 162(m) Limit" shall mean $1,000,000, subject to adjustment as provided in this Section 4.2.2. If one or more amendments to Section 162(m) of the Code or any successor or similar provision shall change the amount of Remuneration for a year that is deductible by Chris-Craft or any Affiliate of Chris-Craft for Federal income tax purposes, a corresponding change shall be made to the Section 162(m) Limit for purposes of this Agreement for all years to which any such amendment shall be applicable. Unless and until there is a Change in Law (defined below) with respect to a taxable year of Chris-Craft, Chris-Craft and the Executive acknowledge and agree that Remuneration shall not include any amounts payable to the Executive pursuant to Section 4.4 hereof, and any amounts includable in the Executive's taxable income with respect to amounts 6 described in Section 6.1(d). For purposes of the preceding sentence, "Change in Law" shall mean an amendment to Section 162(m), or the issuance or revision of one or more judicial decisions or administrative rules, regulations or other pronouncements, following the date hereof which, in the written legal opinion of counsel to Chris-Craft, will more likely than not result in the inclusion of the amount in question in "applicable employee remuneration" as defined in Section 162(m) of the Code. 4.2.3 The provisions of this Section 4.2 shall be interpreted in a manner consistent with the intention of the parties that a deduction not be disallowed to Chris-Craft or any Affiliate for Federal income tax purposes with respect to any Remuneration payable to the Executive under this Agreement by reason of Code Section 162(m) (other than subparagraph (4)(F) thereof) or any successor or similar provision (except for Excluded Remuneration) and the Minimum Annual Payment. 4.3 DEFERRED COMPENSATION. During the Employment Term, Chris-Craft shall credit to the Executive's Account (as defined in Section 4.3.1) the amount specified in Section 4.3.2. 4.3.1 Chris-Craft shall maintain, on its books, a special account with respect to the Executive (the "Account"), in accordance with the terms of this Agreement, 7 until Executive shall have been paid all amounts credited thereto. 4.3.2 During each year of the Employment Term, Chris-Craft shall credit to the Account, as of the end of each month, (a) an amount equal to the sum of (i) $45,833.33, subject to COLA Adjustment plus (ii) the amounts by which all cash compensation payments or distributions during such month shall have been reduced or omitted pursuant to the last sentence of Section 4.2.1; and (b) interest on the Account balance as of the end of the preceding month, computed at a rate to be adjusted as of the last day of each calendar quarter to equal the yield, as of the last business day of such quarter, as reported in The Wall Street Journal, on U.S. Treasury Notes maturing in the month that is five years after the last month of such quarter (the "Interest Rate"). Amounts credited to the Account, excluding interest, shall be deemed compensation for the year credited, for purposes of determining benefits respecting each of Chris-Craft's qualified employee benefit plans under Chris-Craft's Benefit Equalization Plan (the "BEP"). If no yield for such notes is so published as of the last day of a particular quarter, there shall be substituted the average of the yields so published for the months next preceding and following. If The Wall Street Journal is not published on the last day of a particular quarter, there shall be substituted the appropriate yield 8 reported on the last previous day on which The Wall Street Journal was published. Following the Employment Term, Chris-Craft shall credit to the Account, as of the last day of each month (based each month on a 30-day month and a 360-day year), interest on the Account Balance as of such date, computed at the Interest Rate. 4.3.3 On the January 15 first-occurring following the year in which expiration or termination of the Employment Term shall have occurred, Chris-Craft shall pay to the Executive an amount equal to one-fifth of the Account balance as of such January 15 (including interest accrued in accordance with Section 4.3.2 through such January 15) (the "First Payment"), and the Account balance shall be reduced by the amount of such First Payment. On each succeeding January 15, until Chris-Craft shall have made five payments (including the First Payment) pursuant to this Section 4.3.3, Chris-Craft shall pay to the Executive a sum equal to the amount of the First Payment, plus interest credited to the Account through the date of such payment, from the first day after the date of the immediately preceding payment, and the Account balance shall be reduced by the amount of such sum. 4.4 BONUS. 4.4.1 In addition to his base salary and the deferred amounts referred to in Section 4.3.2 above, the Executive shall be entitled to receive, with respect to each 9 fiscal year of Chris-Craft, or portion thereof, during the Employment Term, a bonus equal to 1 1/2% of the amount by which Chris-Craft's "Pre-tax Income" (as defined in Section 4.4.2) for the fiscal year in question exceeds $36,000,000. The bonus shall be paid to Executive as soon as practicable, but not later than March 31 of the year following the end of each such fiscal year. The amount of the bonus payable with respect to any fiscal year that includes but does not end on the last day of the Employment Term shall be determined by multiplying the bonus which would have been payable with respect to the whole of such fiscal year (if the whole of such fiscal year were within the Employment Term) by a fraction, the numerator of which is the number of days of such year included in the Employment Term and the denominator of which is 365. 4.4.2 As used in this Section 4.4, the term "Pre-tax Income" shall mean Chris-Craft's "Income before provision for income taxes and minority interest," as such amount is reported on Chris-Craft's audited consolidated statements of income included in its Annual Report to Shareholders; provided that, in determining such "Pre-tax Income," for purposes of this Section 4.4.2, there shall be excluded (i) any loss, (determined in conformity with generally accepted accounting principles) of any business commenced or newly acquired by Chris-Craft during (or within the six months next preceding commencement of) 10 the Employment Term, if such business would at any time during such Term constitute a Development Stage Company under Securities and Exchange Commission Regulation S-X assuming such business were organized as a separate entity, e.g., the broadcast television network currently under development; but only to the extent that the loss of such business, aggregated with the losses of all other such businesses (if any) so commenced or acquired, exceed $10,000,000 in any fiscal year and provided further that such losses incurred by any business shall not be so excluded for any fiscal year beginning after the fourth anniversary of the date of commencement or acquisition of such business by Chris-Craft; and (ii) any goodwill amortization (similarly determined) arising out of a business acquisition during the Employment Term. As used in the next preceding sentence, the term "Chris-Craft" includes any entity in which Chris-Craft has a substantial interest, the financial results of which are reflected in Chris-Craft's consolidated statements of income. 4.5 CONSUMER PRICE INDEX. The words "Consumer Price Index," as used in this Agreement shall mean the Consumer Price Index for All Urban Consumers, U.S. City Average, All Items (1982-84=100), as reported by the Bureau of Labor Statistics of the U.S. Department of Labor. In the event that this Consumer Price Index shall be superseded or shall be published by a different agency, then the 11 superseding index shall be substituted for this Consumer Price Index in such a manner as to implement the intent of this Agreement that the Executive's base salary and Deferred Compensation shall be adjusted annually, beginning as of January 1, 1995, so that the purchasing power thereof shall be maintained at a level at least equivalent to the purchasing power thereof at January 1, 1994. 5. EXPENSES. In addition to the compensation provided in Section 4 and in Section 11, Chris-Craft will pay or reimburse the Executive for all reasonable expenses actually incurred or paid by him during the Employment Term or the Consulting Term (as defined in Section 11) in the performance of his services hereunder upon presentation of expense statements, vouchers, or such other supporting information as Chris-Craft may customarily require of its senior executives. 6. ADDITIONAL BENEFITS. 6.1 During the Employment Term: (a) The Executive will be entitled to reasonable annual vacation periods, not less than an aggregate of nine weeks in each calendar year, with full pay and allowances. (b) The Executive will also be eligible for sick leave in accordance with Chris-Craft's customary practice for senior executives. 12 (c) The Executive will be entitled to participate in any insurance, pension, profit-sharing, stock option, stock purchase or other benefit plan of Chris-Craft now existing or hereafter adopted for the benefit of the employees generally or of the executives of Chris-Craft; provided that the Executive shall begin receiving payments under the BEP, at the latest, upon attaining age 70, regardless whether the Executive shall continue to be a Chris-Craft employee at age 70. (d) Upon approval of a new stock option plan by Chris-Craft stockholders at their 1994 annual meeting, Chris-Craft shall grant the Executive a 10-year option covering 300,000 shares that shall be exercisable during the Employment Term and Consulting Term. (e) Chris-Craft shall match the Executive's contributions (including any contribution by any trust of which the Executive is the grantor) to recognized charities, during each year of the Employment Term and the Consulting Term, in an amount equal to the sum of (i) $200,000, plus (ii) the amount by which (x) the product obtained by multiplying $200,000 by the number of previous years in which this Agreement shall have been in effect shall exceed (y) the total amount of all matching contributions made by Chris-Craft pursuant to this sentence in such previous years. Matching contributions made by Chris-Craft pursuant hereto shall be in addition to any 13 contributions made to match Executive's contributions under any other charitable gift matching program generally applicable with respect to contributions made by employees or directors of Chris-Craft or any of its subsidiaries. (f) The Executive shall be entitled to such additional benefits as may be granted to him from time to time by the Board of Directors of Chris-Craft. 6.2 As an additional inducement to the Executive to enter this Employment Agreement, Chris-Craft shall enter into separate written split-dollar insurance agreements (the "Split Dollar Agreements") with Executive's sons, John C. Siegel and William D. Siegel, pursuant to which, under each agreement, Chris-Craft shall procure, and pay the full amount of each annual premium for 15 years on, split-dollar, last-to-die policies on the lives of Executive and his wife having face amounts totaling $15,000,000, such annual premiums to be in amounts set forth on Schedule A for all policies procured pursuant to this Section 6.2 (I.E., pursuant to both Split Dollar Agreements). John C. Siegel and William D. Siegel will be the owners of the policies procured pursuant to their respective agreements and shall have the full right to designate and change, from time-to-time, the beneficiaries thereunder. 6.3 No payment or benefit made or provided under this Agreement shall be deemed to constitute payment 14 to the Executive, his legal representatives or beneficiaries in lieu of, or in reduction of, any benefit or payment under an insurance, pension, profit-sharing or other benefit plan, and no payment under any such plan shall reduce any payment or benefit due under this Agreement. 7. CERTAIN ADDITIONAL PAYMENTS BY CHRIS-CRAFT 7.1 Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by Chris-Craft to or for the Executive's benefit (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (including pursuant to any of Chris-Craft's benefit plans)), determined without regard to any additional payment required under this Section 7 (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code (and any successor provision and any similar provision of state or local income tax law) (collectively, "Section 4999"), or any interest or penalty is incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest or penalty, hereinafter collectively to be referred to as the "Excise Tax"), then the Executive shall be entitled to receive or have paid to the Internal Revenue Service or other appropriate authority (and any relevant state or local authority) ("IRS") on his behalf an additional payment (a "Gross-Up Payment") in an amount equal to the sum of (a) the 15 Excise Tax plus (b) all taxes, penalties and interest (including any excise tax imposed by Section 4999 of the Code) paid or payable by Executive on account of the operation of this Section 7, such that, after payment by Executive of all such other taxes (including any interest or penalty imposed with respect to such taxes) and any Excise Tax imposed upon the Gross-Up Payment, Executive shall be in the same position as he would have been had no Excise Tax been imposed upon the Payments. 7.1.1 Subject to the provisions of Section 7.3, all determinations required to be made under this Section 7, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment, and the assumptions to be utilized in arriving at such determination, shall be made by Price Waterhouse or any other nationally recognized accounting firm (the "Accounting Firm") that shall be Chris-Craft's outside auditors at the time of such determination, which Accounting Firm shall provide detailed supporting calculations both to the Executive and Chris-Craft within 15 business days of the receipt of notice from Chris-Craft or the Executive that there has been a Payment that the person giving notice believes may be subject to the Excise Tax, or such earlier time as shall be requested by Chris-Craft. All fees and expenses of the Accounting Firm shall be borne solely by Chris-Craft. Any Gross-Up Payment, as determined pursuant 16 to this Section 7, shall be paid by Chris-Craft to the IRS on the Executive's behalf within five business days after the receipt of the Accounting Firm's determination. If the Accounting Firm shall determine that no Excise Tax is payable by the Executive, it shall furnish to the Executive written advice that failure to report the Excise Tax on the Executive's applicable federal income tax return would not be reasonably likely to result in the imposition of a penalty for fraud, negligence, or disregard of rules or regulations. Any determination by the Accounting Firm shall be binding upon Chris-Craft and the Executive in determining whether a Gross-Up Payment is required or the amount thereof (subject to Section 7.1.2 and 7.2), in the absence of material mathematical or legal error. 7.1.2 As a result of uncertainty in the application of Section 4999 of the Code that may exist at the time of the initial determination by the Accounting Firm, it may be possible that in making the calculations required to be made hereunder, the Accounting Firm shall determine that a Gross-Up Payment need not be made that properly should be made ("Underpayment") or that a Gross-Up Payment not properly needed to be made should be made ("Overpayment"). In the event that Chris-Craft shall exhaust or fail to adequately pursue its remedies pursuant to Section 7.2, and the Executive thereafter shall be required to make a payment of any Excise Tax, the Accounting 17 Firm shall determine the amount of the Underpayment that occurred, and Chris-Craft shall promptly pay the amount thereof to the IRS on the Executive's behalf. In the event that the Accounting Firm shall determine that an Overpayment was made, any such Overpayment shall be treated for all purposes as a loan to the Executive with interest at the applicable Federal rate provided for in Section 1274(d) of the Code; PROVIDED, HOWEVER, that the amount to be repaid by the Executive to Chris-Craft shall be reduced to the extent that any portion of the Overpayment to be repaid will not be offset by a corresponding reduction in tax by reason of such repayment of the Overpayment. 7.2 Executive shall give Chris-Craft written notice of any claim by the IRS that, if successful, would require the payment by Chris-Craft of a Gross-Up Payment. The Executive shall give such notice, within ten business days after the Executive shall be informed in writing of such claim, provided that failure by the Executive to provide such notice shall not result in a waiver or forfeiture of any rights of Executive under this Section 7 except to the extent of actual damages suffered by Chris-Craft as a result of such failure; provided further that if such failure prevents the contest of such claim no payment shall be required with respect to such claim by Chris-Craft under this Section 7. The Executive shall not pay such claim prior to the expiration of 15 days following the date 18 on which the Executive gives such notice to Chris-Craft. If Chris-Craft shall notify the Executive in writing prior to the expiration of such 15-day period that Chris-Craft desires to contest such claim, the Executive shall: (a) give Chris-Craft any information reasonably requested by Chris-Craft relating to such claim, (b) take such action in connection with contesting such claim as Chris-Craft shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by Chris-Craft, (c) cooperate in good faith with Chris-Craft's contest of such claim, and (d) permit Chris-Craft to control any proceedings to the extent relating to such claim; PROVIDED, HOWEVER, that Chris-Craft shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed in relation to such claim, including all costs and expenses. Without limiting the foregoing provisions of this Section 7.2, and to the extent its actions do not 19 unreasonably interfere or prejudice the Executive's disputes with the IRS as to other issues, Chris-Craft shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the IRS in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as Chris-Craft shall determine; PROVIDED, HOWEVER, that if Chris-Craft shall direct the Executive to pay such claim and sue for a refund, Chris-Craft shall advance the amount of such the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance, and further provided that any extension of the statute of limitations relating to taxes for the Executive's taxable year with respect to which such contested amount shall to be due shall be limited solely to such claim. Furthermore, Chris-Craft's control of the contest shall be limited to issues with respect to which a Gross-Up Payment 20 would be payable hereunder, and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the IRS to the extent that such settlement or contest would not be reasonably likely to have a material adverse effect on the issues with respect to the Gross-Up Payment. 7.3 If, after the Executive's receipt of an amount advanced by Chris-Craft pursuant to Section 7.2, the Executive shall become entitled to receive any refund with respect to such claim, the Executive shall promptly pay to Chris-Craft the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the Executive's receipt of an amount advanced by Chris-Craft pursuant to Section 7.2, a determination shall be made that the Executive shall not be entitled to any refund with respect to such claim, and Chris-Craft shall not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after Chris-Craft shall receive notice of such determination, then such advance shall be forgiven and shall not be required to be repaid, and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 7.4 This Section 7 shall remain in full force and effect following the termination of the Employment Term for any reason until the expiration of the statute of 21 limitations on the assessment of taxes applicable to the Executive for all periods in which the Executive may incur a liability for taxes (including Excise Taxes), interest or penalties arising out of the operation of this Agreement. 8. CHANGE IN CONTROL; EXTENSION OF TERM. 8.1 Chris-Craft, on behalf of itself and its stockholders, wishes to assure itself of continuity of management in the event of any Change in Control (as defined in Section 8.2 of this Agreement). Notwithstanding anything to the contrary in this Agreement, if a Change in Control (as defined in Section 8.2 hereof) shall occur during the Employment Term, and the Employment Term shall not have previously terminated for any reason (other than in connection with or as a result of a Change in Control), the Employment Term shall automatically be extended to the third anniversary of such Change in Control, if, pursuant to Section 1.2, the Employment Term otherwise might have terminated before such third anniversary. 8.2 For the purposes of this Agreement, a "Change in Control" shall mean: 8.2.1 The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act ("Rule 13d-3")) of 20% or more of the combined 22 voting power of the then outstanding voting securities of Chris-Craft entitled to vote generally in the election of directors (the "Outstanding Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change in Control: (v) any acquisition of a security (i) directly from Chris-Craft that is authorized by the Incumbent Board, as defined in Section 8.2.2, or (ii) of a class constituting a class of Outstanding Voting Securities on the date hereof that results from conversion of a security of any such class; (w) any acquisition by Chris-Craft; (x) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Chris-Craft or any corporation controlled by Chris-Craft; (y) any change in ownership of Outstanding Voting Securities by any Person identified or referred to in "Table I, Beneficial Ownership of Chris-Craft Stock," in Chris-Craft's Proxy Statement for its 1993 Annual Meeting of Stockholders, so long as (i) any such Person who is an officer or director of Chris-Craft remains such, or (ii) any Person that, with respect to a change in such Person's ownership of Outstanding Voting Securities, as of the date hereof, would have an obligation to make a filing under Rule 13d-3, would not be required, in connection with such change in ownership, to change from filing on Schedule 13G to Schedule 13D or to change any response to Schedule 13D, Item 4, other than paragraph (a) thereof or paragraph (j), as it might 23 relate to paragraph (a); or (z) any acquisition by any corporation pursuant to a reorganization, merger or consolidation, if, following such reorganization, merger or consolidation, the conditions described in clauses (a), (b), and (c) of Section 8.2.3 are satisfied; or 8.2.2 Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the stockholders of Chris-Craft, shall be approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or 8.2.3 Approval by the stockholders of Chris-Craft of a reorganization, merger or consolidation, in each case, unless, following such reorganization, merger or consolidation: (a) more than 60% of the combined voting power of the then outstanding voting securities of the 24 corporation resulting from such reorganization, merger, or consolidation, which may be Chris-Craft (the "Resulting Corporation"), entitled to vote generally in the election of directors (the "Resulting Corporation Voting Securities") shall then be owned beneficially, directly or indirectly, by all or substantially all of the Persons who were the beneficial owners of Outstanding Voting Securities immediately prior to such reorganization, merger, or consolidation, in substantially the same proportions as their respective ownerships of Outstanding Voting Securities immediately prior to such reorganization, merger or consolidation; (b) no Person (excluding Chris-Craft, any employee benefit plan (or related trust) of Chris-Craft, the Resulting Corporation, and any Person beneficially owning, immediately prior to such reorganization, merger or consolidation, directly or indirectly, 20% or more of the combined voting power of Outstanding Voting Securities) shall own beneficially, directly or indirectly, 20% or more of the combined voting power of the Resulting Corporation Voting Securities; and (c) at least a majority of the members of the board of directors of the Corporation shall have been members of the Incumbent Board at the time of the execution of the initial agreement providing for such reorganization, merger or consolidation; or 8.2.4 Approval by the stockholders of Chris-Craft of (a) a complete liquidation or dissolution of 25 Chris-Craft or (b) the sale or other disposition of all or substantially all of the assets of Chris-Craft, other than to a corporation (the "Buyer") with respect to which (i) following such sale or other disposition, more than 60% of the combined voting power of securities of Buyer entitled to vote generally in the election of directors ("Buyer Voting Securities"), shall be owned beneficially, directly or indirectly, by all or substantially all of the Persons who were the beneficial owners of the Outstanding Voting Securities immediately prior to such sale or other disposition, in substantially the same proportion as their respective ownerships of Outstanding Voting Securities, immediately prior to such sale or other disposition; (ii) no Person (excluding Chris-Craft and any employee benefit plan (or related trust) of Chris-Craft or Buyer and any Person that shall immediately prior to such sale or other disposition own beneficially, directly or indirectly, 20% or more of the combined voting power of Outstanding Voting Securities), shall own beneficially, directly or indirectly, 20% or more of the combined voting power of, Buyer Voting Securities; and (iii) at least a majority of the members of the board of directors of Buyer shall have been members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of Chris-Craft. 26 9. TERMINATION OF AGREEMENT FOR CAUSE. Chris-Craft may terminate this Agreement, and all of Chris-Craft's obligations hereunder except its obligation to pay to the Executive amounts accrued to the date of termination, "for cause" upon 30 days written notice. As used in this Agreement, the term "for cause" shall mean and be limited to the following events: (a) the Executive's conviction (which conviction, through lapse of time or otherwise, is not subject to appeal) in a court of law of a felony involving moral turpitude; (b) the Executive's material breach of any of the covenants set forth in Section 12; (c) the Executive's dishonesty in the course of fulfilling his duties hereunder; or (d) the Executive's continuing, repeated, wilful failure or refusal to perform his duties in accordance with the terms of Section 2; PROVIDED, HOWEVER, that this Agreement may not be terminated for cause under the immediately preceding clause (d), unless the Executive shall have first received written notice from the Board of Directors of Chris-Craft advising him of the specific acts or omissions alleged to constitute a failure or refusal to perform his duties, and such failure or refusal to perform his duties continues after the Executive shall have had a reasonable opportunity to correct the acts or omissions cited in such notice. In no event shall the alleged incompetence of the Executive in the 27 performance of his duties hereunder be deemed grounds for termination of this Agreement for cause. 10. TERMINATION OTHER THAN FOR CAUSE. 10.1 DEATH. If the Executive shall die during the Employment Term, this Agreement, and all of Chris-Craft's obligations hereunder, shall terminate, except (a) with regard to payments from the Account pursuant to Section 4.3.3 (which Account shall include Deferred compensation payable through the last day of the month in which his death occurred) and (b) that Chris-Craft shall pay to the Executive's estate, (i) within 30 days after his death, the base salary, and bonus with respect to the then current fiscal year, which would have been payable to the Executive under Section 4 had the Employment Term ended on the last day of the month in which his death occurred, and (ii) an annual amount (payable at the same times as salary is paid to other executive employees of Chris-Craft) equal to the Executive's "Average Annual Compensation" (as defined in Section 10.3) at the date of his death; such annual amount shall be payable for each of the three 12-month periods following the first day of the month following the month in which the Executive's death shall occur. 10.2 DISABILITY. If, during the Employment Term, the Executive shall become disabled (as defined in Chris-Craft's then existing disability policy) so that he shall be unable substantially to perform his services 28 hereunder, (a) for a period of six consecutive months or (b) for an aggregate of six months within any period of 12 consecutive months, then the Board of Directors of Chris-Craft may, at any time during the continuance of such disability, terminate the Employment Term on 30 days' prior written notice to the Executive. After such termination, the Executive shall have no further obligation to perform services for Chris-Craft pursuant to Section 2 but shall be entitled to receive from Chris-Craft, within 30 days after such termination, in lieu of the amounts which would otherwise be payable under Section 4, (i) the base salary, and bonus with respect to the then current fiscal year, which would have been payable to the Executive under Section 4, had the Employment Term ended on the last day of the month in which the Employment Term was terminated pursuant to this Section 10.2, and (ii) an amount (payable at the same times as salary is paid to the other executive employees of Chris-Craft) at an annual rate equal to one-half of the Executive's "Average Annual Compensation" (as defined in Section 10.3) at the date of the termination of the Employment Term, such amount to be payable for the period beginning on the first day of the month following the month in which the Employment Term shall have been terminated pursuant to this Section 10.2 and ending on the day on which the Employment Term would have ended (as extended, if theretofore extended) if not terminated 29 pursuant to this Section 10. The Executive shall have no obligation to accept any employment offered to him by others in order to minimize, or to be set off against, the amounts to which he is entitled pursuant to this Section 10.2. Chris-Craft shall not interpose any defense against payment of such amounts based on refusal of the Executive to seek or accept other employment. However, if the Executive shall obtain other employment, then amounts due to him pursuant to this Section 10.2 shall be reduced, PRO TANTO, by amounts actually received by him for services rendered in such other employment during the time amounts are payable pursuant to said Section 10.2. 10.3 AVERAGE ANNUAL COMPENSATION. As used in Sections 10.1 and 10.2, the term "Average Annual Compensation" shall mean the mean annual compensation received or receivable by the Executive pursuant to Section 4 (without regard to the effect of the provisions of Section 4.2) with respect to each of the three full fiscal years of Chris-Craft immediately preceding the date of the Executive's death (in the case of Section 10.1) or the date of the termination of the Employment Term (in the case of Section 10.2); provided, however, that if the Executive shall die, or the Employment Term shall be terminated due to his disability, prior to January 1, 1997, the Average Annual Compensation shall be the mean of (i) the amount received or receivable by the Executive, or that would have become 30 receivable by the Executive pursuant to Section 4 (including salary, Deferred Compensation and bonus and without regard to the effect of the provisions of Section 4.2) had he lived through December 31, 1994, and (ii) the mean amount received or receivable by the Executive pursuant to Section 4 (including salary, Deferred Compensation and bonus and without regard to the effect of the provisions of Section 4.2) for each full fiscal year of Chris-Craft, if any, beginning after December 31, 1994 and ending on the December 31 immediately preceding the date of the Executive's death or the date of the termination of the Employment Term due to his disability, as the case may be. 10.4 TERMINATION BY EXECUTIVE. 10.4.1 If, during the Employment Term, (a) the Executive shall not be elected (and continued) as a director and as chief executive officer of Chris-Craft, or (b) the Executive shall not be continuously afforded the authority, responsibilities and prerogatives contemplated in Section 2.2 and 2.3, or (c) Chris-Craft shall, without the consent of the Executive, be merged or consolidated with any other corporation, or (d) Chris-Craft shall, without the consent of the Executive, be dissolved, or (e) Chris-Craft shall, without the consent of the Executive, sell all or substantially all of its assets, or (f) the Executive shall be required to perform his principal services under this Agreement at a place other than that set forth in Section 3, 31 or (g) Chris-Craft shall fail to cure a material breach of this Agreement within 10 days after notice, then the Executive shall have the election (but not the obligation) to terminate the Employment Term on 60 days' prior written notice to Chris-Craft. Such right to terminate the Employment Term shall be the Executive's exclusive remedy in the event of the occurrence of any of the events described in this Section 10.4.1. For purposes of clause (b) of the preceding sentence, the Executive shall be deemed not to have been continuously afforded the authority, responsibilities and prerogatives contemplated in Sections 2.2 and 2.3 if there shall occur any reduction in the scope, level or nature of the Executive's employment hereunder, or any demotion, any phasing out or assignment to others, of the duties contemplated in Section 2. For purposes of this Section 10.4, any determination made by the Executive in good faith that any of the events described in clauses (a) through (g) of the first sentence of this Section 10.4.1 has occurred shall be conclusive. 10.4.2 If the Executive shall elect to terminate the Employment Term upon the occurrence of any event described in Section 10.4.1, or if Chris-Craft shall terminate this Agreement other than for cause or disability pursuant to Sections 9 and 10 hereof, then the Executive shall have no further obligation to perform services for Chris-Craft pursuant to Section 2 but he shall be entitled 32 to receive from Chris-Craft, 30 days after the date of termination of the Employment Term, for the period beginning on the date of such termination and running through the day on which the Employment Term would have ended (as extended, if theretofore extended) if not terminated pursuant to this Section 10, assuming no additional extensions of the Employment Term, and ending on the day on which the Consulting Term would have ended (the "Cutoff Date"), in lieu of the amounts that would otherwise be payable hereunder, a lump sum in cash of an amount equal to the aggregate of (a) compensation that would have been payable each year at the rate of the (i) base salary payable to the Executive pursuant to Section 4.1 and (ii) all amounts of Deferred Compensation payable to the Executive pursuant to Section 4.3 (each at the rate in effect on the date of the termination of the Employment Term (including any COLA Adjustment theretofore required to have been made)); (b) all consulting fees payable pursuant to Section 11 hereof subject to COLA Adjustment; and (c) an amount equal to the mean performance bonuses theretofore paid to or payable to the Executive pursuant to this Agreement, multiplied by the number of years remaining in the Employment Term at the date of termination (including the year in which the termination occurs). Notwithstanding the above, Deferred Compensation amounts, previously deferred and credited to the Account shall be paid in accordance with Section 4.3.3. In 33 addition, until the Cutoff Date, Chris-Craft shall maintain, at its expense, all insurance coverages and medical and health benefits in respect of the Executive that shall have been in effect with respect to him prior to the occurrence of the event entitling the Executive to terminate this Agreement. 11. CONSULTING SERVICES. Unless the Employment Term shall theretofore have been terminated for cause pursuant to Section 9, or on account of the death of the Executive, during the five-year period (the "Consulting Term") beginning on the date of termination of the Employment Term (or, if the Employment Term shall have been terminated pursuant to Section 10.2 or 10.4, on the date the Employment Term would have ended (as extended, if theretofore extended) if it had not been terminated pursuant to said Section 10.2 or 10.4), the Executive shall render to Chris-Craft such consultation and advice as the Board of Directors or the Chief Executive Officer of Chris-Craft may request, subject to the Executive's reasonable convenience and other business activities; PROVIDED, HOWEVER, that the Executive shall not be required to devote more than 20 hours in any month to such services, which shall be performed at a time and place mutually convenient to both parties. For his consulting services, the Executive shall receive, as a consulting fee, compensation at the rate of $500,000 per annum, payable in 34 equal monthly installments; Chris-Craft shall also provide the Executive with an office and a secretary, as well as the use of such other facilities and amenities (including, as examples, any airplane or automotive transportation utilized by Chris-Craft) as Chris-Craft shall from time to time make available to its most senior officers. Such facilities shall be furnished on a level at least equivalent to those made available to the Executive under his employment contract expiring December 31, 1993. The consulting fee shall be adjusted upward, as of the beginning of the Consulting Term and as of each successive January 1 to the end of the Consulting Term, in proportion to any increase in the Consumer Price Index, as defined in Section 4.4, from the December 1993 level (as of the beginning of the Consulting Term) and from the December level of the prior year as of each successive January 1. Each such adjustment shall be made retroactively when the Consumer Price Index for the month next preceding the date of such adjustment becomes available. In addition, Executive shall be entitled to participate in each insurance plan or medical or health plan generally available to Chris-Craft senior executives. In the event that the Executive shall be discharged by Chris-Craft during the Consulting Term other than for cause (as defined in Section 9), he shall nevertheless be entitled to receive his full consulting fee for the remainder of the Consulting Term. If the Executive shall die during the 35 Consulting Term, his estate shall be entitled to receive the full consulting fee payable hereunder until the earlier to occur of (a) the third anniversary of the date of his death or (b) the end of the Consulting Term. If, during the Consulting Term, the Executive shall be disabled from performing his consulting services, and such disability shall continue for a period of six consecutive months or for an aggregate of six months within any period of 12 consecutive months, or if such disability shall exist at the start of the Consulting Term and shall be a continuation of a disability for which the Employment Term shall have been terminated pursuant to Section 10.2, and the Board of Directors of Chris-Craft, by written notice to the Executive (before the Executive shall recover from such disability) shall terminate the Executive's consulting services, the Executive shall have no further obligation to perform consulting services for Chris-Craft and shall be entitled to receive compensation at the rate of one-half of the consulting fee payable hereunder until the end of the Consulting Term. 12. PROTECTION OF CONFIDENTIAL INFORMATION; NON-COMPETITION. 12.1 The Executive agrees that, in view of the fact that his work for Chris-Craft will bring him into close contact with many confidential affairs of Chris-Craft not readily available to the public, he will not at any time (whether during the Employment Term, the Consulting Term, or 36 thereafter) disclose to any person, firm, corporation, partnership or other entity whatsoever (except Chris-Craft or any of its subsidiaries), or any officer, director, stockholder, partner, associate, employee, agent or representative of any such firm, corporation or other entity, any confidential information or trade secrets of Chris-Craft which may come into his possession during the Employment Term or the Consulting Term. (the "Confidential Materials") the term "Confidential Materials" does not include information which at the time of disclosure or thereafter is generally available to or known by the public otherwise than by reason of the Executive's disclosure thereof in violation of this Agreement (ii) is, was or becomes available to the Executive on a nonconfidential basis from a source other than Chris-Craft, provided that the Executive has no reason to believe that such source is or was bound by a confidentiality agreement with Chris-Craft, (iii) has been made available, or is made available, on an unrestricted basis to a third party by Chris-Craft, by an individual authorized to do so, or (iv) is known by the Executive prior to its disclosure to the Executive. The Executive may use and disclose Confidential Materials to the extent necessary to assert any right or defend against any claim arising under this Agreement or pertaining to Confidential Materials or their use, to the extent necessary to comply with any applicable statute, constitution, treaty, 37 rule, regulation, ordinance or order, whether of the United States, any state thereof, or any other jurisdiction applicable to the Executive, or if the Executive receives a request to disclose all or any part of the information contained in the Confidential Materials under the terms of a subpoena, order, civil investigative demand or similar process issued by a court of competent jurisdiction or by a governmental body or agency, whether of the United States or any state thereof, or any other jurisdiction applicable to the Executive. 12.2 From the date hereof to the last day of the Consulting Term, the Executive will not, except on behalf of Chris-Craft or any of its subsidiaries, directly or indirectly, whether as an officer, director, stockholder, partner, associate, employee, agent or representative, become or be interested in, or associated with, any other person, firm, corporation, partnership or other entity whatsoever, engaged in a business competitive with any of the businesses of Chris-Craft or any of its subsidiaries in any of the markets in which Chris-Craft or any of its subsidiaries carries on such business; provided, however, that the Executive may own as an investor securities of any such corporation which securities are registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, so long as he is not part of any control group of such corporation. 38 12.3 The Executive agrees that a violation of the covenants set forth in Section 12.1 or 12.2, or any provision thereof, will cause irreparable injury to Chris-Craft and that Chris-Craft shall be entitled, in addition to any other rights and remedies it may have, at law or in equity, to an injunction enjoining and restraining the Executive from doing or continuing to do any such act and any other violation or threatened violation of said Section 12.1 or 12.2. 12.4 If any provision of Section 12 as applied to any circumstance shall be adjudged by a court to be invalid or unenforceable, the same shall in no way affect any other provision of this Section 12, the application of such provision in any other circumstances, or the validity or enforceability of this Section 12. Chris-Craft and the Executive intend this Section 12 to be enforced as written. However, if any provision, or any part thereof, is held to be unenforceable because of the duration of such provision or the area covered thereby, or otherwise, Chris-Craft and the Executive agree that the court making such determination shall have the power to reduce the duration and/or area of such provision, and/or to delete specific words or phrases ("blue-pencilling"), and in its reduced or blue-pencilled form such provision shall then be enforceable and shall be enforced. 39 12.5 Chris-Craft and the Executive intend to, and do hereby, confer jurisdiction to enforce the covenants contained in this Section 12 upon the courts of any state of the United States and any other governmental jurisdiction within the geographical scope of such covenants. If the courts of any one or more of such states or jurisdictions shall hold such covenants wholly unenforceable by reason of the breadth of such scope or otherwise, it is the intention of Chris-Craft and the Executive that such determination shall not bar or in any way affect Chris-Craft's right to the relief provided above in the courts of any other state or jurisdiction within the geographical scope of such covenants, as to breaches of such covenants in such other respective states or jurisdictions, the above covenants as they relate to each state or jurisdiction being, for this purpose, severable into diverse and independent covenants. 13. NOTICES. All notices, requests, consents and other communications, required or permitted to be given hereunder, shall be in writing and shall be deemed to have been duly given (a) if delivered personally, when delivered; (b) if delivered by overnight carrier, on the first business day following such delivery; (c) if delivered by registered or certified mail, return receipt requested, on the third business day after having been mailed in New York, New York. In any case, each such notice, request, or consent or other 40 communication shall be addressed as follows or to such other address as either party shall designate by notice in writing to the other in accordance herewith: 13.1 If to Chris-Craft: Chris-Craft Industries, Inc. 767 Fifth Avenue New York, New York 10153 Attention: Board of Directors 13.2 If to the Executive to him at his address set forth on the personnel records of Chris-Craft. With a copy to: Harold I. Kahen, Esq. Loeb and Loeb 345 Park Avenue New York, New York 10154 14. GENERAL. 14.1 This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely in New York. 14.2 The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. 14.3 This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter hereof, and supersedes all prior agreements, arrangements and understandings, written or oral, between the parties. 41 14.4 This Agreement and the benefits hereunder are personal to Chris-Craft and are not assignable or transferable, nor may the services to be performed hereunder be assigned by Chris-Craft to any person, firm or corporation; PROVIDED, HOWEVER, that this Agreement and the benefits hereunder may be assigned by Chris-Craft to any corporation acquiring all or substantially all of the assets of Chris-Craft or to any corporation into which Chris-Craft may be merged or consolidated, and this Agreement and the benefits hereunder will automatically be deemed assigned to any such corporation, subject, however, to the Executive's right to terminate the Employment Term in such event as provided in Section 10.4. In the event of any assignment of this Agreement to any corporation acquiring all or substantially all of the assets of Chris-Craft or to any other corporation into which Chris-Craft may be merged or consolidated, the responsibilities and duties assigned to the Executive by such successor corporation shall be the responsibilities and duties of, and compatible with the status of, a senior executive officer of such successor corporation. Chris-Craft may delegate any of its obligations hereunder to any subsidiary of Chris-Craft, provided that such delegation shall not relieve Chris-Craft of its obligations hereunder. 14.5 This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or 42 covenants hereof may be waived, only by a written instrument executed by both of the parties hereto, or in the case of a waiver, by the party waiving compliance. The failure of either party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by either party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 14.6 Whenever this Agreement provides for any payment to the Executive's estate, such payment may be made instead to such beneficiary or beneficiaries as the Executive may have designated by written notice to Chris-Craft. The Executive shall have the right to revoke any such designation and to redesignate a beneficiary or beneficiaries by written notice to Chris-Craft to such effect. 14.7 In case of any dispute or disagreement arising out of, or in connection with, this Agreement, until the final determination of such dispute or disagreement Chris-Craft shall continue to pay to the Executive all of the compensation provided in this Agreement, and the Executive shall be entitled to continue to receive all of 43 the other benefits provided herein. If any such dispute or disagreement shall result in legal action between Chris-Craft and the Executive, the Executive shall be entitled to recover from Chris-Craft any actual expenses for attorney's fees and disbursements incurred by him in connection with the Executive's good faith maintenance or defense of such action, on an after-tax basis. During the pendency of any such action, Chris-Craft shall pay all actual attorney's fees and expenses incurred by the Executive in connection therewith upon receipt of an undertaking by the Executive to repay such amounts as shall be found in such action as having been incurred in connection with the Executive's maintenance or defense of such action other than in good faith. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written. CHRIS-CRAFT INDUSTRIES, INC. /s/ HERBERT J. SIEGEL By /s/ EVAN C THOMPSON - --------------------- ------------------------ Herbert J. Siegel Executive Vice President 44 TABLE OF CONTENTS TO EMPLOYMENT AGREEMENT SECTION PAGE 1. EMPLOYMENT; TERM............................................... 1 2. DUTIES AND AUTHORITY........................................... 2 3. LOCATION....................................................... 4 4. CASH COMPENSATION.............................................. 4 4.1 BASE SALARY............................................. 4 4.2 SECTION 162(M) LIMIT.................................... 5 4.3 DEFERRED COMPENSATION................................... 7 4.4 BONUS................................................... 9 4.5 CONSUMER PRICE INDEX.................................... 11 5. EXPENSES....................................................... 12 6. ADDITIONAL BENEFITS............................................ 12 7. CERTAIN ADDITIONAL PAYMENTS BY CHRIS-CRAFT..................... 15 8. CHANGE IN CONTROL; EXTENSION OF TERM........................... 22 9. TERMINATION OF AGREEMENT FOR CAUSE............................. 27 10. TERMINATION OTHER THAN FOR CAUSE............................... 28 10.1 DEATH.................................................. 28 10.2 DISABILITY............................................. 28 10.3 AVERAGE ANNUAL COMPENSATION............................ 30 10.4 TERMINATION BY EXECUTIVE............................... 31 11. CONSULTING SERVICES............................................ 34 12. PROTECTION OF CONFIDENTIAL INFORMATION; NON-COMPETITION........ 36 13. NOTICES........................................................ 40 14. GENERAL........................................................ 41 45 -----END PRIVACY-ENHANCED MESSAGE-----