<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
TRANS-LUX CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / 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:
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<PAGE> 2
TRANS-LUX CORPORATION
110 RICHARDS AVENUE
NORWALK, CONNECTICUT 06856-5090
--------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 1995
--------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of TRANS-LUX
CORPORATION will be held at the Office of the Corporation, 110 Richards Avenue,
Norwalk, Connecticut, on Thursday, May 18, 1995 at 10:00 A.M. local time for the
following purposes:
1. To elect one (1) director chosen by the holders of Common Stock and
three (3) directors chosen by the holders of Class B Stock to serve for a
term of three (3) years, in each case until their successors shall be
elected and shall have qualified;
2. To consider and act upon proposed amendments to the Corporation's
Certificate of Incorporation authorizing the creation of 3,000,000 shares
of a new class of capital stock designated Class A Stock, $1.00 par value
and amending the authorized number of shares of capital stock;
3. To consider and act upon a proposal to adopt the 1995 Stock Option
Plan by which 50,000 shares of the Corporation's capital stock will be
reserved for issuance thereunder;
4. To consider and act upon a proposal to recommend to the Board of
Directors the retention of Deloitte & Touche LLP as the Corporation's
independent auditors for the ensuing year; and
5. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The close of business on March 23, 1995 has been fixed as the record date
for the determination of the stockholders entitled to notice of and to vote at
the Meeting.
By Order of the Board of Directors,
ANGELA D. TOPPI
Secretary
Dated: Norwalk, Connecticut
April 14, 1995
- --------------------------------------------------------------------------------
Please mark, date, sign and return promptly the enclosed proxy so that your
shares may be represented at the Meeting. A return envelope, which requires no
postage if mailed in the United States, is enclosed for your convenience.
- --------------------------------------------------------------------------------
<PAGE> 3
TRANS-LUX CORPORATION
110 RICHARDS AVENUE
NORWALK, CONNECTICUT 06856-5090
------------------------
PROXY STATEMENT
This statement is furnished in connection with the solicitation by the
Board of Directors of TRANS-LUX CORPORATION (hereinafter called the
"Corporation"), of proxies in the accompanying form to be used at the Annual
Meeting of the Stockholders of the Corporation to be held on Thursday, May 18,
1995, and at any adjournment thereof, for the purposes set forth in the
accompanying notice of the Meeting. It is intended that this Statement and the
proxies solicited hereby be mailed to stockholders no later than April 14, 1995.
A stockholder who shall sign and return a proxy in the form enclosed with this
statement has the power to revoke it at any time before it is exercised by
giving written notice of revocation or a proxy of later date and returning it to
the Corporation, Attention: Secretary, or by voting in person at the Meeting.
Proxies properly executed and received in time for the Meeting will be voted.
The close of business on March 23, 1995, has been fixed as the record date
for the determination of the stockholders entitled to notice of, and to vote at
the Meeting. There were outstanding as of the close of business on March 23,
1995 and entitled to notice of, and to vote at the meeting 943,374 shares of
Common Stock and 304,781 shares of Class B Stock. Each outstanding share of
Common Stock shall be entitled to one vote on all matters voted on at the
Meeting and each outstanding share of Class B Stock is entitled to ten votes on
all matters voted on at the Meeting. The holders of Common Stock and Class B
Stock vote together on the proposals to adopt the 1995 Stock Option Plan and
recommend independent auditors and as separate classes on the proposal to amend
the Corporation's Certificate of Incorporation to authorize the Class A Stock.
With respect to the election of directors, the holders of Common Stock have the
right to elect 25% of the total number of directors rounded up to the next
highest whole number, and holders of Class B Stock elect the balance of the
Board. At the 1995 Annual Meeting one (1) director will be elected by the
holders of Common Stock and three (3) directors will be elected by the holders
of Class B Stock.
Unless otherwise specified, the proxies in the accompanying form will be
voted in favor of all of the proposals set forth in the Notice of Annual
Meeting. In the discretion of the proxyholders, the proxies will also be voted
for or against such other matters as may properly come before the Meeting. The
Board of Directors is not aware that any other matters are to be presented for
action at the Meeting.
2
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS, DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as of March 15, 1995 (or such
other date specified) with respect to the beneficial ownership of the
Corporation's Class B Stock and Common Stock by (i) each person known by the
Corporation to own more than 5% of the Corporation's outstanding Class B Stock
and/or Common Stock and who is deemed to be such beneficial owner of the
Corporation's Class B Stock and Common Stock under Rule 13d-3(a)(ii); (ii) each
person who is a director of the Corporation; (iii) each named executive in the
Summary Compensation Table; and (iv) all persons as a group who are executive
officers and directors of the Corporation, and as to the percentage of
outstanding shares held by them on that date.
<TABLE>
<CAPTION>
AMOUNT PERCENT
BENEFICIALLY PERCENT OF ALL
NAME, STATUS & MAILING ADDRESS TITLE OF CLASS OWNED OF CLASS CLASSES
- ------------------------------------------ --------------------- ------------ -------- -------
<S> <C> <C> <C> <C>
Richard Brandt............................ Class B Stock 178,357(1) 58.52% 14.29%
Chairman of the Board of Directors & Common Stock and 12,500(1) 1.31% 0.99%
beneficial owner of more than 5% of the Common Stock
Corporation's Class B Stock acquirable
110 Richards Avenue
Norwalk, CT 06856-5090
The TCW Group, Inc........................ Common Stock 92,900(2) 9.85% 7.44%
Beneficial owner of more than 5% of the
Corporation's Common Stock
865 South Figueroa Street
Los Angeles, CA 90017
Gabelli Funds, Inc........................ Common Stock 130,652(3) 13.85% 10.47%
Beneficial owner of more than 5% of the Common Stock 88,740(3) 8.60% 6.64%
Corporation's Common Stock acquirable
One Corporate Center
Rye, NY 10580-1434
Ryback Management Corporation............. Common Stock 135,354(4) 12.55% 9.78%
Lindner Dividend Fund, Inc. acquirable
Beneficial owner of more than 5% of the
Corporation's Common Stock
7711 Carondelet Avenue
Box 16900
St. Louis, MO 63105
Jean Firstenberg.......................... Common Stock and 920(5) * *
Director Common Stock
110 Richards Avenue acquirable
Norwalk, CT 06856-5090
Allan Fromme.............................. Class B Stock 17,013(6) 5.58% 1.36%
Director Common Stock and 2,900 * *
110 Richards Avenue Common Stock
Norwalk, CT 06856-5090 acquirable
Robert Greenes............................ Common Stock and 4,056(7) * *
Director Common Stock
110 Richards Avenue acquirable
Norwalk, CT 06856-5090
Victor Liss............................... Class B Stock 9,728(8) 3.19% *
Director, Vice Chairman, President Common Stock and 25,533 2.64% 2.00%
and Chief Executive Officer Common Stock
110 Richards Avenue acquirable
Norwalk, CT 06856-5090
</TABLE>
3
<PAGE> 5
<TABLE>
<CAPTION>
AMOUNT PERCENT
BENEFICIALLY PERCENT OF ALL
NAME, STATUS & MAILING ADDRESS TITLE OF CLASS OWNED OF CLASS CLASSES
- ------------------------------------------ --------------------- ------------ -------- -------
<S> <C> <C> <C> <C>
Howard S. Modlin.......................... Class B Stock 2,812(9) * *
Director Common Stock 1,500(9) * *
445 Park Avenue acquirable
New York, NY 10022
Steven Baruch............................. Common Stock 100 * *
Director
110 Richards Avenue
Norwalk, CT 06856-5090
Matthew Brandt............................ Class B Stock 20,700(10) 6.79% 1.66%
Director Common Stock 1,500
110 Richards Avenue acquirable
Norwalk, CT 06856-5090
Thomas Brandt............................. Class B Stock 20,700(11) 6.79% 1.66%
Director Common Stock 1,500
110 Richards Avenue acquirable
Norwalk, CT 06856-5090
Gene Jankowski............................ Common Stock 2,000 * *
Director
110 Richards Avenue
Norwalk, CT 06856-5090
Michael R. Mulcahy........................ Common Stock and 3,116(12) * *
Senior Vice President Common Stock
110 Richards Avenue acquirable
Norwalk, CT 06856-5090
All directors and executive officers Class B Stock 249,310(13) 81.80% 19.97%
as a group (14 persons) Common Stock and 66,027(13) 6.54% 5.02%
Common Stock
acquirable
</TABLE>
- ---------------
(1) These amounts include 12,500 shares of Common Stock acquirable upon
exercise of stock options in the 60 days following March 15, 1995. They do
not include 4,232 shares of Class B Stock owned by Mrs. Brandt.
(2) Based on amended Schedule 13G dated February 6, 1994 filed by such parent
holding company and written advice dated March 27, 1995 it has sole voting
power and sole dispositive power over all such 92,900 shares.
(3) Based on Schedule 13D, Amendment No. 14, dated March 21, 1995, this amount
includes 88,740 shares of Common Stock acquirable upon conversion of
$1,127,000 principal amount of the Corporation's 9% Convertible
Subordinated Debentures due 2005 (the "9% Debentures"). All securities are
held as agent for the account of various investment company fund accounts
managed by the reporting persons. Except under certain conditions, Gabelli
Funds, Inc., Gamco Investors, Inc. and Gabelli International Limited,
respectively, have sole voting power and sole dispositive power over
158,031, 59,461 and 1,900 shares of Common Stock or a maximum aggregate
219,392 shares of Common Stock if the 9% Debentures were converted into
Common Stock.
(4) Based on Schedule 13G, Amendment No. 1 dated March 27, 1995 filed by Ryback
Management Corporation, a registered investment adviser, this amount
includes 135,354 shares of Common Stock acquirable upon conversion of
$1,719,000 principal amount of the 9% Debentures held by the Lindner
Dividend Fund, Inc., a registered investment company. Such investment
adviser and investment company have shared voting power and shared
dispositive power over the maximum 135,354 shares of Common Stock if the 9%
Debentures were converted into Common Stock.
(5) The amount includes 500 shares of Common Stock acquirable upon exercise of
stock options in the 60 days following March 15, 1995.
4
<PAGE> 6
(6) The amount includes 2,500 shares of Common Stock acquirable by Dr. Fromme,
who is Mr. Richard Brandt's brother-in-law, upon exercise of stock options
in the 60 days following March 15, 1995. It does not include 3,937 shares
of Common Stock acquirable upon conversion of $50,000 principal amount of
9% Debentures owned by Mrs. Fromme.
(7) The amount includes l,500 shares of Common Stock acquirable upon exercise
of stock options in the 60 days following March 15, 1995.
(8) The amount includes 25,500 shares of Common Stock acquirable upon exercise
of stock options in the 60 days following March 15, 1995.
(9) The amount includes l,500 shares of Common Stock acquirable upon exercise
of stock options in the 60 days following March 15, 1995. It does not
include 3,460 shares of Class B Stock owned by Mr. Modlin's immediate
family.
(10) The amount includes l,500 shares of Common Stock acquirable upon exercise
of stock options in the 60 days following March 15, 1995.
(11) The amount includes l,500 shares of Common Stock acquirable upon exercise
of stock options in the 60 days following March 15, 1995.
(12) The amount includes 2,500 shares of Common Stock acquirable upon exercise
of stock options in the 60 days following March 15, 1995.
(13) The amount includes 58,000 shares of Common Stock which members of the
group have the right to acquire by exercise of stock options (including
director stock options) in the 60 days following March 15, 1995; does not
include an aggregate of 7,692 shares of Class B Stock set forth in
footnotes 1 and 9 above or 3,937 shares of Common Stock acquirable upon
conversion of the 9% Debentures set forth in footnote 6 above.
* Less than 1%
The Corporation has an Employee Stock Ownership Plan ("ESOP"). As of the
record date, no shares of Common Stock had been acquired by such ESOP.
ELECTION OF DIRECTORS
The Board of Directors of the Corporation is divided into three classes
with the term of office of one of the three classes of directors expiring each
year and with each class being elected for a three-year term. Three (3) Class B
Stock directors and one (1) Common Stock director are to be elected at the May
18, 1995 Annual Meeting for a three (3) year term, in each case until their
successors have been elected and qualified. Messrs. Richard Brandt and Victor
Liss, Class B Stock designees nominated for election as directors for a three
(3) year term, were each elected a director of the Corporation at the 1992
Annual Meeting of Stockholders; Ms. Jean Firstenberg, originally a Common Stock
director elected in 1992 for a three (3) year term, was reclassified for a one
(1) year term as a Class B Stock director in 1994 and is nominated at this time
for a three (3) year term; and Mr. Gene Jankowski, the nominee as Common Stock
director for a three (3) year term, was first elected a Common Stock director in
1994.
5
<PAGE> 7
Set forth opposite the name of the nominees and each director is their
principal occupation for the past five years, age, the name and principal
business of any corporation or other organization in which such employment is
carried on, certain other directorships held, the year first elected as a
director and the year in which the term of office for which they are a nominee
or the term of office of such person will expire.
<TABLE>
<CAPTION>
FIRST
BECAME TERM
NAME PRINCIPAL OCCUPATION, OTHER DIRECTORSHIPS AND AGE DIRECTOR EXPIRES
- ---------------------- -------------------------------------------------------- -------- -------
<S> <C> <C> <C>
NOMINEES -- THREE-YEAR TERM
CLASS B DIRECTORS
Richard Brandt........ Chairman of the Board, formerly President and Chief 1954 1998
Executive Officer of Trans-Lux Corporation; Director of
Presidential Realty Corporation; Vice Chairman and
Trustee of The College of Santa Fe; Chairman Emeritus
and Trustee of the American Film Institute; Trustee of
American Theatre Wing; 67
Jean Firstenberg...... Director, American Film Institute since 1980; Trustee of
Boston University; 59 1989 1998
Victor Liss........... Vice Chairman of the Board, President, and Chief 1988 1998
Executive Officer, formerly Co-Chief Executive Officer,
an Executive Vice President, Chief Financial Officer and
Secretary of Trans-Lux Corporation; Director of Blue
Cross & Blue Shield of Connecticut, Inc. and First
Fidelity Bank, Connecticut; Trustee of Norwalk Hospital
and Norwalk Community Technical College Foundation,
Inc.; 58
COMMON STOCK DIRECTOR
Gene Jankowski........ Chairman of Jankowski Communications System, Inc. since 1994 1998
August 1990; prior thereto he served 28 years with CBS,
Inc., last serving as President and Chairman of the CBS
Broadcast Group from 1977 to 1989 when he retired;
Adjunct Professor Telecommunications for Michigan State
University; Chairman Emeritus of the American Film
Institute; Director of The Advertising Educational
Foundation and the Silvermine Art Center; and advisor to
the World Press Freedom Foundation; 60
DIRECTORS -- TWO-YEAR REMAINING TERM
CLASS B DIRECTORS
Thomas Brandt......... Vice President of Trans-Lux Corporation and Senior Vice 1994 1997
President of its Entertainment Subsidiaries since 1991;
prior thereto Vice President since 1990 and Assistant
Vice President since 1989 of its Entertainment
Subsidiaries; 31
Allan Fromme.......... Psychologist, Author, Consultant, Chairman of Executive
Committee of Trans-Lux Corporation; 79 1958 1997
COMMON STOCK DIRECTOR
Steven Baruch......... Executive Vice President of Presidential Realty 1994 1997
Corporation; producer of various theatrical productions
among them Driving Miss Daisy, Angels in America, Love
Letters and the current Broadway revivals of Damn
Yankees and Smokey Joe's Cafe; 56
DIRECTORS -- ONE-YEAR REMAINING TERM
CLASS B DIRECTORS
Matthew Brandt........ Vice President of Trans-Lux Corporation and Senior Vice 1994 1996
President of its Entertainment Subsidiaries since 1991;
prior thereto Vice President since 1990 and Assistant
Vice President since 1989 of its Entertainment
Subsidiaries; Director of the National Association of
Theatre Owners; 31
Howard S. Modlin...... Attorney and member of the firm Weisman, Celler, Spett & 1975 1996
Modlin; Director of Fedders Corporation and General
DataComm Industries, Inc.; 63
</TABLE>
6
<PAGE> 8
<TABLE>
<CAPTION>
FIRST
BECAME TERM
NAME PRINCIPAL OCCUPATION, OTHER DIRECTORSHIPS AND AGE DIRECTOR EXPIRES
- ---------------------- -------------------------------------------------------- -------- -------
<S> <C> <C> <C>
COMMON STOCK DIRECTOR
Robert Greenes........ Vice Chairman of the Executive Committee of Trans-Lux 1971 1996
Corporation; President of Petroconsult, Inc.; President
of East Coast Energy Council; formerly President and
Chief Executive Officer of Public Fuel Service Inc. and
all of its subsidiaries; 74
</TABLE>
EXECUTIVE COMPENSATION AND TRANSACTIONS WITH MANAGEMENT
COMPENSATION OF EXECUTIVE OFFICERS
The following Summary Compensation Table sets forth the compensation paid
or awarded for the fiscal years ended December 31, 1994, 1993 and 1992 to the
Corporation's five most highly compensated executive officers and the Chairman
of the Board whose compensation exceeded $100,000 for the fiscal year ended
December 31, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM
-------------------------------- COMPENSATION
OTHER ------------ ALL OTHER
ANNUAL OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION GRANTED(#) ($)(1)
- --------------------------------- ---- ------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Richard Brandt,.................. 1994 -- 73,491 363,380 -- 116,535(2)
Chairman of the Board, former 1993 -- 57,694 349,242 12,500 96,615
Chief and Co-Chief Executive 1992 432,495 27,114 -- -- 1,047,638
Officer(2)
Victor Liss,..................... 1994 196,915 133,753 -- 10,000 1,888
Chief Executive Officer, 1993 168,244 67,694 -- 10,000 1,958
President 1992 153,885 20,048 -- 8,000 1,888
and Vice Chairman, former
Co-Chief Executive Officer and
Chief Financial Officer
Michael R. Mulcahy,.............. 1994 130,261 28,124 -- 3,500 --
Senior Vice President -- Sales 1993 129,689 -- -- 500 --
former Vice President of Sales 1992 101,376 -- -- 1,000 --
</TABLE>
- ---------------
(1) There are no restricted stock awards, stock appreciation rights or deferred
long-term incentive payouts. The amounts included reflect the Corporation's
payments for split dollar life insurance premiums of $1,888, $1,958 and
$1,888 on behalf of Mr. Liss.
(2) The amount includes a supplemental lump sum retirement payment of $1,044,599
of which $544,799 was funded by the surrender of life insurance policies.
The Chairman is not an executive officer under the Corporation's by-laws
and the bonuses and other annual compensation for 1993 and 1994 constitute
consulting fees and other payments under his consulting agreement with the
Corporation.
COMPENSATION COMMITTEE REPORT
All matters concerning executive compensation for Mr. Victor Liss, the
Chief Executive Officer, and other executive officers are considered by the
Corporation's Compensation Committee. The salary levels are intended to be
consistent with competitive practice and level of performance. In determining
the total compensation to be paid to the Chief Executive Officer and all other
executive officers, the Compensation Committee considers management's
recommendation based upon past salary levels, contractual obligations where
applicable, experience, capability, duties, normal salary increase levels in
past years, and the Corporation's and respective individual's performance during
the last fiscal year. The Chief Executive Officer's compensation is based upon
the above factors and includes profit participation and bonuses as described in
the section on Employment and Consultant Agreements. Mr. Liss' responsibilities
were increased in September 1993 when the then President resigned. His contract
was amended in 1994 to increase the salary by
7
<PAGE> 9
$15,000 for each year 1994 through 1997, increase the profit participation from
3/4% in 1994, 7/8% in 1995 and 1996 and 1% for 1997 to 1 1/2% in each such
year and increase the bonus formula to a percentage of earnings and not fixed
amounts at each progressive level plus a one time bonus of $25,000 in 1994.
RETIREMENT PLAN AND SUPPLEMENTAL RETIREMENT BENEFITS:
There was no cash contribution for the group to the Corporation's
retirement plan for 1994 since such Plan was overfunded. The amount set forth
for All Other Compensation includes an accrual of $184,890 in 1992 and 75,000 in
1993 for supplemental retirement benefits resulting from limitations placed on
the Plan by the Internal Revenue Code, which was paid to Mr. Richard Brandt
under his employment agreement and $96,615 and $116,535 for tax equalization
payments in 1993 and 1994, respectively. An amount of $15,000 was accrued in
1993 and $95,475 was accrued in 1994 but not paid, under the supplemental
retirement arrangement with Mr. Liss.
The Corporation's retirement plan covers all salaried employees over age 21
with at least one year of service who are not covered by a collective bargaining
agreement to which the Corporation is a party. The following table presents
estimated retirement benefits payable at normal retirement date, which normally
is age 65. The amounts shown include estimated Social Security benefits which
would be deducted in calculating benefits payable under such Plan.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
----------------------------------------------------
BASED ON CREDITED SERVICE YEARS
FINAL AVERAGE SALARY FOR HIGHEST FIVE OF ----------------------------------------------------
THE TEN YEARS PRECEDING RETIREMENT 10 20 30 35 40
- ------------------------------------------ ------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
$100,000.................................. 15,000 30,000 45,000 52,500 60,000
125,000.................................. 18,750 37,500 56,250 65,625 75,000
150,000.................................. 22,500 45,000 67,500 78,750 90,000
200,000**................................ 30,000 60,000 90,000 105,000 118,800*
</TABLE>
As of January 1, 1995, Messrs. Victor Liss and Michael R. Mulcahy had 26
and 27 years of credited service, respectively.
- ---------------
* Maximum legislated annual benefits payable from a qualified pension plan.
** $235,840 is the legislated annual cap on compensation for 1993 and $150,000
is the limit for subsequent years.
TAX CREDIT EMPLOYEE STOCK OWNERSHIP PLAN ("TRASOP")
In 1980 the Board adopted, as of January 1, 1980, a TRASOP, which was
amended to conform to the provisions of the Internal Revenue Code, under which
the Corporation contributed an amount equivalent to 0.5% of the payroll of
eligible participants to a Trustee for the purchase of Common Stock of the
Corporation. No contributions are required of participating employees. Due to an
offsetting tax credit permitted through 1986, there was no cost to the
Corporation. No contribution was made to the TRASOP or ESOP for the years 1987
through 1994 and the TRASOP terminated in December 1994 and stock or cash was
distributed. Eligibility for such plans was based on three years continuous
employment and account distributions were made in the Corporation's Common Stock
or Class B Stock or cash upon termination of employment, termination of the
Plan, death, total disability or 84 months after the month in which shares were
allocated.
CERTAIN TRANSACTIONS
During the year 1994, $206,667 in fees for legal services rendered were
paid by the Corporation to the law firm of which Mr. Howard S. Modlin is a
partner.
8
<PAGE> 10
EMPLOYMENT AND CONSULTANT AGREEMENTS
The Corporation has a consulting agreement with Mr. Richard Brandt
effective December 31, 1992, when he retired, providing consultation fees at the
annual rate of $240,000 during the term expiring December 31, 2002. In addition,
Mr. Brandt is entitled to additional consulting fees per annum of $90,000 for
five years (subject to extension by Mr. Brandt) if Mr. Brandt performs a minimum
of 35 hours per month. Such rates are subject to CPI adjustments commencing
January 1, 1994 and such increases effective January 1, 1994 and 1995 were 2.7%
in each year. Mr. Brandt has 12,500 non-incentive stock options granted on
January l, 1993 at $7.50 per share and he has waived 2,500 stock options under
the Non-Employee Director Stock Option Plan. In addition, Mr. Brandt is entitled
to receive as a profit participation for each year during the term of the
agreement an amount equal to 3/4 of 1% of the Corporation's pre-tax consolidated
earnings for each fiscal year during the term thereof. The Board of Directors of
the Corporation, upon the recommendation of the Compensation Committee, shall
grant Mr. Brandt a bonus for each year during the term as follows: $5,000 if the
Corporation's pre-tax consolidated earnings meet or exceed $250,000; $10,000 if
earnings meet or exceed $500,000; $15,000 if earnings meet or exceed $750,000;
$20,000 if earnings meet or exceed $1,000,000; $31,250 if earnings meet or
exceed $1,250,000; $37,500 if earnings meet or exceed $1,500,000; $43,750 if
earnings meet or exceed $1,750,000; $50,000 if earnings meet or exceed
$2,000,000; and over $2,000,000, $50,000 plus 2 1/2% of each full increment of
$250,000 over $2,000,000, up to a maximum of $125,000. Such pre-tax consolidated
earnings shall not include any defined extraordinary or unusual items of gain or
loss (such gains and losses are not offset for this purpose) as determined by
generally accepted accounting principles to the extent such an item exceeds 20%
of net book value. The Board of Directors may, in any event, even if the
breakpoint for any year is not achieved, grant Mr. Brandt the aforesaid bonus or
a portion thereof for such year. The agreement further provides that if Mr.
Brandt is unable to perform by reason of his disability, then the Corporation
will continue to pay to Mr. Brandt the fees he was receiving at the time of the
occurrence of such disability, plus the profit participation and bonus he would
have received if such disability had not occurred. In accordance with the terms
of the consulting agreement, the Corporation has purchased a life insurance
policy on the life of Mr. Brandt, in the face amount of $250,000, reduced from
$1,337,000 on policies previously carried, certain of which were surrendered to
partially pay his supplemental retirement benefits. During the term of the
agreement, the Corporation agreed to use its best efforts to the end that Mr.
Brandt continues to be elected Chairman of the Board and a director of the
Corporation and a member of its Executive Committee. A failure to elect Mr.
Brandt to such positions shall, upon Mr. Brandt's option, constitute a material
breach of the agreement and entitle him to receive the annual fees and
additional fees for the remaining term in one lump sum payment within ten (10)
days of his notice, plus the other bonus and profit participation amounts at the
times provided for in the agreement.
The Corporation has an employment agreement with Mr. Victor Liss for a term
expiring December 31, 1997, as amended in 1994, which provides for compensation
at the annual rate of $185,000 for 1994, $195,000 for 1995, $205,000 for 1996
and $215,000 for 1997. As part of the agreement, Mr. Liss was granted an
incentive stock option on January 1, 1993 to purchase 10,000 shares of Common
Stock at $7.5625 per share. Mr. Liss is entitled to receive as a profit
participation 1 1/2% of the Corporation's pre-tax consolidated earnings for the
fiscal years 1994, 1995, 1996 and 1997. The Board of Directors, upon the
recommendation of the Compensation Committee, shall grant Mr. Liss a bonus for
1994 through 1997 of 2% of pre-tax consolidated earnings if earnings are
$250,000 up to $1,000,000 and 2 1/2% of total over $1,000,000 with a maximum of
$125,000 for any year. Such pre-tax consolidated earnings shall not include any
defined extraordinary or unusual items of gain or loss (such gains and losses
are not offset for this purpose) as determined by generally accepted accounting
principles to the extent such an item exceeds 20% of net book value. Mr. Liss
also received an additional bonus of $10,000 in 1993 and $25,000 in 1994. The
agreement further provides that if Mr. Liss is disabled, the Corporation will
pay to Mr. Liss 50% of the salary he is entitled to receive for the duration of
the disability during the term but in no event less than twenty-four (24)
months. In the event Mr. Liss dies during the term of said agreement, the
Corporation shall pay to his widow death benefits in an amount equal to 50% of
his then annual salary plus 50% of profit participation and bonus for the
immediate preceding fiscal year, but in no event less than twenty-four (24) nor
more than forty-two (42) months' salary. The Corporation has purchased a life
insurance policy in the amount of $75,000 in favor of Mr. Liss' beneficiary and
will reimburse Mr. Liss for the cost of an additional $175,000 of life
insurance, the cost of
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<PAGE> 11
$5,000 monthly long-term disability insurance coverage and up to $5,000 for
personal tax planning. During the period January 1, 1996 through June 30, 1996,
Mr. Liss may request the Corporation to renegotiate the agreement for 1997. If
no new terms are agreed on, Mr. Liss has the right to cancel the agreement
effective as of January 1, 1997 by giving notice on or before August 1, 1996 and
if he is not elected co-chief executive officer or chief executive officer and a
member of the Board and Executive Committee, he may cancel the agreement on 120
days notice.
The Corporation entered into an employment agreement with Mr. Michael R.
Mulcahy during 1994 for a three year term expiring May 31, 1997, which provides
for compensation at the annual rate of $100,000 for the period June 1, 1994
through May 31, 1995, $107,500 for the period June 1, 1995 through May 31, 1996
and $115,000 for the period June 1, 1996 through May 31, 1997. The agreement
also provides for sales override commissions not to exceed $21,000 for the
period June 1 through December 31, 1994, $44,500 for calendar year 1995, $48,500
for calendar year 1996 and $20,833 for the period January 1 through May 31, 1997
plus an additional bonus based on a formula if bonus sales goals are exceeded,
not to be paid on amounts which exceed twice the mutually agreed goal. The Board
of Directors of the Corporation, upon the recommendation of the Compensation
Committee shall grant Mr. Mulcahy a bonus for each year during the term if the
Corporation's pre-tax consolidated earnings meet or exceed $250,000 and each
$125,000 incremental level up to $3,000,000, not to exceed $17,500 for 1994,
$30,000 for 1995 and 1996 and $12,500 for 1997. Such pre-tax consolidated
earnings shall not include any defined extraordinary or unusual items of gain or
loss (such gains and losses are not offset for this purpose) as determined by
generally accepted accounting principles to the extent such an item exceeds 20%
of net book value. In the event Mr. Mulcahy is disabled, the Corporation will
pay him 35% of the salary he is entitled to receive for the duration of the
disability during the term of said agreement. In the event Mr. Mulcahy dies
during the term of said agreement the Corporation shall pay to his widow death
benefits in an amount equal to 35% of his then annual salary for the balance of
the term or 18 months, whichever is less. The agreement also provides for
severance pay if Mr. Mulcahy leaves the employ of the Corporation at the end of
any term (unless discharged for cause) at the rate of 50% of his then annual
salary for eighteen (18) months. The Corporation has purchased a life insurance
policy in the amount of $75,000 in favor of Mr. Mulcahy's beneficiary and paid
him a one time performance bonus of $10,000 following execution of the
agreement.
Messrs. Matthew Brandt and Thomas Brandt, directors, Vice Presidents of the
Corporation and sons of Mr. Richard Brandt and nephews of Dr. Allan Fromme, are
each employed by the Corporation at an annual rate of compensation of $76,000
each plus a bonus of 1/2 of 1% of the Corporation's pre-tax consolidated
earnings.
LOANS
During 1989, 1990, 199l and 1994, Trans-Lux Investment Corporation loaned
$46,795 in each year and $9,615 in 1992 for an aggregate of $196,795, which is
presently outstanding, to Dr. Allan Fromme, Chairman of the Executive Committee,
to pay for premiums on a life insurance policy on his life. The Corporation has
received an assignment of the policy as collateral for such loan which had an
interest rate adjusted periodically from 3.25% to 5.50% during 1994 based on the
bank 90-day certificate of deposit rate. The Corporation has also authorized a
loan to pay the annual premium of $46,795 for 1995.
STOCK OPTION PLAN AND STOCK OPTIONS
The Corporation has an incentive stock option plan adopted by the
stockholders in 1992, a proposed new plan to be considered at the annual meeting
and options outstanding under a plan which expired (no further options may be
granted) which plans provide for the grant of incentive stock options at fair
market value or 110% of fair market value on date of grant to employees. Options
outstanding are exercisable during the period one year to ten years after date
of grant and while the holder is in the employ of the Corporation. The following
tables set forth information as to certain executive officers and the Chairman
of the Board of the Corporation with respect to: stock options granted pursuant
to the existing plan during 1994, the potential gain that could be realized if
the fair market value of the Corporation's Common Stock were to appreciate at a
5%
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<PAGE> 12
and 10% annual rate over the ten (10) year period of the option term and fiscal
year end option value. No options were exercised by any executive officer during
1994.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------
% OF
TOTAL POTENTIAL
OPTIONS REALIZABLE VALUE
GRANTED TO EXERCISE AT ASSUMED
EMPLOYEES OR BASE ANNUAL RATES OF
OPTIONS IN FISCAL PRICE ($) EXPIRATION STOCK PRICE
NAME GRANTED(#) YEAR PER SHARE DATE APPRECIATION FOR
- ------------------------------- ---------- --------- --------- ---------- ----------------
5% ($) 10% ($)
------ -------
<S> <C> <C> <C> <C> <C> <C>
Victor Liss.................... 10,000 64.5% 8.125 12/05/04 51,000 129,000
Michael R. Mulcahy............. 3,500 22.6% 9.6875 05/18/04 21,000 54,000
</TABLE>
FISCAL YEAR ("FY") END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END (#) FY-END ($)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE(1)
- ------------------------------------------------------------ ------------- ----------------
<S> <C> <C>
Richard Brandt.............................................. 12,500/ -- 18,750/ --
Victor Liss................................................. 25,500/10,000 46,188/ 8,750
Michael R. Mulcahy.......................................... 2,500/ 3,500 4,063/ --
</TABLE>
- ---------------
(1) Market value of underlying securities at FY-End, minus the exercise price.
11
<PAGE> 13
FIVE YEAR CORPORATE PERFORMANCE GRAPH
The following graph compares the Corporation's total stockholder return
over the five fiscal years ended December 31, 1994 with the total return on the
American Stock Exchange Market Value Index ("AMEX MKT") and The American Stock
Exchange New England Regional Index ("AMEX NE"). The stockholder return shown on
the graph as "TLX" is not intended to be indicative of future performance of the
Corporation's Common Stock.
* Cumulative total return assumes reinvestment of dividends.
** Peer group consists of the AMEX NE. Assumes $100 investment at the close of
trading on the last trading day preceding the first day of the fifth
preceding fiscal year in TLX Common Stock, AMEX MKT and AMEX NE.
12
<PAGE> 14
PROPOSAL TO APPROVE THE CLASS A STOCK AND ARTICLE FOURTH
On March 10, 1995, the Board of Directors of the Corporation unanimously
adopted the proposal to amend the Certificate of Incorporation of the
Corporation (the "Amendments"), subject to approval of the Corporation's
stockholders. If the Amendments are approved by stockholders, the number of
shares of stock which the Corporation is authorized to issue will be increased
from 6,500,000 to 10,000,000 consisting of 5,500,000 shares of Common Stock
(increase by 1,500,000 shares), 3,000,000 shares of Class A stock, 1,000,000
shares of Class B stock (decrease by 1,000,000 shares), and 500,000 shares of
Preferred Stock. The total authorized shares of Common Stock will be so
increased to provide shares to be available upon conversion of the Class A Stock
under limited circumstances (see "Description of Class A Stock and Article
Fourth -- Convertibility"). The Common Stock and Class A Stock will have
substantially identical rights, except that the holders of Class A Stock will
have a 10% higher dividend right than Common Stock (and 22.2% higher than Class
B) and will not be entitled to vote on any matter unless and until all of the
Class B Stock is converted into Common Stock as provided in the Certificate of
Incorporation or as otherwise required by law. The Amendments were adopted by
the Board on March 10, 1995. It is intended that an application for listing the
Class A Stock on the American Stock Exchange will be filed if and when it meets
such Exchange's listing requirement. The proposal to effect the Amendments is
sometimes referred to in this Proxy Statement as the "Proposal".
Except for stock dividends, any issuances of additional Class B shares must
be authorized by vote of majority of each of the outstanding shares of Common
Stock and Class B Stock. Accordingly the authorized amount is being reduced
because the Board of Directors believes there will be sufficient shares
available to cover any forseeable requirements of Class B Stock for stock
dividends or stock splits.
If the stockholders approve the adoption of the Amendments, it is expected
that an amendment to the Certificate of Incorporation reflecting the changes
resulting from the Amendments will be filed with the Secretary of State of the
State of Delaware prior to the first issuance of Class A Stock and become
effective on the filing thereof. At any time prior to such filing,
notwithstanding authorization by the stockholders, the Board of Directors may
abandon the proposed Amendments without further action of the stockholders. A
copy of Article Fourth of the Certificate of Incorporation, as proposed to be
amended, is attached hereto as Exhibit A.
DESCRIPTION OF THE CLASS A STOCK AND ARTICLE FOURTH
As indicated previously, the Amendments will create the Class A Stock.
Following is a summary of the rights, preferences, powers and limitations of the
Class A Stock. The following summary should be read in conjunction with, and is
qualified in its entirety by reference to, the full text of proposed amended
Article Fourth of the Certificate of Incorporation, a copy of which is attached
hereto as Exhibit A.
Voting. Each share of Class A Stock will have no voting rights except as
otherwise required by law. Under the Delaware General Corporation Law, holders
of Class A Stock will be entitled to vote on proposals to increase or decrease
the number of authorized shares of Class A Stock, change the par value of the
Class A Stock or to alter or change the powers, preferences or special rights of
the shares of Class A Stock which may affect them adversely. The Proposal will
not affect the relative voting power of the holders of Common Stock and Class B
Stock.
Dividends and Other Distributions. Each outstanding share of Class A Stock
will be entitled to receive such dividends and other distributions in cash,
stock or property as may be declared by the Board of Directors of the
Corporation, provided that, if at any time a cash dividend is paid on the Common
Stock, a cash dividend will also be paid on the Class A Stock in an amount 10%
higher than the amount per share paid on the Common Stock and 22.2% higher than
that paid on the Class B Stock. In no event shall dividends and other
distributions be paid on any of the Common Stock, Class A Stock or Class B Stock
unless the other such classes of stock also receive dividends subject to the
above provisions for the requirement of the respective higher cash dividends for
Class A Stock and Common Stock. Dividends or other distributions payable in
shares of stock shall be made to holders of Class A Stock in shares of Class A
Stock. The Certificate provides that the Board can authorize a distribution of
Class A Stock proportionately to holders of Common Stock,
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<PAGE> 15
Class A Stock and Class B Stock. In no event will either Common Stock, Class A
Stock or Class B Stock be split, divided or combined unless the others are also
proportionately split, divided or combined. The Corporation currently pays cash
dividends on a quarterly basis of $.035 and $.0315 per share on Common Stock and
Class B Stock, respectively.
Convertibility. The Class A Stock will convert into Common Stock only at
such time as all of the Class B Stock is converted to Common Stock in accordance
with the terms of the Certificate of Incorporation. The Certificate of
Incorporation provides that if the number of shares of Class B Stock falls below
5% of the aggregate number of outstanding shares of Common Stock and Class B
Stock, or if the Board of Directors and a majority of the shares of Class B
Stock so approve, the outstanding shares of Class B Stock will be converted into
Common Stock.
Preemptive Rights. Consistent with the terms of the Common Stock and Class
B Stock, the Class A Stock will not carry any preemptive rights enabling a
holder to subscribe for or receive shares of any class of stock of the
Corporation or any other securities convertible into shares of any class of
stock of the Corporation.
Other Distributions. The Class A Stock is entitled to receive the same
consideration per share as the Common Stock and Class B Stock in the event of
any liquidation, dissolution or winding-up of the Corporation.
Mergers and Acquisitions. Each holder of Class A Stock will be entitled to
receive the same per share consideration as the per share consideration, if any,
received by any holder of Common Stock and Class B Stock in a merger or
consolidation of the Corporation (whether or not the Corporation is the
surviving corporation).
BACKGROUND AND REASONS FOR THE PROPOSAL
The Proposal is being submitted for the purpose of enabling the Corporation
to engage in the broadest possible range of operating, financing and investment
activities, if determined by the Board of Directors to be in the best interest
of all the stockholders, without diluting the relative voting interests of
existing stockholders, including Mr. Richard Brandt, the Corporation's Chairman
and its largest Class B stockholder. Except for a maximum of 50,000 shares of
Class A Stock to be reserved under the proposed 1995 Stock Option Plan, no
specific issuance of Class A Stock is presently contemplated (although the
Corporation is presently considering various financing alternatives which could
include the issuance of Class A Stock).
Mr. Brandt owns approximately 58.5% of the outstanding shares of Class B
Stock. Financings, acquisitions or other transactions involving the issuance of
stock which the Board of Directors determines to be in the best interests of all
of the stockholders might dilute the voting power of existing stockholders,
including the holders of Class B Stock, and might cause the Class B Stock to be
converted into Common Stock by reason of reducing the Class B Stock to less than
5% of the total of the outstanding shares of Common Stock and Class B Stock. The
Board of Directors of the Corporation approved the Amendments based, in part, on
its judgment that the Corporation can enjoy better long-term performance if
permitted to consider the desirability of transactions and benefit plans that
would not dilute existing stockholders' voting power in the Corporation. The
Board believes that the Proposal is in the best interests of the Corporation and
all of its stockholders for this and other reasons, including the following:
Financing Flexibility. Implementation of the Proposal would provide the
Corporation with increased flexibility in the future to utilize the Class A
Stock to fund employee benefit plans including the proposed 1995 Stock Option
Plan and to raise equity capital or to issue convertible debt or convertible
preferred stock as means to finance future growth without diluting the voting
power of the Corporation's existing stockholders. The Corporation is considering
various financing alternatives which may involve the issuance in the future of
equity securities or convertible securities.
Business Relationships. Implementation of the Proposal may also help to
mitigate the uncertainties and risks of disruption of existing and potential
business relationships, including banking arrangements, with parties who may in
the future become concerned about changes in control of the Corporation in the
event that the voting power of Mr. Brandt is diluted. The Corporation may be
less able to attract business partners willing
14
<PAGE> 16
to make long-term plans and commitments if the Corporation is perceived to be
vulnerable to a takeover or there is uncertainty as to the Corporation's plans
and objectives. The Corporation is not presently aware of any plans to attempt
to acquire the Corporation.
CERTAIN POTENTIAL DISADVANTAGES OF THE PROPOSAL
While the Board of Directors has determined that implementation of the
Proposal is in the best interests of the Corporation and its stockholders, the
Board recognizes that implementation of the Proposal may result in certain
disadvantages, including those described below:
Anti-Takeover Effect. Mr. Brandt currently holds approximately 58.5% of
the Class B Stock. As a result, Mr. Brandt presently would be able to elect his
own slate of Class B directors in any election of directors if any unrelated
Class B bidder, or group of bidders or even the Board of Directors propose their
own slate of Class B Directors. In addition, as a result of certain voting
provisions contained in the Certificate of Incorporation which provide that, on
certain matters, each class of stock votes separately as a class, Mr. Brandt
has, by virtue of his majority holdings of the Class B Stock, the power to veto
mergers, consolidations and similar extraordinary transactions, as well as
increases in authorized capital stock and any other matters requiring an
amendment to the Certificate of Incorporation. Regardless of whether the
Proposal is implemented, Mr. Brandt will maintain the ability to keep or dispose
of the voting power of the Class B Stock as he sees fit. Implementation of the
Proposal may limit the future circumstances in which a sale or transfer of
equity by Mr. Brandt or his estate could lead to a merger proposal or tender
offer that is not acceptable to Mr. Brandt or his estate, or a proxy contest for
the removal of incumbent directors. Accordingly, adoption of the Amendments
might deprive stockholders of an opportunity to sell their shares at a premium
over prevailing market prices by virtue of a tender offer or merger proposal or
to replace the Board of Directors and management. The Corporation is not aware
of any current or planned effort on the part of any party to acquire control of
the Corporation by means of a merger, tender offer, solicitation in opposition
to management or otherwise, or to change the Corporation's Board of Directors or
management.
Acquisition Accounting. The use of the Class A Stock to effect a business
combination would make such combination ineligible to be accounted for using the
pooling of interests method. In order for such method to be used, among other
criteria, the Corporation would be required to issue a voting common stock,
i.e., Common Stock or Class B Stock (the issuance of Class B is prohibited in
the absence of stockholder approval) as the consideration for the combination.
Investment by Institutions. Certain institutional holders may be
prohibited from holding or purchasing Class A Stock as a result of charter
provisions or business policies which prohibit such institutions from investing
in securities without voting privileges.
CERTAIN OTHER EFFECTS OF THE PROPOSAL
Effect on Relative Voting Power. The relative ownership interest and
voting power of each holder of Common Stock and Class B Stock would be the same
immediately after any issuance of Class A stock as it was immediately prior
thereto. Consequently, the Amendments will not alter Mr. Brandt's present
potential control of the Corporation through his ability to elect a majority of
the Class B directors in a proxy fight for election of directors and to vote his
shares of Class B Stock separately, as a class, on certain significant issues.
See "Certain Potential Disadvantages of the Proposal -- Anti-Takeover Effect."
The Corporation has been advised that it is the present intention of Mr. Brandt
to continue to hold a substantial amount of his shares of Class B Stock.
Effect on Market Price and Liquidity. The market price of shares of Common
Stock and Class A Stock after any issuance of Class A Stock will depend on many
factors, including, among others, the future performance of the Corporation,
general market conditions and conditions relating to companies in industries
similar to that of the Corporation. Similarly, the market liquidity of the
Common Stock and the Class A Stock will depend on these and other factors.
Accordingly, the Corporation cannot predict the trading prices or the market
liquidity of the Common Stock and Class A Stock following any issuance of Class
A Stock.
15
<PAGE> 17
Trading Market. As discussed above, in order to minimize dilution of
voting power to existing stockholders, the Corporation might be more likely to
issue Class A Stock than Common Stock in the future to raise equity (either
through the issuance of Class A Stock or securities convertible into Class A
Stock), finance acquisitions or fund benefit plans. Any such issuance of Class A
Stock by the Corporation may serve to increase market activity in Class A Stock
relative to the Common Stock.
Dilutive Effect. As noted above, the principal purpose of creating the
Class A Stock is to provide the Corporation with a vehicle to use equity in
financings, acquisitions and employee benefit plans without diluting the voting
rights of existing stockholders. As with any issuance of equity, however, an
issuance of Class A Stock may cause dilution of the economic interest that each
outstanding share of the Corporation's equity securities represents. The
preceding summary of certain provisions of Article Fourth is qualified in its
entirety by reference to the complete text of Article Fourth which is set forth
as Exhibit A of this Proxy Statement.
The affirmative vote of a majority of the shares entitled to vote of each
of the Common Stock and Class B Stock voting separately is required to approve
the proposed amendment to the Certificate of Incorporation authorizing 3,000,000
shares of Class A Stock and amending the authorized number of shares of capital
stock. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION AUTHORIZING CLASS
A SHARES AND AMENDING THE AUTHORIZED NUMBER OF SHARES OF CAPITAL STOCK. IT IS
INTENDED THAT PROXIES SOLICITED HEREBY WILL BE VOTED FOR SUCH AMENDMENT TO THE
CERTIFICATE OF INCORPORATION UNLESS THE STOCKHOLDER SPECIFIES OTHERWISE.
PROPOSED 1995 STOCK OPTION PLAN
The 1995 Stock Option Plan ("1995 Plan") was adopted by the Board of
Directors on March 10, 1995. It is intended to provide an incentive to key
employees, including officers and directors who are employees of the Corporation
and its subsidiaries, and to offer an inducement in obtaining the services of
key personnel. The proposed 1995 Plan is in addition to the Corporation's
existing 1992 Stock Option Plan.
Options granted under the 1995 Plan may be either "incentive stock options"
within the meaning of Section 422A of the Internal Revenue Code of 1986 ("Code")
as amended or non-statutory options. The 1995 Plan is not qualified under
Section 401(a) of the Code and is not subject to the Employee Retirement Income
Security Act of 1974.
SUMMARY OF THE PLAN
The basic provisions of the 1995 Plan are as follows:
1. Fifty thousand (50,000) shares of the Common Stock, $1.00 par value,
and/or Class A Stock, $1.00 par value, if the stockholders authorize Class A
Stock, of the Corporation are to be authorized for issuance under the Plan,
which number of shares is subject to adjustment by reason of certain specified
changes in the capitalization of the Corporation.
2. The 1995 Plan is administered by the Compensation Committee of the
Board of Directors which reports to the Board of Directors with respect to the
names of employees to be granted stock options, the number of shares covered by
each option, the applicable option prices, the type of option and class of stock
subject to the option. Options granted to persons who are not subject to Section
16 of the Securities Exchange Act of 1934 shall be adopted by resolution of the
Board of Directors and options granted to persons subject to Section 16 shall be
adopted by resolution of the Compensation Committee.
3. The granting of an option under the 1995 Plan takes place whenever the
Board of Directors or the Compensation Committee, as the case may be, by
resolution makes such grant, designates the person for the receipt of the option
and such option is evidenced by an appropriate Stock Option Contract executed by
the Corporation and the employee.
16
<PAGE> 18
4. The 1995 Plan terminates on March 9, 2005, and no option shall be
granted under the 1995 Plan after that date.
5. The option price at which non-statutory stock options may be granted
shall be the fair market value of the Common Stock and/or Class A Stock on the
date the option is granted or such greater or lesser price as determined by the
Compensation Committee, as the case may be. The option price at which incentive
stock options may be granted shall not be less than the fair market value of the
Common Stock or Class A Stock on the date the option is granted, except that if
the optionee owns more than 10% of the total combined voting power of the
Corporation on the date of grant, the exercise price of such option shall be not
less than 110% of the market price for said shares on the date of grant.
6. The maximum term of each non-statutory stock option shall be for a
period not exceeding ten (10) years from the date of grant thereof and the term
of each incentive stock option shall likewise be for a period not exceeding ten
(10) years from the date of grant thereof (but only five (5) years if the
optionee owns more than 10% of the voting power).
7. Except in limited situations as expressly provided in the 1995 Plan, no
option granted under the 1995 Plan may be exercised during the life of the
optionee, unless the optionee remains in the continuous employ of the
Corporation or one of its subsidiaries from the date of grant to the date of
exercise. The option shall be exercisable in whole or in part, from time to
time, during the term thereof, as may be determined by the Compensation
Committee and stated in the option, provided, however, that unless otherwise
permitted by the Compensation Committee, no option may be exercised prior to the
first anniversary of the date of grant of such option.
8. Payment for shares purchased will be made in full in cash or by the
surrender of shares of Common Stock or Class A Stock, as the case may be, of the
Corporation valued at the market price for such shares at the time of exercise
of the option under the 1995 Plan.
If an optionee holds more than one (1) incentive or non-statutory stock
option under the 1995 Plan or 1992 Plan the options may be exercised by the
optionee in any order.
FEDERAL INCOME TAX CONSEQUENCES
Tax Aspects -- Non-Statutory Stock Options
Messrs. Weisman, Celler, Spett & Modlin, the Corporation's legal counsel,
have advised that under existing Treasury regulations, with respect to
non-statutory stock options, (i) an optionee will not realize taxable income
upon the grant of an option; (ii) the difference between the option price and
the fair market value of the shares on the date of exercise is taxable as
ordinary income to the optionee at the time of exercise and is allowable to the
Corporation, as an income tax deduction; (iii) the ordinary income to the
optionee will be treated as compensation to the optionee which is subject to
income tax withholding by the Corporation; (iv) the optionee will take a basis
in the shares for tax purposes equal to the sum of the option price plus the
amount of his or her ordinary income; and (v) any gain or loss on a subsequent
sale of the shares, which will equal the difference between the sales proceeds
and the optionee's tax basis in the shares, will be capital gain or loss at the
time of sale.
Tax Aspects -- Incentive Stock Options
The Corporation has also been advised by such legal counsel that the
Federal income tax consequences of incentive stock options under present law are
generally as follows: if an option is an incentive stock option, the optionee
will recognize no income upon grant or exercise (except for purposes of
computing alternative minimum tax described below) of the incentive stock option
and as such, the Corporation will not be allowed a deduction for Federal tax
purposes as it would in the case of the exercise of a non-statutory stock
option. Upon the sale of the shares by the optionee (assuming that the sale
occurs no sooner than two (2) years after grant of the option and one (1) year
after exercise of the option), any gain will be capital gain to the optionee.
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<PAGE> 19
In order for an option to qualify as an incentive stock option, (i) the
option must be granted pursuant to a plan which includes the aggregate number of
shares which may be issued under options and the employees (or class of
employees) eligible to receive options; (ii) such option is granted within ten
(10) years from the date such plan is adopted, or the date such plan is approved
by the stockholders, whichever is earlier; (iii) the option must be exercised
while the optionee is an employee of the Corporation or a subsidiary of the
Corporation, or no more than three months after the optionee's employment ceases
(twelve (12) months in the case of termination following the optionee's total
disability); (iv) the option may not by its terms be exercisable after the
expiration of ten (10) years from the date it is granted; (v) the option price
must not be less than the fair market value of the stock at the time such option
is granted; (vi) the option plan must be approved by the stockholders within
twelve (12) months after the date such plan is adopted; (vii) the option by its
terms is non-transferable other than upon death of the optionee and is
exercisable only by the optionee during his or her lifetime; (viii) if the
optionee owns more than 10% of the voting power of all classes of the
Corporation's stock at the time the option is granted, the option price must be
at least 110% of the fair market value on the date of grant and the option may
not be exercised after five (5) years from the date of grant; and (ix) under the
terms of the plan, the aggregate fair market value, determined at time of grant,
of stock for which an employee may exercise incentive stock options for the
first time in any calendar year under all plans cannot exceed $100,000.
For purposes of computing alternative minimum tax the spread between the
fair market value of the stock on the exercise date and the option price is
added to taxable income as an adjustment in computing alternative minimum tax,
and the basis of the acquired stock is fair market value on the date of
exercise.
The selection of officers, executives and employees who will be granted
options, and the number of shares to be offered shall be made by the
Compensation Committee. However, it is presently expected that approximately 35
such persons of whom 7 are executive officers, and/or employee directors, will
be eligible for consideration by the Compensation Committee. The shares will be
held by the optionee for investment unless the Corporation registers the shares
covered by the 1995 Plan under the Securities Act of 1933.
The preceding summary of certain provisions of the 1995 Stock Option Plan
is qualified in its entirety by reference to the complete text of the 1995 Plan
which is set forth as Exhibit B of this Proxy Statement.
The affirmative vote of a majority of all of the Common and Class B shares
entitled to vote as a single class is required to approve the 1995 Plan. THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
1995 PLAN. IT IS INTENDED THAT PROXIES SOLICITED HEREBY WILL BE VOTED FOR SUCH
PLAN UNLESS THE STOCKHOLDER SPECIFIES OTHERWISE.
SELECTION OF INDEPENDENT AUDITORS
The auditors recommended to be retained by the Board of Directors, Deloitte
& Touche LLP, have advised the Corporation that they have no direct financial
interest or any material indirect financial interest in the Corporation, nor did
they have any connection during the past three years with the Corporation in the
capacity of promoter, underwriter, voting trustee, director, officer or
employee. Such auditors were first retained in 1987 as auditors for the
Corporation's 1987 fiscal year.
Representatives of such auditors are expected to be at the Meeting of the
stockholders and will be permitted to make a statement to stockholders if they
desire and to respond to any appropriate questions addressed by stockholders to
such representatives. The affirmative vote of a majority of the total votes cast
at the Meeting by the holders of Common Stock and Class B Stock combined is
required to approve the proposal to recommend the independent auditors.
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MEETINGS OF THE BOARD OF DIRECTORS
AND CERTAIN COMMITTEES
During 1994, the Board of Directors had five (5) meetings. All current
directors attended 75% or more of such meetings and of committees of which they
were members. Non-employee directors receive an annual fee of $3,500 and $550
for each meeting of the Board attended, while employee directors receive an
annual fee of $2,200 and $350 for each meeting attended.
The members of the Executive Committee of the Board of Directors are
Messrs. Allan Fromme, Chairman, Richard Brandt, Robert Greenes, Victor Liss and
Howard S. Modlin. The Executive Committee is authorized to exercise the powers
of the Board of Directors during the intervals between the meetings of the Board
and is from time to time delegated certain authorizations by the Board in
matters pertaining to the Corporation. The Executive Committee did not hold any
formal meetings in 1994. Members of said Committee receive a fee of $300 for
each meeting of the Committee they attend. Dr. Allan Fromme receives an annual
fee of $12,000 as Chairman of the Executive Committee and for other consulting
services, including his participation in telephonic conferences. Mr. Robert
Greenes receives an annual fee of $6,000 as Vice Chairman of the Executive
Committee and for other consulting services, including his participation in
telephonic conferences.
The members of the Compensation Committee of the Board of Directors are
Messrs. Howard S. Modlin, Chairman, Robert Greenes, Gene Jankowski and Ms. Jean
Firstenberg. The Compensation Committee reviews compensation and other benefits.
The Compensation Committee had two (2) meetings in 1994. Members of said
Committee receive a fee of $300 for each meeting of the Committee they attend
and the Chairman receives an annual fee of $2,500.
The members of the Audit Committee of the Board of Directors are Ms. Jean
Firstenberg, Chairperson and Messrs. Steven Baruch, Robert Greenes and Howard S.
Modlin. The Audit Committee reviews the audit function and material aspects
thereof with the Corporation's independent auditors. Such Committee had two (2)
meetings in 1994. Members of the Audit Committee receive a fee of $300 for each
meeting which they attend and the Chairperson receives an annual fee of $2,500.
The Board of Directors has not established a nominating or similar
committee.
On June 20, 1989, the Board of Directors established a Non-Employee
Director Stock Option Plan covering a maximum of 15,000 shares for grant.
Options are for a period of six years from the date of the grant, are granted at
fair market value on the date of the grant, may be exercised at any time after
one (1) year from the date of the grant while a director and are based on years
of service, with a minimum of 500 stock options for each director, an additional
500 based on five or more years of service, another 500 based on ten or more
years of service and an additional 1,000 based on twenty or more years of
service. In accordance with the Plan, the Board granted 500, 2,500, 1,500 and
1,500 options respectively to Jean Firstenberg, Allan Fromme, Robert Greenes and
Howard S. Modlin at the fair market price of $7.4375 on June 20, 1989 which are
currently outstanding and expire June 19, 1995 and 500 options to Steven Baruch,
Jean Firstenberg and Gene Jankowski at the fair market value of $9.6875 on May
19, 1995 which are also outstanding. An additional 1,000 options were granted to
Robert Greenes on June 10, 1991 at the fair market price on such date of
$4.6875. Mr. Greenes exercised such 1,000 options in June 1992. Mr. Richard
Brandt waived his right to receive 2,500 options upon his retirement as an
employee.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
The Corporation's executive officers and directors are required under
Section 16(a) of the Securities Exchange Act of 1934 to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and American Stock Exchange. Copies of those reports must also be furnished to
the Corporation.
Based solely on a review of the copies of reports furnished to the
Corporation and the Corporation's monthly reporting compliance program, the
Corporation believes that during the preceding year all filing
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<PAGE> 21
requirements applicable to executive officers and directors were met except Mr.
Michael R. Mulcahy inadvertently failed to report by February 14, 1995 on the
grant of an option in May 1994 because the option agreement was not delivered
until February 1995. Such report was filed on March 3, 1995. In addition,
Messrs. Matthew Brandt and Thomas Brandt each inadvertently failed to report by
February 14, 1995 on a gift of Class B Stock on December 28, 1994. Such reports
were filed in the second week of March 1995.
STOCKHOLDER PROPOSALS -- 1996 ANNUAL MEETING
If any stockholder desires to submit a proposal for action at the 1996
annual meeting, such proposal must be received by the Secretary of the
Corporation on or before December 4, 1995. Nominations for directors at the 1996
annual meeting by stockholders must be in accordance with Article 4(c) of the
Corporation's By-Laws and received on or before January 19, 1996. Shareholder
Communications Corporation will assist in the proxy solicitation for a fee of
$5,000 plus out-of-pocket expenses.
COST OF SOLICITATION
The cost of preparing and mailing material in connection with the
solicitation of proxies is to be borne by the Corporation. Solicitation will be
made by the Corporation's regular employees in the total approximate number of
ten. Solicitation will be made by mail, telegram, telephone and in person.
By Order of the Board of Directors
ANGELA D. TOPPI
Secretary
Dated: Norwalk, Connecticut
April 14, 1995
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EXHIBIT A
PROPOSED NEW ARTICLE FOURTH
(a) "FOURTH: The aggregate number of shares of stock of all classes which
the Corporation shall have authority to issue is 10,000,000, consisting of
5,500,000 shares of Common Stock having a par value of $1.00 per share,
3,000,000 shares of Class A Stock having a par value of $1.00 per share,
1,000,000 shares of Class B Stock having a par value of $1.00 per share, and
500,000 shares of Preferred Stock having a par value of $1.00 per share.
The powers, preferences and the relative, participating, optional and other
rights and the qualifications, limitations and restrictions thereof, of each
class of stock, and the express grant of authority to the Board of Directors to
fix by resolution the designations and the powers, preferences and rights of
each share of Preferred Stock and the qualifications, limitations and
restrictions thereof, which are not fixed by this Certificate of Incorporation,
are as follows:
A. COMMON STOCK AND CLASS B STOCK
I. Dividends, etc. Subject to the rights of the holders of Preferred
Stock, and subject to any other provisions of this Certificate of Incorporation,
as amended from time to time, holders of Common Stock, Class A Stock and Class B
Stock shall be entitled to receive such dividends and other distributions in
cash, stock or property of the Corporation as may be declared thereon by the
Board of Directors from time to time out of assets or funds of the Corporation
legally available therefor, provided that in the case of cash dividends, if at
any time a cash dividend is paid on the Common Stock, a cash dividend will also
be paid on the Class A Stock in an amount per share of Class A Stock equal to
110% of the amount of the cash dividends paid on each share of the Common Stock
(rounded up, if necessary to the nearest one-hundredth of a cent) and on Class B
Stock in an amount per share of Class B Stock equal to 90% of the amount of the
cash dividends paid on each share of the Common Stock (rounded down, if
necessary, to the nearest one-hundredth of a cent), and provided that in no
event shall dividends and other distributions be paid on any of the Common
Stock, Class A Stock and Class B Stock unless the other such classes of stock
also receive dividends subject to the above provisions for the requirement of
the respective higher cash dividends for Class A Stock and Common Stock, and
provided, further, that in the case of dividends or other distributions payable
in stock of the Corporation other than Preferred Stock, including distributions
pursuant to stock splits or divisions of stock of the Corporation other than
Preferred Stock, which occur after the initial issuance of shares of Class A
Stock and Class B Stock by the Corporation, except as specifically provided
herein, only shares of Common Stock shall be distributed with respect to Common
Stock, only shares of Class A Stock in an amount per share equal to the amount
per share paid with respect to the Common Stock shall be distributed with
respect to the Class A Stock and only shares of Class B Stock in an amount per
share equal to the amount per share paid with respect to the Common Stock shall
be distributed with respect to Class B Stock, except that the Board of Directors
may declare a distribution of Class A Stock proportionately to all holders of
Common Stock, Class A Stock and Class B Stock, and that, in the case of any
combination or reclassification of the Common Stock, the shares of Class A Stock
and Class B Stock shall also be combined or reclassified, so that the number of
shares of Class A Stock and Class B Stock outstanding immediately following such
combination or reclassification shall bear the same relationship to the number
of shares of Class A Stock and Class B Stock outstanding immediately prior to
such combination or reclassification as the number of shares of Common Stock
outstanding immediately following such combination or reclassification bears to
the number of shares of Common Stock outstanding immediately prior to such
combination or reclassification.
II. VOTING: (a) At every meeting of the stockholders every holder of
Common Stock shall be entitled to one (1) vote in person or by proxy for each
share of Common Stock, standing in his name on the transfer books of the
Corporation and every holder of Class B Stock shall be entitled to ten (10)
votes in person or by proxy for each share of Class B Stock standing in his name
on the transfer books of the Corporation subject to the following provisions:
(i) The holders of the Common Stock, voting separately as a class,
shall have the right at each meeting of stockholders with respect to
election of directors following the filing of this Certificate of
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Amendment, to elect such number of directors who, together with all other
directors previously elected by the holders of Common Stock (the "Common
Stock Directors") and whose terms are not expiring at such meeting,
constitute twenty-five percent (25%) of the total number of directors of
the entire Board of Directors. Such right to elect directors shall be in
accordance with this Certificate of Incorporation and the By-Laws of the
Corporation in effect from time to time. The remaining directors of the
Board of Directors shall be elected by the holders of Class B Stock voting
separately as a class. In the event that twenty-five percent (25%) of the
number of directors so fixed at any time is not a whole number, the number
of Common Stock Directors shall be rounded up to the nearest whole number.
Notwithstanding the foregoing, in no event shall the Common Stock Directors
constitute more than twenty-five percent (25%) (or the next highest whole
number) of the entire Board of Directors and, in the event that on the
record date of any stockholder meeting with respect to the election of
directors the number of Common Stock Directors whose terms are not expiring
at such stockholder meeting, constitute at least twenty-five percent (25%)
of the entire Board of Directors, the holders of Common Stock shall have no
vote in the election of directors at such meeting and no Common Stock
Directors shall be elected at such meeting.
(ii) If on the record date of any stockholder meeting with respect to
the election of directors the number of shares of Class B Stock which is
issued and outstanding is less than twelve-and-a-half percent (12 1/2%) of
the total number of shares of Common Stock and Class B Stock which is
issued and outstanding, the holders of the Common Stock shall vote
separately as a class to elect twenty-five percent (25%) of the directors
to be elected in the manner specified in Paragraph A II (b)(i) of this
Article FOURTH, and shall also be entitled to vote in the election of the
remaining directors to be elected, together with the holders of the Class B
Stock, voting, for this purpose as one class, with each share of Common
Stock entitled to one (1) vote and each share of Class B Stock entitled to
ten (10) votes.
(iii) In the event that the continued listing for trading of the
Corporation's Common Stock on the American Stock Exchange no longer
requires twenty-five percent (25%) of the number of directors to be elected
by the holders of the Common Stock in the manner specified in Paragraph A
II (a)(i) and (ii) of this Article FOURTH, then such right of the holders
of Common Stock to elect twenty-five percent (25%) of the number of
directors shall cease and at all elections of directors following such
change, the Common Stock and Class B Stock shall vote in the election of
directors as one class, with each share of Common Stock entitled to one (1)
vote and each share of Class B Stock entitled to ten (10) votes.
(iv) The holders of Class A stock shall not be entitled to vote at any
meeting of the stockholders or otherwise, except as may be specifically
required by applicable law.
(b) The provisions of this Article FOURTH of the Certificate of
Incorporation shall not be modified, revised, altered or amended, repealed or
rescinded in whole or in part, without the affirmative vote of a voting majority
of the shares of the Common Stock and of a voting majority of the shares of the
Class B Stock, each voting separately as a class.
(c) The Corporation may not effect or consummate:
(1) any merger or consolidation of the Corporation with or into any
other corporation;
(2) any sale, lease exchange or other disposition of all or
substantially all of the assets of the Corporation to or with any other
person; or
(3) any dissolution of the Corporation,
unless and until such transaction is authorized by the vote, if any, required by
Articles NINTH and TWELFTH of this Certificate of Incorporation and by Delaware
law; and unless and until such transaction is authorized by a majority of the
voting power of the shares of Common Stock and of Class B Stock entitled to
vote, each voting separately as a class, but the foregoing shall not apply to
any merger or other transaction described in the preceding subparagraphs (1) and
(2) if the other party to the merger or other transaction is a Subsidiary of the
Corporation.
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For purposes of this paragraph (c) a "Subsidiary" is any corporation more
than 50% of the voting securities of which are owned directly or indirectly by
the Corporation; and a "person" is any individual, partnership, corporation or
entity.
(d) Following the initial issuance of shares of Class B Stock, the
Corporation may not effect the issuance of any additional shares of Class B
Stock (except in amounts per share equal to the amount of Common Stock per share
paid with respect to the Common Stock in connection with stock splits and stock
dividends) unless and until such issuance is authorized by the holders of a
majority of the voting power of the shares of Common Stock and by the holders of
a majority of the voting power of Class B Stock entitled to vote, each voting
separately as a class.
(e) Every reference in this Certificate of Incorporation to a majority or
other proportion of shares of stock shall refer to such majority or other
proportion of the votes of such shares of stock.
(f) Except as may be otherwise required by law or by this Article FOURTH,
the holders of Common Stock and Class B Stock shall vote together as a single
class, subject to any voting rights which may be granted to holders of Preferred
Stock.
III. TRANSFER.
(a) No person holding shares of Class B Stock of record (hereinafter called
a "Class B Holder") may transfer, and the Corporation shall not register the
transfer of, such shares of Class B Stock, as Class B Stock, whether by sale,
assignment, gift, bequest, appointment or otherwise, except to a Permitted
Transferee and any attempted transfer of shares not permitted hereunder shall be
converted into Common Stock as provided by subsection (d) of this Section III. A
Permitted Transferee shall mean, with respect to each person from time to time
shown as the record holder of shares of Class B Stock:
(i) In the case of a Class B Holder who is a natural person;
(A) The spouse of such Class B Holder and any lineal ancestor and
descendant of such spouse, any lineal ancestor or descendant of such
Class B Holder's parents, including adopted children and any spouse of
such lineal descendant or ancestor and such spouse's lineal ancestors
and descendants (which ancestors and descendants, their spouses and any
lineal ancestors and descendants of such spouse, the Class B Holder, and
his or her spouse are herein collectively referred to as "Class B
Holder's Family Members");
(B) The trustee of a trust (including a voting trust) principally
for the benefit of such Class B Holder, such Class B Holder's Family
Members and/or one or more of his or her other Permitted Transferees
described in each subclause of this clause (i) other than this subclause
(B), provided that such trust may also grant a general or special power
of appointment to one or more of such Class B Holder's Family Members
and may permit trust assets to be used to pay taxes, legacies and other
obligations of the trust or of the estates of one or more of such Class
B Holder's Family Members payable by reason of the death of any of such
Family Members;
(C) A corporation if a majority of the beneficial ownership of
outstanding capital stock of such corporation which is entitled to vote
for the election of directors is owned by, or a partnership if a
majority of the beneficial ownership of the partnership is held by, the
Class B Holder or his or her Permitted Transferees determined under this
clause (i), provided that if by reason of any change in the ownership of
such stock or partnership interests, such corporation or partnership
would no longer qualify as a Permitted Transferee, all shares of Class B
Stock then held by such corporation or partnership shall, upon the
election of the Corporation given by written notice to such corporation
or partnership, without further act on anyone's part, be converted into
shares of Common Stock effective upon the date of the giving of such
notice, and stock certificates formerly representing such shares of
Class B Stock shall thereupon and thereafter be deemed to represent the
like number of shares of Common Stock; and
(D) The estate of such Class B Holder.
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(ii) In the case of a Class B Holder holding the shares of Class B
Stock in question as trustee pursuant to a trust (other than a trust
described in clause (iii) below), "Permitted Transferee" means (A) any
person transferring Class B Stock to such trust and (B) any Permitted
Transferee of any such transferor determined pursuant to clause (i) above.
(iii) In the case of a Class B Holder holding the shares of Class B
Stock in question as trustee pursuant to a trust which was irrevocable on
the record date (hereinafter in this Section III called the "Record Date")
for determining the persons to whom the Class B Stock is first issued by
the Corporation, "Permitted Transferee" means (A) any person to whom or for
whose benefit principal may be distributed either during or at the end of
the term of such trust whether by power of appointment or otherwise and (B)
any Permitted Transferee of any such person determined pursuant to clause
(i) above.
(iv) In the case of a Class B Holder which is a corporation or
partnership acquiring record and beneficial ownership of the shares of
Class B Stock in question upon its initial issuance by the Corporation,
"Permitted Transferee" means (A) any partner of such partnership, or
stockholder of such corporation, on the Record Date, (B) any person
transferring such shares of Class B Stock to such corporation or
partnership, and (C) any Permitted Transferee of any such person, partner,
or stockholder referred to in subclauses (A) and (B) of this clause (iv),
determined under clause (i) above.
(v) In the case of a Class B Holder which is a corporation or
partnership (other than a corporation or partnership described in clause
(iv) above) holding record and beneficial ownership of the shares of Class
B Stock in question, "Permitted Transferee" means (A) any person
transferring such shares of Class B Stock to such corporation or
partnership and (B) any Permitted Transferee of any such transferor
determined under clause (i) above.
(vi) In the case of a Class B Holder which is the estate of a deceased
Class B Holder, or which is the estate of a bankrupt of insolvent Class B
Holder, which holds record and beneficial ownership of the shares of Class
B Stock in question, "Permitted Transferee" means a Permitted Transferee of
such deceased, bankrupt or insolvent Class B Holder as determined pursuant
to clause (i), (ii), (iii), (iv) or (v) above, as the case may be.
(b) Notwithstanding anything to the contrary set forth herein, any Class B
Holder may pledge such Holder's share of Class B Stock to a pledgee pursuant to
a bona fide pledge of such shares as collateral security for indebtedness due to
the pledgee, provided that such shares shall not be transferred to or registered
in the name of the pledgee and shall remain subject to the provisions of this
Section III. In the event of foreclosure or other similar action by the pledgee,
such pledged shares of Class B Stock may only be transferred to a Permitted
Transferee of the pledgor or converted into shares of Common Stock, as the
pledgee may elect.
(c) For purposes of this Section III:
(i) The relationship of any person that is derived by or through legal
adoption shall be considered a natural one.
(ii) Each joint owner of shares of Class B Stock shall be considered a
"Class B Holder" of such shares.
(iii) A minor for whom shares of Class B Stock are held pursuant to a
Uniform Gifts to Minors Act or similar law shall be considered a Class B
Holder of such shares.
(iv) Unless otherwise specified, the term "person" means both natural
persons and legal entities.
(v) Without derogating from the election conferred upon the
Corporation pursuant to subclause (C) of clause (i) above, each reference
to a corporation shall include any successor corporation resulting from
merger or consolidation and each reference to a partnership shall include
any successor partnership resulting from the death or withdrawal of a
partner.
(d) Any transfer of shares of Class B Stock not permitted hereunder shall
result in the conversion of the transferee's shares of Class B Stock into shares
of Common Stock, effective the date on which certificates representing such
shares are presented for transfer on the books of the Corporation. The
Corporation may, in
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connection with preparing a list of stockholders entitled to vote at any meeting
of stockholders, or as a condition to the transfer or the registration of shares
of Class B Stock on the Corporation's books, require the furnishing of such
affidavits or other proof as it deems necessary to establish that any person is
the beneficial owner of shares of Class B Stock or is a Permitted Transferee.
(e) At any time when the number of outstanding shares of Class B Stock as
reflected on the stock transfer books of the Corporation falls below 5% of the
aggregate number of the issued and outstanding shares of the Common Stock and
Class B Stock of the Corporation, or the Board of Directors and the holders of a
majority of the outstanding shares of Class B Stock approve the conversion of
all of the Class B Stock into Common Stock, then, immediately upon the
occurrence of either such event, the outstanding shares of Class B Stock shall
be converted into shares of Common Stock. In the event of such a conversion,
certificates formerly representing outstanding shares of Class B Stock shall
thereupon and thereafter be deemed to represent the like number of shares of
Common Stock.
(f) Shares of Class B Stock shall be registered in the names of the
beneficial owners thereof and not in "street" or "nominee" name. For this
purpose, a "beneficial owner" of any shares of Class B Stock shall mean a person
who, or an entity which, possesses the power, either singly or jointly, to
direct the voting or disposition of such shares. The Corporation shall note on
the certificates for shares of Class B Stock the restrictions on transfer and
registration of transfer imposed by this Section III.
IV. CONVERSION RIGHTS.
(a) Subject to the terms and conditions of this Section IV, all outstanding
shares of Class A Stock shall be converted into fully paid and nonassessable
shares of Common Stock, immediately and without any action on the part of the
holder of such stock, in the event the Class B Stock is converted into Common
Stock in accordance with the provisions of subsection (e) of Section III of this
Article Fourth. Upon conversion, the shares of Common Stock issued shall be
subject to the same dividends or distributions theretofore declared but not paid
or issued on the Class A Stock immediately prior to conversion but the
Corporation shall not make any payment or adjustment on account of any dividends
or distributions declared but not paid or issued on the Common Stock on such
conversion. In the event of such conversion, certificates formerly representing
shares of Class A Stock shall thereupon and thereafter be deemed to represent
the like number of shares of Common Stock.
(b) Subject to the terms and conditions of this Section IV, each Share of
Class B Stock shall be convertible at any time or from time to time, at the
option of the respective holder thereof, at the office of any transfer agent for
Class B Stock, and at such other place or places, if any, as the Board of
Directors may designate, or, if the Board of Directors shall fail so to
designate, at the principal office of the Corporation (attention of the
Secretary of the Corporation), into one (1) fully paid and nonassessable share
of Common Stock. Upon conversion, the Corporation shall make no payment or
adjustment on account of dividends accrued or in arrears on Class B Stock
surrendered for conversion or on account of any dividends on the Common Stock
issuable on such conversion. Before any holder of Class B Stock shall be
entitled to convert the same into Common Stock, he shall surrender the
certificate or certificates for such Class B Stock at the office of said
transfer agent (or other place as provided above), which certificate or
certificates, if the Corporation shall so request, shall be duly endorsed to the
Corporation or in blank or accompanied by proper instruments of transfer to the
Corporation or in blank) (such endorsements or instruments of transfer to be in
form satisfactory to the Corporation), and shall give written notice to the
Corporation at said office that he elects so to convert said Class B Stock in
accordance with the terms of this Section IV, and shall state in writing therein
the name or names in which he wishes the certificate or certificates for Common
Stock to be issued. Every such notice of election to convert shall constitute a
contract between the holder of such Class B Stock and the Corporation, whereby
the holder of such Class B Stock shall be deemed to subscribe for the amount of
Common Stock which he shall be entitled to receive upon such conversion, and, in
satisfaction of such subscription, to deposit the Class B Stock to be converted
and to release the Corporation from all liability thereunder, and thereby the
Corporation shall be deemed to agree that the surrender of the certificate or
certificates therefor and the extinguishment of liability thereon shall
constitute full payment of such subscription for Common Stock to be issued upon
such conversion. The Corporation will as soon as
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practicable after such deposit of a certificate or certificates for Class B
Stock, accompanied by the written notice and the statement above prescribed,
issue and deliver at the office of said transfer agent (or other place as
provided above) to the person for whose account such Class B Stock was so
surrendered, or to his nominee or nominees, a certificate or certificates for
the number of full shares of Common Stock to which he shall be entitled as
aforesaid. Subject to the provisions of subsection (d) of this Section IV, such
conversion shall be deemed to have been made as of the date of such surrender of
the Class B Stock to be converted; and the person or persons entitled to receive
the Common Stock issuable upon conversion of such Class B Stock shall be treated
for all purposes as the record holder or holders of such Common Stock on such
date.
(c) The issuance of certificates for shares of Common Stock upon conversion
of shares of Class B Stock shall be made without charge for any stamp or other
similar tax in respect of such issuance. However, if any such certificate is to
be issued in a name other than that of the holder of the share or shares of
Class B Stock converted, the person or persons requesting the issuance thereof
shall pay to the Corporation the amount of any tax which may be payable in
respect of any transfer involved in such issuance or shall establish to the
satisfaction of the Corporation that such tax has been paid.
(d) The Corporation shall not be required to convert Class B Stock and no
surrender of Class B Stock shall be effective for that purpose, while the stock
transfer books of the Corporation are closed for any purpose; but the surrender
of Class B Stock for conversion during any period while such books are so closed
shall become effective for conversion immediately upon the reopening of such
books, as if the conversion had been made on the date such Class B Stock was
surrendered.
(e) The Corporation covenants that it will at all times reserve and keep
available, solely for the purpose of issue upon conversion of the outstanding
shares of Class A Stock and Class B Stock, such number of shares of Common Stock
as shall be issuable upon the conversion of all such outstanding shares,
provided that nothing contained herein shall be construed to preclude the
Corporation from satisfying its obligations in respect of the conversion of the
outstanding shares of Class A Stock and Class B Stock by delivery of shares of
Common Stock which are held in the treasury of the Corporation. The Corporation
covenants that if any shares of Common Stock, required to be reserved for
purposes of conversion hereunder, require registration with or approval of any
governmental authority under any federal or state law before such shares of
Common Stock may be issued upon conversion, the Corporation will use its best
efforts to cause such shares to be duly registered or approved, as the case may
be. The Corporation will endeavor to list the shares of Common Stock required to
be delivered upon conversion prior to such delivery upon each national
securities exchange, if any, upon which the outstanding Common Stock is listed
at the time of such delivery. The Corporation covenants that all shares of
Common Stock which shall be issued upon conversion of the shares of Class A
Stock and Class B Stock, will, upon issue, be fully paid and nonassessable and
not entitled to any preemptive rights.
V. LIQUIDATION RIGHTS. In the event of any dissolution, liquidation or
winding up of the affairs of the Corporation, whether voluntary or involuntary,
after payment or provision for payment of the debts and other liabilities of the
Corporation, the holders of each series of Preferred Stock shall be entitled to
receive, out of the net assets of the Corporation, an amount for each share
equal to the amount fixed and determined by the Board of Directors in any
resolution or resolutions providing for the issuance of any particular series of
Preferred Stock, plus an amount equal to all dividends accrued and unpaid on
shares of such series to the date fixed for distribution, and no more, before
any of the assets of the Corporation shall be distributed or paid over to the
holders of Common Stock. After payment in full of said amounts to the holders of
Preferred Stock of all series, the remaining assets and funds of the Corporation
shall be divided among and paid ratably to the holders of Common Stock, Class A
Stock and Class B Stock (considered for this purpose as one class). If, upon
such dissolution, liquidation or winding up, the assets of the Corporation
distributable as aforesaid among the holders of Preferred Stock of all series
shall be insufficient to permit full payment to them of said preferential
amounts, then such assets shall be distributed among such holders, first in the
order of their respective preferences, and second, as to such holders who are
next entitled to such assets and who rank equally with regard to such assets,
ratably in proportion to the respective total amounts which they shall be
entitled to receive as provided in this Section V. A merger or consolidation of
the Corporation with or into any other corporation or a sale or conveyance of
all or any part of the assets of the Corporation (which shall not in fact result
in the liquidation of the Corporation and the distribution of assets to
stockholders) shall not be
A-6
<PAGE> 28
deemed to be a voluntary or involuntary liquidation or dissolution or winding up
of the Corporation within the meaning of this Section V.
B. PREFERRED STOCK.
The Board of Directors is authorized, subject to limitations prescribed by
law and the provisions of this Article FOURTH, to provide for the issuance of
the preferred shares in series, and by filing a certificate pursuant to the
General Corporation Law of Delaware, to establish the number of shares to be
included in each such series, and to fix the designations, relative rights,
preferences and limitations of the shares of each such series. The authority of
the Board with respect to each series shall include, but not be limited to,
determination of the following:
(a) The number of shares constituting that series and the distinctive
designations of that series;
(b) The dividend rate on the shares of that series, whether dividends
shall be cumulative and, if so, from which date or dates, and the relative
rights or priority, if any, of payment of dividends on shares of that
series;
(c) Whether that series shall have voting rights, in addition to the
voting rights provided by law and, if so, the terms of such voting rights;
(d) Whether that series shall have conversion privileges and, if so,
the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors
shall determine;
(e) Whether or not the shares of that series shall be redeemable and,
if so, the terms and conditions of such redemption, including the date or
dates upon or after which they shall be redeemable, and the amount per
share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(f) Whether that series shall have a sinking fund for the redemption
or purchase of shares of that series and, if so, the terms and amount of
such sinking fund;
(g) The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the Corporation,
and the relative rights of priority, if any, of payment of shares of that
series;
(h) Any other relative rights, preferences and limitations of that
series.
Dividends on outstanding preferred shares shall be declared and paid, or
set apart for payment, before any dividends shall be declared and paid, or set
apart for payment, on the common shares with respect to the dividend period.
Any and all such shares issued, and for which the full consideration has
been paid or delivered shall be deemed fully paid stock and the holder of such
shares shall not be liable for any further call or assessment or any other
payment thereon.
C. AUTHORIZED SHARES OF CAPITAL STOCK.
Except as may be provided in the terms and conditions fixed by the Board of
Directors for any series of Preferred Stock, and in addition to any other vote
that may be required by statute, stock exchange regulations, this Certificate of
Incorporation or any amendment hereof, the number of authorized shares of any
class or classes of stock of the Corporation may be increased or decreased by
the affirmative vote of the holders of a majority of the outstanding shares of
stock of the Corporation entitled to vote."
A-7
<PAGE> 29
EXHIBIT B
1995 STOCK OPTION PLAN
OF
TRANS-LUX CORPORATION
1. Purpose. The purpose of this Plan is to enable the Corporation to
attract and keep able and qualified officers, key executives and employees of
the Corporation and its subsidiaries, as defined in Section 425(f) of the
Internal Revenue Code of 1986, as amended, by offering them an opportunity to
participate in the growth and development of the Corporation through stock
ownership, and to thereby provide additional incentive for them to promote the
success of the business.
2. Stock Subject to the Plan. The shares of stock to be offered pursuant
to this Plan shall be shares of the Corporation's authorized Common Stock and/or
Class A Stock (if such Class A stock is approved at the May 18, 1995 annual
meeting of stockholders), and may be unissued shares or reacquired shares. The
aggregate amount of stock which may be delivered upon exercise of all options
granted under the Plan shall not be more than 50,000 shares. Shares subject to
but not delivered under any option terminating or expiring for any reason prior
to the exercise thereof by the optionee in full shall be deemed available for
options thereafter granted during the continuance of the Plan. Options granted
may be "Incentive Stock Options" or "Non-Statutory Stock Options".
3. Administration of the Plan. The Board of Directors shall appoint a
Compensation Committee (hereinafter called "Committee"), which shall consist of
not less than three members who are not employees of the Corporation. Each
member of the Committee, while serving as such, shall also be a member of the
Board of Directors of the Corporation. Subject to the provisions of the Plan,
the Committee shall have plenary authority in its sole discretion to determine
the employees of the Corporation and its subsidiaries to whom options may be
granted, the number and class of shares to be embraced in each of the options
and the time or times at which options shall be granted; to interpret the Plan;
and to prescribe, amend, and rescind rules and regulations relating to it;
provided, however, that options shall be granted in accordance with the
provisions of paragraphs 4 and 5 hereof. 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 select one of its members as its chairman and
shall hold its meetings at such times and places as it shall deem advisable. A
majority of its members shall constitute a quorum. All actions of the Committee
shall be taken by a majority of its members. Any action may be taken by a
written instrument signed by a majority of the members and actions so taken
shall be fully as effective as if it had been taken by a vote of a majority of
the members 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.
4. Employees to Whom Options May be Granted. Options may be granted to
such qualified officers, key executives and employees of the Corporation and of
its subsidiaries who, in the opinion of the Committee, perform services of
special importance to the management, operation and development of the business
of the Corporation or any of its subsidiaries. The Committee shall determine
those employees to be granted options and the number and class of shares to be
subject to each option so granted, provided, however, that the option shall be
granted only by resolution adopted by the Board of Directors of this Corporation
if it is to an employee who is not subject to Section 16 of the Securities
Exchange Act of 1934. Options granted to employees who are subject to said
Section 16 shall be granted by resolution of the Committee. Employees may
receive more than one (1) option under the Plan, but the aggregate fair market
value (determined as of the time the option is granted) of the stock for which
any employee may exercise incentive stock options for the first time in any
calendar year (under all such plans of the Corporation and its subsidiaries)
shall not exceed $100,000.
5. Option Price. The purchase price of the Common Stock and/or Class A
Stock under each option shall be determined by the Committee, but shall not be
less than the fair market value of the stock at the time of granting of the
option except that in the case of Non-Statutory Stock Options, the price may be
such lesser price as determined by the Committee. Such fair market value shall
be taken by the Committee as the average between the high and low sale price of
the Common Stock and/or Class A Stock of the Corporation as quoted
B-1
<PAGE> 30
on a national securities exchange or other market on the date the option is
granted, or, if there is no such sale on that date, then on the last previous
day on which such a sale was reported. If the option holder owns more than 10%
of the total combined voting power of the Corporation, the purchase price of
Incentive Stock Options shall not be less than 110% of the fair market value on
the date of grant.
6. Term of Option. The term of each option granted pursuant to the Plan
shall be for a period not exceeding ten (10) years from the date of granting
thereof, except that if the option holder owns more than 10% of the total
combined voting power of the Corporation and the option is an Incentive Stock
Option, such period shall not exceed five (5) years from the date of grant.
Options shall be subject to earlier termination as hereinafter provided.
7. Exercise of Options. An option when and after it becomes exercisable
may be exercised at any time, or from time to time during its term as to any
part of or all of the shares which shall be optioned, provided, however, that:
(a) an option may not be exercised as to less than 100 shares at any
one time (or the remaining shares then purchasable under the option if the
same is less than 100 shares);
(b) the purchase price of the shares as to which an option shall be
exercised shall be paid in full in cash and/or by delivery of shares of the
same class of the Corporation valued at the closing price of such Common
Stock and/or Class A Stock, as the case may be, on the American Stock
Exchange or other market on the date of exercise thereof;
(c) each option shall be subject to the following additional
conditions, precedent and restrictions thereon with respect to its
exercise:
(i) Each employee to whom an option is granted under the Plan must
remain in the continuous employ of the Corporation or one of its
subsidiaries for one year from the date the option is granted or such
shorter period as permitted by the Committee before he or she shall have
the right to exercise any part thereof. Thereafter all or any part of
the shares covered by each option may be purchased at any time or from
time to time during the option period, provided, however, that no option
may be exercised unless the optionee is at the time of such exercise in
the employ of the Corporation or one of its subsidiaries, and shall have
been continuously so employed since the grant of his or her option,
except as otherwise permitted in Paragraph 8. Absence on leave, approved
by the Committee, shall not be considered an interruption of employment
for any purpose of the Plan.
(ii) No option shall be transferable by a participant otherwise
than by will or by the laws of descent and distribution and is
exercisable during his or her lifetime only by the optionee.
(iii) Neither this Plan nor the granting of any option hereunder
shall be deemed to confer upon any optionee any right with respect to
continuation of employment by the Corporation or any subsidiary, nor in
any way interfere with or affect the right of the optionee or the
Corporation's right to terminate his or her employment at any time.
(iv) Each optionee shall agree that unless and until the shares are
registered under the Securities Act of 1933, he or she will purchase the
optioned shares for investment and not with any present intention to
resell the shares.
8. Limitations on Participation.
(a) If an optionee shall cease to be employed by the Corporation or
one of its subsidiaries for any reason (other than death or disability), he
or she may, but only within the 90 days next succeeding such cessation of
employment, exercise the option to the extent that he or she was entitled
to exercise it at the date of such cessation, unless he or she was
discharged for cause. If an optionee shall be discharged for cause, the
option shall terminate on the date of such discharge and the optionee shall
forfeit any and all rights which may have accrued prior thereto. The
Committee's determination that an optionee was discharged for cause shall
be final and absolute, and shall not be subject to question by the optionee
or the
B-2
<PAGE> 31
Corporation. All options to the extent not exercisable on the date of
cessation of employment shall be forfeited.
(b) Retirement shall be deemed a cessation of employment within the
meaning of this Plan.
(c) In the event of death of an optionee while in the employ of the
Corporation or any of its subsidiaries, the option theretofore granted to
the optionee shall be exercisable only within nine (9) months next
following the date of his or her death by the person or persons to whom the
optionee's rights under the option shall pass by the optionee's will or the
laws of descent and distribution, or within six (6) months after the date
of the appointment of an administrator or executor of the estate of such
optionee, whichever date shall sooner occur, and then only if and to the
extent that he or she was entitled to exercise it at the date of death,
provided, however, that the optionee shall be deemed to be so entitled even
if such death shall have taken place prior to the expiration of one (1)
year from the date of the granting of the option, anything in this Plan to
the contrary notwithstanding, if the Committee so determines.
(d) In the event that an optionee becomes permanently and totally
disabled while in the employ of the Corporation or any of its subsidiaries,
the optionee may, but only within one (1) year next succeeding the day of
the commencement of such disability, exercise the option to the extent that
he or she was entitled to exercise, but in no event after the expiration of
the option. For this purpose, an optionee shall be considered permanently
and totally disabled if he or she is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than twelve
(12) months. An optionee shall not be considered to be permanently and
totally disabled unless the optionee furnishes proof of the existence
thereof in such form and manner, and at such times, as the Committee may
require. The Committee's determination of whether the optionee is
permanently and totally disabled shall be final and absolute, and shall not
be subject to question by the optionee, a representative of the optionee,
or the Corporation.
9. Adjustments Upon Changes in Capitalization. In the event of changes in
the outstanding Common Stock and Class A Stock of the Corporation by reason of
stock dividends, split-ups, recapitalizations, mergers, consolidations,
combinations, or exchanges of shares, separations, reorganizations, or
liquidations, the number and class of shares available under the Plan and the
aggregate and the maximum number of shares as to which options may be granted to
any employee shall be correspondingly adjusted by the Committee. No adjustment
shall be made in the minimum number of shares which may be purchased at any
time.
10. Effectiveness of the Plan. The Plan shall become effective on such
date as the Board of Directors shall determine, but only after:
(a) The stockholders shall have approved the Plan by an affirmative
vote of the majority of the outstanding shares of capital stock entitled to
vote as a single class within twelve (12) months following the adoption of
the Plan by the Board of Directors;
(b) if not previously listed, the shares of the Common Stock and/or
Class A Stock reserved for the Plan shall have been duly listed, upon
official notice of issuance, upon the national exchange whereon they are
traded and registered under the Securities Exchange Act of 1934, as
amended; and
(c) the Board of Directors shall have been advised by counsel that all
applicable legal requirements have been complied with.
11. Time of Granting Options. Whenever the Board of Directors or
Committee shall designate a person for the receipt of an option, the Corporation
shall forthwith send notice thereto to the designee. The date of such notice
shall be the date of granting the option to such participant for all purposes of
this Plan. The notice shall be in the form of a Grant approved by the Board of
Directors of this Corporation.
12. Amendments and Termination of the Plan. The Plan shall terminate on
March 9, 2005, and an option shall not be granted under the Plan after that
date. The Board of Directors without further approval of the stockholders, may
at any time suspend or terminate the Plan or amend it from time to time in such
B-3
<PAGE> 32
respects as it may deem advisable in order that options granted hereunder as
Incentive Stock Options shall be "Incentive Stock Options" as defined in Section
422A of the Internal Revenue Code of 1986, or to conform to any change in
applicable law or to regulations or rulings of administrative agencies, or may
so amend it in any other respect not involving a substantial departure from the
principles herein set forth; provided, however, that no amendment shall be
effective without prior approval of a majority of the holders of the issued and
outstanding shares of capital stock of the Corporation entitled to vote, which
would: (a) except as specified in paragraph 9, increase the number of shares for
which options may be granted under the Plan; (b) change the eligibility
requirements for individuals entitled to receive options hereunder; (c) the
manner of determining option prices; (d) the period during which options may be
granted or exercised or (e) the provisions relating to adjustments to be made in
changes in capitalization. No termination, suspension or amendment of the Plan
shall, without the consent of the holder of an existing option, adversely affect
the holder's rights under such option.
13. Restriction on Issuance of Shares. The Corporation shall not be
obligated to sell or issue any shares pursuant to any stock option agreement
unless:
(a) the shares with respect to which the option is being exercised
have been registered under the Securities Act of 1933, as amended, or are
exempt from such registration; and
(b) the prior approval of such sale or issuance has been obtained from
any State regulatory body having jurisdiction.
14. Class A Stock. All references to Class A Stock herein are subject to
approval of such class of stock at the Corporation's May 18, 1995 annual meeting
of stockholders. If such class is not authorized by stockholders, then the only
shares of stock offered pursuant to this Plan shall be Common Stock.
B-4
<PAGE> 33
(INCENTIVE) (NON-STATUTORY) STOCK OPTION
GRANT made this day of , 19 , by TRANS-LUX CORPORATION,
a Delaware corporation having its office at 110 Richards Avenue, Norwalk,
Connecticut (hereinafter called the "Corporation") to residing at
(hereinafter called the "Employee").
WHEREAS, Corporation has heretofore adopted the TRANS-LUX CORPORATION 1995
STOCK OPTION PLAN for the benefit of its employees and the employees of its
subsidiaries, which Plan has been approved by Corporation's stockholders; and
WHEREAS, the said 1995 Stock Option Plan makes the granting of an option to
Employee effective on the date hereof,
FIRST: Subject to all of the provisions hereinafter set forth and the
terms and provisions of the 1995 Stock Option Plan, Corporation grants to
Employee the right and option (hereinafter called the "Option") to purchase all
or any part of an aggregate of ( ) shares of the Stock* of
Corporation (such number being subject to adjustment as provided in paragraph
SEVENTH hereof).
SECOND: The purchase price of the shares of Corporation's Stock*
covered by the Option shall be ($ ) per share.
THIRD: The term of the Option shall be for a period of ten (10)** years
from the date hereof subject to earlier termination as provided in paragraphs
FIFTH and SIXTH hereof. The Option may be exercised at any time, or from time to
time, during its term, as to any part or all of the shares covered by the Option
provided, however, that an Option may not be exercised as to less than one
hundred (100) shares at any time (or the remaining shares then purchasable under
the Option if the same is less than one hundred (100) shares, and further
provided that except as otherwise provided in paragraph SIXTH hereof, Employee,
at the time of exercise of the Option, shall have been continuously employed by
Corporation, or one of its subsidiaries, for a period of one (1) year from the
date hereof. (Absence on leave approved by or on behalf of the employing
corporation, shall not be considered an interruption of employment for the
purpose hereof.)
The holder of the Option shall not have any of the rights of a stockholder
with respect to the shares covered by the Option except to the extent that any
such shares shall be actually delivered upon the due exercise of the Option. The
Option may not be exercised unless at the date of exercise a registration
statement under the Securities Exchange Act of 1934, as amended, relating to the
shares covered by the Option, shall be in effect, and such shares shall have
been duly listed, upon official notice of issuance, upon the national exchange
wherein they are traded.
FOURTH: The Option herein granted may not be assigned, transferred,
pledged or hypothecated in any way, shall not be subject to execution,
attachment or similar process and shall not be transferable or assignable by
operation of law except that the Option shall be assignable or transferable
under and pursuant to the last will and testament of Employee or the laws of
descent and distribution. The Option may be exercised during the lifetime of the
Employee only by Employee. The granting of the Option herein granted to Employee
shall not in any way be deemed to confer upon Employee any right to continuation
of employment by the Corporation, or any subsidiary of Corporation nor shall it
in any way interfere or affect the right of Corporation or any subsidiary of
Corporation who shall be the employer of Employee, to terminate Employee's
employment hereunder.
FIFTH: If Employee shall cease to be employed by Corporation or one of its
subsidiaries for any reason other than death, disability or discharge for cause,
Employee may, but only within 90 days next succeeding such cessation of
employment, exercise the Option herein granted to the extent that Employee shall
be
- ---------------
* Insert whether options are granted for Common or Class A Stock. Options will
only be for Common Stock if stockholders do not approve the Class A Stock.
** Five (5) years if the Employee owns more than ten percent (10%) of the total
combined voting power of the Corporation and the Option is an Incentive
Stock Option.
B-5
<PAGE> 34
entitled to exercise it at the date of such cessation of employment. If Employee
shall be discharged for cause, the Option herein granted shall terminate on the
date of such discharge and Employee shall forthwith forfeit any and all rights
which may have accrued prior thereto. Any determination by or on behalf of the
employing corporation of Employee that Employee was discharged for cause shall
be final and absolute and shall not be subject to any question by Employee.
SIXTH: (a) In the event of the death of Employee while in the employ of
Corporation or any of its subsidiaries, the Option herein granted shall be
exercisable only within nine (9) months next following the date of Employee's
death by the person or persons to whom the rights under the Option shall pass by
the Employee's will or by the laws of descent and distribution or within six (6)
months after the date of the appointment of an administrator or executor of the
estate of the Employee, whichever date shall sooner occur, and then only if and
to the extent that Employee was entitled to exercise the Option at the date of
death; provided, however, that anything hereinbefore contained to the contrary
notwithstanding, the Employee shall be deemed, in the sole and absolute
discretion of the Compensation Committee of the Board of Directors of the
Corporation, to be so entitled to exercise the Option herein granted in such
number of shares, if any, as the Compensation Committee of the Board of
Directors of the Corporation determines in its sole and absolute discretion,
even if death shall take place prior to the expiration of one (1) year from the
date hereof.
(b) In the event that Employee becomes permanently and totally
disabled while in the employ of the Corporation or one of its subsidiaries
the Employee may, but only within one (1) year next succeeding the day of
the commencement of such disability, exercise the Option to the extent
Employee is entitled to exercise, but in no event after the expiration of
the Option. For this purpose, Employee shall be considered permanently and
totally disabled if Employee is unable to engage in any substantial gainful
activity by reason of any medically determinable mental or physical
impairment which can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than twelve
(12) months. Employee shall not be considered to be permanently and totally
disabled unless Employee furnishes proof of the existence thereof in such
form and manner and at such times as the Compensation Committee of the
Board of Directors may require. The Compensation Committee's determination
of whether Employee is permanently and totally disabled shall be final and
absolute and shall not be questioned by the Employee, a representative of
the Employee or the Corporation.
SEVENTH: If all or any portion of the Option shall be exercised subsequent
to any stock dividend, split-up, recapitalization, merger, consolidation,
combination or exchange of shares, separation, reorganization or liquidation
occurring after the date hereof, as a result of which shares of any class shall
be issued in respect of outstanding shares of Stock*, or shares of
Stock* shall be changed into the same or a different number of shares of
the same or another class or classes, the person or persons so exercising the
Option shall receive, for the aggregate price paid upon such exercise, the
aggregate number and class of shares which, if shares of Stock* (as
authorized at the date hereof) had been purchased at the date hereof for the
same aggregate price (on the basis of the price per share set forth in paragraph
SECOND hereof) and had not been disposed of, such person or persons would be
holding, at the time of such exercise, as a result of such purchase and all
stock dividends, split-ups, recapitalizations, mergers, consolidations,
combinations or exchanges of shares, separations, reorganizations, or
liquidations; provided, however, that no fractional share will be issued upon
any such exercise, and the aggregate price paid shall be appropriately reduced
on account of any fractional share not issued. No adjustment shall be made in
the minimum number of shares which may be purchased at any one time.
EIGHTH: The granting of this Option is subject to Employee's agreement
that unless the shares are registered under the Securities Act of 1933, as
amended, Employee or any successor to Employee will purchase the shares which
are the subject hereof for investment and not with any present intention to
resell the same, and to Employee's further agreement that Employee or such
successor will confirm such intention by an appropriate certificate at the time
of exercising the Option, the form of such certificate to be in the form
- ---------------
* Insert whether options are granted for Common or Class A Stock. Options will
only be for Common Stock if stockholders do not approve the Class A Stock.
B-6
<PAGE> 35
determined by counsel for the Corporation at the time of any purchase of shares
pursuant to the Option herein granted, and no shares will be issued pursuant to
the Option unless and until such appropriate certificate shall be executed,
signed and delivered by the Employee or any successor.
NINTH: The Option may be exercised by giving written notice of such
exercise to the Corporation, at 110 Richards Avenue, Norwalk, Connecticut
06856-5090 or such other address as designated by the Corporation. Such notice
shall state an intention to exercise the Option and the number of shares in
respect of which it is being exercised, and shall be signed by the person or
persons exercising the Option. Such notice shall either:
(a) be accompanied by the full purchase price of such shares, which
payment shall be the cash and/or delivery of Stock* of Corporation
valued at the closing price of such Stock* on the American Stock
Exchange or other market on the date of exercise, in which event the
Corporation shall deliver a certificate or certificates representing such
shares as soon as practicable after the notice is received; or
(b) fix a date (not less than 10 nor more than 15 business days from
the date such notice shall be received by the Corporation) for the payment
of the full purchase price of such shares, at the office of the
Corporation, or designate in writing, against delivery of a certificate or
certificates representing such shares.
The certificate or certificates for the shares as to which the Option shall
have been exercised, shall be registered in the name of the person or persons
exercising the Option and shall be delivered as provided above to or upon the
written order of the person or persons exercising the Option. In the event that
the Option shall be exercised by any person or persons other than the Employee,
such notice shall be accompanied by appropriate proof of the right of such
person or persons to exercise the Option, which proof shall be to the
satisfaction of counsel to the Corporation.
TENTH: As used herein, the terms "subsidiary" or "subsidiaries" shall mean
any present or future corporation which would be a "subsidiary corporation" of
the Corporation as that term is defined in Section 425(f) of the Internal
Revenue Code of 1986 as now or hereafter amended.
ELEVENTH: This agreement contains the sole and entire Option Grant and may
not be changed, varied, amended or modified except by an instrument in writing
duly executed by the Corporation.
TWELFTH: The appropriate Federal or State Courts of, or located in, the
State in which the Corporation has its principal executive offices shall have
exclusive jurisdiction of all disputes arising under this Agreement.
IN WITNESS WHEREOF, the Corporation has caused this Option Grant to be duly
executed by its officer thereunto duly authorized on the day and year first
above written.
TRANS-LUX CORPORATION
By
Accepted and Agreed to
Employee
- ---------------
* Insert whether options are granted for Common or Class A Stock. Options will
only be for Common Stock if stockholders do not approve the Class A Stock.
B-7
<PAGE> 36
TRANS-LUX
CORPORATION
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
MAY 18, 1995
NORWALK, CONNECTICUT
21
<PAGE> 37
TRANS-LUX CORPORATION
COMMON STOCK PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- MAY 18, 1995
(SOLICITED ON BEHALF OF BOARD OF DIRECTORS)
KNOW ALL MEN BY THESE PRESENTS, that the undersigned stockholder of
TRANS-LUX CORPORATION hereby constitutes and appoints RICHARD BRANDT, VICTOR
LISS and HOWARD S. MODLIN, and each of them, the attorneys and proxies of the
undersigned, with full power of substitution, to vote for and in the name, place
and stead of the undersigned, at the Annual Meeting of the Stockholders of said
Corporation, to be held at the office of the Corporation, 110 Richards Avenue,
Norwalk, Connecticut, on May 18, 1995, at 10:00 A.M., and at any adjournment
thereof, the number of votes the undersigned would be entitled to cast if
present for the following matters and, in their discretion, upon such other
matters as may properly come before the meeting or any adjournment thereof:
Directors recommend vote FOR Items 1, 2, 3 and 4
<TABLE>
<S> <C> <C> <C> <C>
Item 1. FOR NOT FOR
/ / / / Common Stock Designee -- Election of Gene
Jankowski to serve as director for a three
year term and until his successor is elected
and shall have qualified.
Item 2. FOR AGAINST ABSTAIN
/ / / / / / The proposal to authorize the new Class A
Stock and related amendments.
Item 3. FOR AGAINST ABSTAIN
/ / / / / / The proposal to adopt the 1995 Stock Option
Plan.
Item 4. FOR AGAINST ABSTAIN
/ / / / / / Recommended retention of Deloitte & Touche LLP
as the independent auditors for the
Corporation for the ensuing year.
</TABLE>
UNLESS YOU SPECIFY OTHERWISE, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE
NOMINEE FOR DIRECTOR AND "FOR" ITEMS 2, 3 and 4. ONLY COMMON STOCKHOLDERS MAY
VOTE FOR THE COMMON STOCK DESIGNEE.
(Continued and to be signed on other side.)
22
<PAGE> 38
A majority of said attorneys and proxies, or their substitutes at said
meeting, or any adjournments thereof, may exercise all of the powers hereby
given. Any proxy to vote any of the shares with respect to which the undersigned
is or would be entitled to vote, heretofore given to any person or persons other
than the persons named above, is hereby revoked.
IN WITNESS WHEREOF, the undersigned has signed and sealed this proxy and
hereby acknowledges receipt of a copy of the notice of said meeting and proxy
statement in reference thereto, both dated April 14, 1995.
Dated: , 1995
(L.S.)
Stockholder(s) Signature
(L.S.)
NOTE: This proxy properly filled in, dated and signed, should be returned
immediately in the enclosed postpaid envelope to TRANS-LUX CORPORATION, 110
Richards Avenue, Norwalk, Connecticut 06856-5090. If the signer is a
corporation, sign in full the corporate name by a duly authorized officer. If
signing as attorney, executor, administrator, trustee or guardian, please give
your full title as such.
23
<PAGE> 39
TRANS-LUX CORPORATION
CLASS B STOCK PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- MAY 18, 1995
(SOLICITED ON BEHALF OF BOARD OF DIRECTORS)
KNOW ALL MEN BY THESE PRESENTS, that the undersigned stockholder of
TRANS-LUX CORPORATION hereby constitutes and appoints RICHARD BRANDT, VICTOR
LISS and HOWARD S. MODLIN, and each of them, the attorneys and proxies of the
undersigned, with full power of substitution, to vote for and in the name, place
and stead of the undersigned, at the Annual Meeting of the Stockholders of said
Corporation, to be held at the office of the Corporation, 110 Richards Avenue,
Norwalk, Connecticut, on May 18, 1995, at 10:00 A.M., and at any adjournment
thereof, the number of votes the undersigned would be entitled to cast if
present for the following matters and, in their discretion, upon such other
matters as may properly come before the meeting or any adjournment thereof:
Directors recommend vote FOR Items 1, 2, 3 and 4.
<TABLE>
<S> <C> <C> <C> <C>
Item 1. FOR NOT FOR
/ / / / Class B Stock Designees -- Election of Richard
Brandt, Jean Firstenberg and Victor Liss as
directors for a three year term, and until
their successors are elected and shall have
qualified.
</TABLE>
Authority is withheld with respect to the following nominee(s):
<TABLE>
<S> <C>
--------------------------------------- ---------------------------------------
Item 2. FOR AGAINST ABSTAIN
/ / / / / / The proposal to authorize the new Class A
Stock and related amendments.
Item 3. FOR AGAINST ABSTAIN
/ / / / / / The proposal to adopt the 1995 Stock Option
Plan.
Item 4. FOR AGAINST ABSTAIN
/ / / / / / Recommended retention of Deloitte & Touche LLP
as the independent auditors for the
Corporation for the ensuing year.
</TABLE>
UNLESS YOU SPECIFY OTHERWISE, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE
NOMINEES FOR DIRECTORS AND "FOR" ITEMS 2, 3 and 4. ONLY CLASS B STOCKHOLDERS MAY
VOTE FOR THE CLASS B STOCK DESIGNEES.
(Continued and to be signed on other side.)
24
<PAGE> 40
A majority of said attorneys and proxies, or their substitutes at said
meeting, or any adjournments thereof, may exercise all of the powers hereby
given. Any proxy to vote any of the shares with respect to which the undersigned
is or would be entitled to vote, heretofore given to any person or persons other
than the persons named above, is hereby revoked.
IN WITNESS WHEREOF, the undersigned has signed and sealed this proxy and
hereby acknowledges receipt of a copy of the notice of said meeting and proxy
statement in reference thereto, both dated April 14, 1995.
Dated: , 1995
(L.S.)
Stockholder(s) Signature
(L.S.)
NOTE: This proxy properly filled in, dated and signed, should be returned
immediately in the enclosed postpaid envelope to TRANS-LUX CORPORATION, 110
Richards Avenue, Norwalk, Connecticut 06856-5090. If the signer is a
corporation, sign in full the corporate name by a duly authorized officer. If
signing as attorney, executor, administrator, trustee or guardian, please give
your full title as such.
25
