UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission file number 1-2257
------
TRANS-LUX CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-1394750
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 Richards Avenue, Norwalk, CT 06856-5090
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(203) 853-4321
----------------------------------------------------
(Registrant's telephone number, including area code)
- ---------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of Common Stock, as of the latest practicable date.
Date Class Shares Outstanding
- -------- ------------------------------- ------------------
08/12/96 Common Stock - $1.00 Par Value 959,796
08/12/96 Class B Stock - $1.00 Par Value 298,882
(Immediately convertible into a
like number of shares of Common
Stock.)
<PAGE>
TRANS-LUX CORPORATION AND SUBSIDIARIES
INDEX
Page No.
Part I - Financial Information
Consolidated Balance Sheets - June 30, 1996
(unaudited) and December 31, 1995 1
Consolidated Statements of Stockholders' Equity -
June 30, 1996 (unaudited) and December 31, 1995 2
Consolidated Statements of Income - Three and Six
Months Ended June 30, 1996 and 1995 (unaudited) 3
Consolidated Statements of Cash Flows - Six Months
Ended June 30, 1996 and 1995 (unaudited) 4
Notes to Consolidated Financial Statements (unaudited) 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Part II - Other Information 9
Item 4. Submission of Matters to a Vote of Stockholders 9
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
<PAGE>
<TABLE>
Part I - Financial Information
------------------------------
TRANS-LUX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30 December 31
ASSETS 1996 1995
------ ----------- -----------
<S> <C> <C>
Current assets: (unaudited)
Cash and cash equivalents $ 317,000 $ 665,000
Available-for-sale securities 577,000 576,000
Receivables 3,764,000 2,403,000
Inventories 1,848,000 1,900,000
Prepaids and other current assets 365,000 466,000
---------- ----------
Total current assets 6,871,000 6,010,000
---------- ----------
Rental equipment 50,813,000 47,043,000
Less accumulated depreciation 18,757,000 16,265,000
---------- ----------
32,056,000 30,778,000
---------- ----------
Property, plant and equipment 21,466,000 20,913,000
Less accumulated depreciation and amortization 6,624,000 5,921,000
---------- ----------
14,842,000 14,992,000
Prepaids, intangibles and other 3,733,000 4,081,000
Note receivable, MetroLux Theatres (excludes
$94,000 current portion) 831,000 --
Maintenance contracts, net 1,434,000 1,599,000
---------- ----------
$59,767,000 $57,460,000
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable and accruals $ 5,183,000 $ 4,804,000
Income taxes payable 12,000 136,000
Short-term borrowings -- 500,000
Current portion of long-term debt 1,811,000 1,804,000
---------- ----------
Total current liabilities 7,006,000 7,244,000
---------- ----------
Long-term debt:
9% convertible subordinated debentures due 2005 4,811,000 4,874,000
9.5% subordinated debentures due 2012 1,057,000 1,057,000
Notes payable 20,256,000 16,564,000
---------- ----------
26,124,000 22,495,000
Deferred revenue and deposits 1,026,000 2,621,000
Deferred income taxes 3,613,000 3,600,000
Minority interest 1,000 1,000
Stockholders' equity 21,997,000 21,499,000
---------- ----------
$59,767,000 $57,460,000
========== ==========
The accompanying notes are an integral part of these consolidated financial statements.
1
</TABLE>
<PAGE>
TRANS-LUX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
June 30 December 31
<CAPTION>
1996 1995
----------- -----------
(unaudited)
<S> <C> <C>
Capital stock:
Preferred - $1.00 par value
Authorized - 500,000 shares
Issued - none
Common - $1.00 par value
Authorized - 4,000,000 shares
Issued - 2,441,517 shares in 1996 and 2,436,268 in 1995 $2,441,000 $2,436,000
Class B - $1.00 par value
Authorized - 2,000,000 shares
Issued - 298,888 shares in 1996 and 304,137 in 1995 299,000 304,000
Additional paid-in capital 13,828,000 13,806,000
Retained earnings 17,320,000 16,888,000
Other (70,000) (71,000)
---------- ----------
33,818,000 33,363,000
Less treasury stock - at cost
1,481,252 shares in 1996 and 1,488,837 in 1995
(excludes additional 298,888 shares held in 1996 and
304,137 in 1995 for conversion of Class B stock) 11,821,000 11,864,000
---------- ----------
Total stockholders' equity $21,997,000 $21,499,000
========== ==========
</TABLE>
<TABLE>
THE CHANGES IN CONSOLIDATED STOCKHOLDERS'
EQUITY ARE AS FOLLOWS:
<CAPTION>
Additional
Common Class Paid-in Retained Treasury
Stock B Stock Capital Earnings Other Stock
------ ------- ---------- -------- ----- --------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1995 $2,436,000 $304,000 $13,806,000 $16,888,000 ($71,000) ($11,864,000)
1/1/96 - 6/30/96: (unaudited) 519,000
Net income
Cash dividends (87,000)
Unrealized holding gain/(loss) 1,000
Exercise of stock option (1,000) 4,000
9% debenture conversion 23,000 40,000
Purchase of treasury stock (1,000)
Class B conversion 5,000 (5,000)
--------- ------- ---------- ---------- ------ ----------
June 30, 1996 $2,441,000 $299,000 $13,828,000 $17,320,000 ($70,000) ($11,821,000)
========= ======= ========== ========== ====== ==========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
2
<PAGE>
<TABLE>
TRANS-LUX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
-------------------- ------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Equipment rentals and maintenance $ 5,535,000 $5,710,000 $10,923,000 $11,192,000
Equipment sales 4,061,000 3,127,000 7,680,000 6,135,000
Theatre receipts and other 995,000 1,024,000 2,021,000 1,913,000
---------- --------- ---------- ----------
Total revenues 10,591,000 9,861,000 20,624,000 19,240,000
---------- --------- ---------- ----------
Operating expenses:
Cost of equipment rentals and
maintenance 3,010,000 2,907,000 5,912,000 5,846,000
Cost of equipment sales 2,705,000 2,067,000 5,032,000 3,903,000
Cost of theatre receipts and other 796,000 809,000 1,631,000 1,500,000
---------- --------- ---------- ----------
Total operating expenses 6,511,000 5,783,000 12,575,000 11,249,000
---------- --------- ---------- ----------
Gross profit from operations 4,080,000 4,078,000 8,049,000 7,991,000
General and administrative expenses 3,060,000 3,175,000 6,072,000 6,314,000
---------- --------- ---------- ----------
1,020,000 903,000 1,977,000 1,677,000
Interest income 26,000 36,000 43,000 93,000
Interest expense (579,000) (552,000) (1,126,000) (1,089,000)
Other income -- 3,000 -- 49,000
---------- --------- ---------- ----------
Income before income taxes 467,000 390,000 894,000 730,000
Provision for income taxes 196,000 164,000 375,000 307,000
---------- --------- ---------- ----------
Net income $ 271,000 $ 226,000 $ 519,000 $ 423,000
========== ========= ========== ==========
Earnings per share:
Primary $ 0.21 $ 0.18 $ 0.41 $ 0.34
Fully diluted $ 0.20 $ * $ 0.39 $ *
Average common and common equivalent
shares outstanding:
Primary 1,278,000 1,258,000 1,272,000 1,260,000
Fully diluted 1,664,000 * 1,664,000 *
Cash dividends per share:
Common stock $ 0.035 $ 0.035 $ 0.070 $ 0.070
Class B stock $ 0.0315 $ 0.0315 $ 0.0630 $ 0.0630
The accompanying notes are an integral part of these consolidated financial statements.
* not dilutive
</TABLE>
3
<PAGE>
<TABLE>
TRANS-LUX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30 1996 1995
------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 519,000 $ 423,000
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,544,000 3,330,000
Net loss of joint venture 78,000 --
Deferred income taxes 13,000 519,000
Minority interest -- (8,000)
Changes in operating assets and liabilities:
Receivables (1,361,000) 280,000
Inventories 52,000 (185,000)
Prepaids and other current assets 195,000 (183,000)
Prepaids, intangibles and other 221,000 111,000
Accounts payable and accruals 379,000 (939,000)
Income taxes payable (124,000) (13,000)
Deferred revenue and deposits (1,595,000) (597,000)
------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,921,000 2,738,000
------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of rental equipment (3,770,000) (2,557,000)
Purchases of property, plant and equipment (553,000) (1,120,000)
Payments for an acquisition -- (3,178,000)
Proceeds from acquisition note receivable -- 658,000
Sale of assets -- 209,000
Investment in joint venture (136,000) (687,000)
Loan to joint venture (941,000) --
Purchases of securities -- (494,000)
Proceeds from sales of securities -- 1,088,000
------------------------------------------------------------------------------------------
Net cash (used in) investing activities (5,400,000) (6,081,000)
------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 4,100,000 4,286,000
Repayment of long-term debt (901,000) (3,106,000)
Proceeds from short-term borrowings -- 500,000
Proceeds from loan to joint venture 16,000 --
Proceeds from exercise of stock options 4,000 12,000
Purchase of treasury stock (1,000) --
Cash dividends (87,000) (86,000)
------------------------------------------------------------------------------------------
Net cash provided by financing activities 3,131,000 1,606,000
------------------------------------------------------------------------------------------
Net (decrease) in cash and cash equivalents (348,000) (1,737,000)
Cash and cash equivalents at beginning of year 665,000 2,335,000
------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 317,000 $ 598,000
==========================================================================================
Interest paid $ 740,000 $ 900,000
Interest received 61,000 113,000
Income taxes paid 392,000 301,000
------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
4
<PAGE>
TRANS-LUX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
(unaudited)
Note 1 - Basis of Presentation
Financial information included herein is unaudited, however, such
information reflects all adjustments which are, in the opinion of
management, necessary for the fair presentation of the consolidated
financial statements for the interim periods. The results for the
interim periods are not necessarily indicative of the results to be
expected for the full year. It is suggested that the June 30, 1996
consolidated financial statements be read in conjunction with the
consolidated financial statements and notes included in the
Company's Annual Report and Form 10-K for the year ended December
31, 1995.
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 121, "Accounting for Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of" in the
first quarter of 1996. In accordance with the standard, the
Company evaluates the carrying value of its long-lived assets and
identifiable intangibles, including goodwill, when events or
changes in circumstances indicate that the carrying amount of such
assets may not be recoverable. The adoption of the standard did
not have any effect on the Company's consolidated financial
position or results of operations.
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" in the first quarter of 1996. As provided for in the
standard, the Company continues to apply Accounting Principals
Board Opinion No. 25, "Accounting for Stock Issued to Employees"
and related interpretations for employee stock compensation
measurement and will disclose the required pro forma information in
the 1996 Form 10-K.
Note 2 - Accounting for Income Taxes
The provision for income tax expense for the three months ended
June 30, 1996 was $196,000 of which $160,000 and $36,000 are
current and deferred tax expense, respectively. The provision for
income tax expense for the six months ended June 30, 1996 was
$375,000 of which $303,000 and $72,000 are current and deferred tax
expense, respectively. There was no change in the valuation
allowance during the six months ended June 30, 1996.
-5-
<PAGE>
Note 3 - Prepaids, Intangibles and Other
Prepaid, intangibles and other consists of the following:
June 30 December 31
1996 1995
---------- ----------
Prepaids and other $1,113,000 $1,005,000
Deferred debenture expense 197,000 206,000
Deferred financing costs 385,000 480,000
Acquisition costs 93,000 96,000
Deposits and advances 76,000 68,000
Patents 291,000 323,000
Goodwill and noncompete agreement 1,037,000 1,105,000
Investment in joint ventures 148,000 506,000
Long-term portion of officers'
and employees' loans 393,000 292,000
---------- ----------
$3,733,000 $4,081,000
========== ==========
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Six Months Ended June 30, 1996 Compared to Six Months Ended June
30, 1995.
The Company's total revenues for the six months ended June 30, 1996
increased 7.2% to $20.6 million versus $19.2 million for the same
period in the previous year. Revenues from equipment rentals and
maintenance decreased from $11.2 million in 1995 to $10.9 million
in 1996, or 2.4%, primarily due to the expected decline in revenues
from the outdoor lease and maintenance base previously acquired,
although the decline is at a slower rate than originally
anticipated. This decline in revenues was partially offset by an
increase in new indoor and outdoor display rentals and maintenance
contracts. Revenues from equipment sales increased 25.2%, or $1.5
million, in 1996, primarily due to increased sales of outdoor
displays as a result of the acquisition of Integrated Systems
Engineering, Inc. ("ISE") in January 1995 and a significant sale to
the Chicago Board of Trade ("CBOT"), which is being recorded on the
percentage of completion basis. Revenues from theatre receipts and
other increased by $108,000, or 5.6%, which was attributed to
increased attendance and increased concession sales at the
theatres.
Cost of equipment rentals and maintenance increased by $66,000, or
1.1%, primarily due to increased installation costs of the outdoor
displays. The cost of equipment rentals and maintenance
represented 54.1% of related revenues in 1996 compared to 52.2% in
1995. Cost of equipment sales increased by $1,129,000 to $5.0
million in 1996, or 28.9%, primarily due to increased sales of
outdoor displays and the sale to the CBOT which due to the size of
the order has a lower gross profit margin. The cost of equipment
-6-
<PAGE>
sales represented 65.5% of related revenues in 1996 compared to
63.6% in 1995. The cost of theatre receipts and other increased by
$131,000, or 8.7%, which is primarily the loss incurred by the
theatre joint venture in Loveland, Colorado. The cost of theatre
receipts and other represented 80.7% and 78.4% of related revenues
in 1996 and 1995, respectively.
General and administrative expenses decreased by $242,000, or 3.8%,
primarily due to the favorable adjustment of previously accrued
expenses and the implementation of certain cost controls.
Additional reductions of general and administrative expenses are
not anticipated to be realized in future periods.
Interest income decreased by $50,000, primarily attributed to
reduced investments. Interest expense increased by $37,000, due to
increased bank borrowing for general corporate purposes on the
revolving credit line.
The other income of $49,000 in 1995 was largely due to the sale of
a theatre property in New Mexico.
The effective tax rate at June 30, 1996 and 1995 was 42.0%.
Three Months Ended June 30, 1996 Compared to Three Months Ended
June 30, 1995.
Total revenues for the three months ended June 30, 1996 increased
7.4% to $10.6 million versus $9.9 million in the previous year.
Revenues from equipment rentals and maintenance decreased 3.1% to
$5.5 million in 1996 compared to $5.7 million in 1995, primarily
due to the expected decline in revenues from the outdoor lease and
maintenance base previously acquired, although the decline is at a
slower rate than originally anticipated. This decline in revenues
was partially offset by an increase in new indoor and outdoor
display rentals and maintenance contracts. Revenues from equipment
sales increased 29.9% or $934,000, primarily due to increased sales
of outdoor displays as a result of the acquisition of ISE and a
significant sale to the CBOT, which is being recorded on the
percentage of completion basis. Revenues from theatre receipts and
other decreased 2.8% or $29,000 as a result of a decrease in
attendance, partially offset by an increase in concession sales at
the theatres.
Cost of equipment rentals and maintenance increased by $103,000, or
3.5%, primarily due to increased installation costs of the outdoor
displays. The cost of equipment rentals and maintenance
represented 54.4% of related revenues in 1996 compared to 50.9% in
1995. Cost of equipment sales increased by $638,000 to $2.7
million in 1996, or 30.9%, primarily due to increased sales of
outdoor displays and the sale to the CBOT. The cost of equipment
sales represented 66.6% of related revenues in 1996 and 66.1% in
1995. The cost of theatre receipts and other decreased 1.6%, or
$13,000, which is proportional to the decrease in revenues at the
theatres. The cost of theatre receipts and other represented 80.0%
and 79.0% of related revenues in 1996 and 1995, respectively.
-7-
<PAGE>
General and administrative expenses decreased by $115,000 or 3.6%,
primarily due to the favorable adjustment of previously accrued
expenses and the implementation of certain cost controls.
Interest income decreased by $10,000, primarily attributable to
reduced investments. Interest expense increased by $27,000, or
4.9%, due to increased bank borrowing on the revolving credit line.
Accounting Standards
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 121, "Accounting for Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of" in the
first quarter of 1996. In accordance with the standard, the
Company evaluates the carrying value of its long-lived assets and
identifiable intangibles, including goodwill, when events or
changes in circumstances indicate that the carrying amount of such
assets may not be recoverable. The adoption of the standard did
not have any effect on the Company's consolidated financial
position or results of operations.
The Company also adopted the provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" in the first quarter of 1996. As provided for in the
standard, the Company continues to apply Accounting Principals
Board Opinion No. 25, "Accounting for Stock Issued to Employees"
and related interpretations for employee stock compensation
measurement and will disclose the required pro forma information in
the 1996 Form 10-K.
Liquidity and Capital Resources
- -------------------------------
The regular quarterly cash dividend for the second quarter of 1996
of $.035 per share on the Company's Common Stock and $.0315 per
share on the Company's Class B Stock was declared by the Board of
Directors on June 20, 1996, payable to stockholders of record as of
July 5, 1996 and was paid July 19, 1996.
The Company believes that its current cash position and working
capital generated by operations and revolving credit line will
adequately meet its current operating and financing requirements.
The Revolving Credit and Term Loan was increased to $7,000,000 from
$4,000,000 and extended to June 1998 in the second quarter of 1996.
At June 30, 1996, $4,600,000 was outstanding under the revolving
credit line.
Cash and cash equivalents for the six months ended June 30, 1996
decreased by $348,000 in 1996 and $1,737,000 in 1995. The decrease
in 1996 is primarily attributable to cash utilized for investment
in rental equipment, an increase in accounts receivable which is
attributable to the timing of large equipment sales, a decrease in
deferred revenue and deposits which was primarily due to the timing
of recording the revenues versus billings of the sale to the CBOT
and the loan to the theatre joint venture, MetroLux Theatres.
-8-
<PAGE>
The Company believes the loan to MetroLux Theatres to be
collectible and payments are being made in accordance with the
payment schedule. The decrease in 1995 was largely attributable to
the cash utilized to acquire ISE, repayment of long-term debt and
in an investment in a theatre joint venture. The Company
continues to consider various financing alternatives.
Part II - Other Information
---------------------------
Item 4. Submission of Matters to a Vote of Stockholders
- ---------------------------------------------------------
The Annual Meeting of Stockholders of Trans-Lux Corporation was
held on June 20, 1996 for the purpose of electing directors,
amending the 1995 Stock Option Plan and approving the appointment
of auditors as set forth below.
All of management's nominees for directors as listed in the proxy
statement were elected with the following vote:
Votes For Votes Not For
--------- -------------
Matthew Brandt, Class B, Three-Year Term 2,986,460* 16,350*
Howard S. Modlin, Class B, Three-Year Term 2,968,460* 16,350*
Robert Greenes, Common, Three-Year Term 773,305 60,951
The following directors are continuing their terms as directors:
Richard Brandt, Class B, Two-Year Remaining Term
Jean Firstenberg, Class B, Two-Year Remaining Term
Victor Liss, Class B, Two-Year Remaining Term
Gene Jankowski, Common, Two-Year Remaining Term
Thomas Brandt, Class B, One-Year Remaining Term
Allan Fromme, Class B, One-Year Remaining Term
Steven Baruch, Common, One-Year Remaining Term
The stockholders approved an amendment to the 1995 Stock Option
Plan by which an additional 50,000 shares of the Corporation's
capital stock will be reserved for issuance:
COMMON STOCK CLASS B STOCK*
------------ --------------
For Against Abstain For Against Abstain
- ------- ------- ------- --------- ------- -------
473,496 144,694 216,066 2,985,240 17,570 -0-
-9-
<PAGE>
The recommendation to retain Deloitte & Touche LLP as the
independent auditors for the Corporation was approved:
COMMON STOCK CLASS B STOCK*
------------ --------------
For Against Abstain For Against Abstain
- ------- ------- ------- --------- ------- -------
823,087 10,228 941 3,002,810 -0- -0-
*Based on 10 votes per share
Item 6. Exhibits and Reports on Form 8-K
- ------------------------------------------
(a) Exhibits
10(a) First Amendment Agreement to the Credit
Agreement with First Union Bank of
Connecticut
10(b) Letter Amendment dated August 12, 1996 to
the Credit Agreement with First Union
Bank of Connecticut
11 Computation of Earnings Per Share
27 Financial Data Schedule, which is
submitted electronically to the
Securities and Exchange Commission for
information only and not filed
28(a) Employment Agreement with Thomas F. Mahoney
(b) No reports on Form 8-K were filed during the
quarter covered by this report.
-10-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
TRANS-LUX CORPORATION
---------------------
(registrant)
Date: August 14, 1996
\s\ Angela D. Toppi
_______________________________
by: Angela D. Toppi
Senior Vice President and
Chief Financial Officer
\s\ Robert A. Carroll
_______________________________
by: Robert A. Carroll
Chief Accounting Officer
-11-
<page) Exhibit 10(a)
FIRST AMENDMENT AGREEMENT
-------------------------
AGREEMENT, dated as of May 9, 1996, among TRANS-LUX CORPORATION, a
Delaware corporation, TRANS-LUX CONSULTING CORPORATION, a Delaware
corporation, TRANS-LUX SIGN CORPORATION, a Delaware corporation, TRANS-LUX
MONTEZUMA CORPORATION, a New Mexico corporation, INTEGRATED SYSTEMS
ENGINEERING, INC., a Utah corporation, the GUARANTORS, and FIRST UNION
BANK OF CONNECTICUT (formerly known as First Fidelity Bank), a Connecticut
banking corporation.
Background
----------
A. Capitalized terms not otherwise defined shall have the meanings
ascribed to them in the Credit Agreement dated as of August 28, 1995, between
Trans-Lux Corporation, Trans-Lux Consulting Corporation, Trans-Lux Sign
Corporation, Trans-Lux Montezuma Corporation, Integrated Systems Engineering,
Inc., and First Union Bank of Connecticut (as amended, modified or supplemented
from time to time, the "Credit Agreement").
B. The Borrowers have requested that the Lender, among other things,
increase, from $4,000,000 to $7,000,000, the maximum amount of Loan C.
C. The Lender has agreed to the Borrowers' requests subject to the terms
and conditions of this Agreement.
Agreement
---------
In consideration of the Background, which is incorporated by reference,
the parties, intending to be legally bound, agree as follows:
1. Modifications. All the terms and provisions of the Credit Agreement
--------------
and the other Loan Documents shall remain in full force and effect except as
follows:
(a) The information with respect to notices under Section 10.10 of the
Credit Agreement is deleted and the following is substituted therefor:
(a) If to Lender:
First Union Bank of Connecticut
300 Main Street
Stamford, Connecticut 06904
Attention: Ms. Anne S. Wilson
Facsimile No. (203) 964-8239
<PAGE>
2
With copies to:
Cummings & Lockwood
Four Stamford Plaza
Stamford, Connecticut 06904
Attention: Gregory E. Harmer, Esq.
Facsimile No. (203) 351-4499
(b) The definitions of "Lender", "Loan C", "Loan C Commitment Termination
Date", "Loan C Maturity Date", "Note A", "Note B" and "Note C" set forth
in Annex A to the Credit Agreement are deleted and the following are,
respectively, substituted therefor:
"Lender" shall mean First Union Bank of Connecticut, a
Connecticut banking corporation having an office located at
300 Main Street, Stamford, Connecticut 06904
"Loan C" shall mean the revolving loan facility extended by
Lender to TLX in the original principal amount of $7,000,000,
evidenced by Note C.
"Loan C Commitment Termination Date" shall mean the earliest of
(i) June 30, 1998, (ii) the date of termination of Loan C
pursuant to Section 8.2, and (iii) the date of termination of
Loan C in accordance with the provisions of Section (a)(iii)(E)
of Schedule 1.1.
"Loan C Maturity Date" shall mean June 30, 2003
"Note A" shall mean the Term Promissory Note in the original
principal amount of $8,000,000, in the form of the attached
Exhibit "A-1", as the same may be renewed, reissued, exchanged,
consolidated, amended, modified, replaced or supplemented from
time to time.
"Note B" shall mean the Term Promissory Note in the original
principal amount of $7,581,000, in the form of the attached
Exhibit "A-2", as the same may be renewed, reissued,
exchanged, consolidated, amended, modified, replaced or
supplemented from time to time.
"Note C" shall mean the Term Promissory Note in the original
principal amount of $4,000,000, in the form of the attached
Exhibit "A-3", as the same may be renewed, reissued, exchanged,
consolidated, amended, modified, replaced or supplemented from
time to time.
<PAGE>
3
(c) Subparagraph 3 of Annex C to the Credit Agreement is deleted and the
following is substituted therefor:
3. An unused facility fee (the "Non-use Fee") payable to
Lender equal to one-half of one percent (0.50%) commencing
August 28, 1995, and continuing through the date prior to the
effective date of the First Amendment Agreement dated as of May
9, 1996, and, commencing on the effective date of such
Amendment Agreement, three-eighths of one percent (0.375%) per
annum on the average unused daily balance of Loan C, payable in
arrears (i) for the preceding calendar quarter, on the first
day of each calendar quarter commencing October 1, 1995, and
(ii) on the Loan C Commitment Termination Date.
(d) The figure "$4,000,000" contained in Schedule 1.1 to the Credit
Agreement is deleted and the figure "$7,000,000" is substituted therefor:
(e) Subparagraph (c)(iii) of Schedule 1.2 of the Credit Agreement is
deleted and the following is substituted therefor:
On June 30, 1998, the then outstanding indebtedness under Note
C shall be payable in nineteen (19) equal payments each in the
amount of one-twentieth (1/20th) of the amount then outstanding
under Note C, payable on October 1, 1998, and continuing on the
first day each successive Fiscal Quarter and a final payment on
June 30, 2003 of all amounts then outstanding under Note C.
2. Fees. (a) In consideration of the Lender's execution, delivery and
performance of this Agreement, the Borrower agrees to pay to the Lender
the amount of $30,000 (the "Amendment Fee") prior to or simultaneously
with the execution and delivery of this Agreement.
(b) The Borrowers agree that the fee set forth under subsection (a) above
shall be deemed a "Fee" under the Credit Agreement.
3. Conditions to Effectiveness. This Agreement shall not be effective
until such date as the Lender shall have received the following, all in form,
scope and content acceptable to the Lender in its sole discretion:
(a) Amendment Agreement. This Agreement duly executed by the parties
hereto.
(b) Allonge. The First Allonge to Revolving Promissory Note duly drawn to
the order of Lender.
<PAGE>
4
(c) Real Estate Documents. Mortgage Modification Agreements with respect
to each of the mortgages or deeds of trust granted to secure the Obligations
and endorsements to the title insurance policies delivered in connection
therewith.
(d) Amendment Fee. The Amendment Fee in immediately available funds.
(e) Other. Such other agreements and instruments as the Lender shall
reasonably require.
4. Reaffirmation By Borrowers. The Borrowers acknowledge and agree, and
reaffirm, that each is legally, validly and enforceably indebted to the Lender
under the Notes without defense, counterclaim or offset, and that each is
legally, validly and enforceably liable to the Lender for all costs and
expenses of collection and reasonable attorneys' fees as and to the extent
provided in this Agreement, the Credit Agreement, the Notes and the other Loan
Documents. The Borrowers hereby restate and agree to be bound by all covenants
contained in the Credit Agreement and the other Loan Documents and hereby
reaffirm that all of the representations and warranties contained in the Credit
Agreement and the other Loan Documents remain true and correct in all material
respects with the exception that the financial statements described therein are
deemed true as of the date made. The Borrower represents that except as set
forth in the Credit Agreement and the other Loan Documents, there are not
pending, or to the Borrower's knowledge threatened, legal proceedings to which
the Borrowers or either of the Guarantors is a party, or which materially or
adversely affect the transactions contemplated by this Agreement or the ability
of the Borrowers or any of the Guarantors to conduct its business on a
consolidated basis. The Borrowers acknowledge and represent that the
resolutions of the Borrowers dated July 27, 1995, remain in full force and
effect and have not been amended, modified, rescinded or otherwise abrogated.
5. Reaffirmation by Guarantors. Each of the Guarantors acknowledges that
each is legally and validly indebted to the Lender under the Guaranty of each
without defense, counterclaim or offset. Each of the Guarantors affirms that
the Guaranty of each remains in full force and effect and acknowledges that the
Guaranty of each encompasses, without limitation, the amount of Loan C, as
modified herein.
6. Other Representations By Borrowers and Guarantors. The Borrowers and
the Guarantors each represents and confirms that (a) no Default or Event of
Default has occurred and is continuing and the Lender has not given its consent
to or waived any Default or Event of Default and (b) the Credit Agreement and
the other Loan Documents are in full force and effect and enforceable against
the Borrower and Guarantors in accordance with the terms thereof. The
Borrowers and the Guarantors each represent and confirm that as of the date
hereof, each has no claim or defense (and the Borrowers and the Guarantors each
hereby waive every claim and defense as of the date hereof) against the Lender
arising out of or relating to the Credit Agreement and the other Loan Documents
<PAGE>
5
or the making, administration or enforcement of the Revolving Loan and the
remedies provided for under the Loan Documents.
7. No Waiver By Lender. The Borrowers and the Guarantors each
acknowledges that (a) by the execution by each of this Agreement, the Lender is
not waiving any Default, whether now existing or hereafter occurring, disclosed
or undisclosed, by the Borrower under the Loan Documents and (b) the Lender
reserves all rights and remedies available to it under the Loan Documents and
otherwise.
<PAGE>
6
The parties have executed this Agreement as of the date first written above.
BORROWERS:
TRANS-LUX CORPORATION
By \s\ Victor Liss
---------------------
Victor Liss
Title: President
By \s\ Angela Toppi
---------------------
Angela Toppi
Title: Senior Vice President and
Chief Financial Officer
TRANS-LUX CONSULTING
CORPORATION
By \s\ Victor Liss
---------------------
Victor Liss
Title: President
By \s\ Angela Toppi
---------------------
Angela Toppi
Title: Senior Vice President and
Chief Financial Officer
TRANS-LUX SIGN CORPORATION
By \s\ Victor Liss
---------------------
Victor Liss
Title: President
By \s\ Angela Toppi
---------------------
Angela Toppi
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
7
TRANS-LUX MONTEZUMA
CORPORATION
By \s\ Victor Liss
---------------------
Victor Liss
Title: President
By \s\ Angela Toppi
---------------------
Angela Toppi
Title: Senior Vice President and
Chief Financial Officer
INTEGRATED SYSTEMS
ENGINEERING, INC.
By \s\ Victor Liss
---------------------
Victor Liss
Title: President
By \s\ Angela Toppi
---------------------
Angela Toppi
Title: Senior Vice President and
Chief Financial Officer
GUARANTORS:
TRANS-LUX SIGN CORPORATION
TRANS-LUX CONSULTING CORPORATION
SAUNDERS REALTY CORPORATION
TRANS-LUX CANADA, LTD.
TRANS-LUX COCTEAU CORPORATION
TRANS-LUX COLORADO CORPORATION
TRANS-LUX CREDIT TERMINAL
CORPORATION
TRANS-LUX DURANGO CORPORATION
TRANS-LUX EXPERIENCE CORPORATION
TRANS-LUX HIGH FIVE CORPORATION
<PAGE>
8
TRANS-LUX INVESTMENT CORPORATION
TRANS-LUX LOMA COPORATION
TRANS-LUX MONTEZUMA CORPORATION
TRANS-LUX MULTIMEDIA COPORATION
TRANS-LUX PENNSYLVANIA
CORPORATION
TRANS-LUX SEAPORT CORPORATION
TRANS-LUX SERVICE CORPORATION
TRANS-LUX SOUTHWEST CORPORATION
TRANS-LUX STORYTELLER CORPORATION
TRANS-LUX SYNDICATED PROGRAMS
CORPORATION
TRANS-LUX TAOS CORPORATION
TRANS-LUX THEATRES CORPORATION
TRANS-LUX YUCCA CORPORATION
TRANS-LUX LOVELAND CORPORATION
INTEGRATED SYSTEMS ENGINEERING,
INC.
TRANS-LUX PTY, LTD
By \s\ Victor Liss
---------------------
Victor Liss
Title: President
By \s\ Angela Toppi
---------------------
Angela Toppi
Title: Senior Vice President and
Chief Financial Officer
LENDER:
FIRST UNION BANK OF
CONNECTICUT
By \s\ Anne S. Wilson
--------------------
Anne S. Wilson
Title: Vice President
S2238721.DOC 05/09/96
3
3
Exhibit 10(b)
August 12, 1996
Ms. Angela Toppi
Trans-Lux Corporation
110 Richards Avenue
Norwalk, CT 06854
Dear Ms. Toppi:
We refer to the Credit Agreement dated as of August 28,
1995, between Trans-Lux Corporation, Trans-Lux Consulting
Corporation, Trans-Lux Sign Corporation, Trans-Lux Montezuma
Corporation and Integrated Systems Engineering, Inc. as Borrowers
and First Fidelity Bank (now known as First Union Bank of
Connecticut) as Lender (as amended, modified or supplemented from
time to time, the "Credit Agreement"). Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them
in the Credit Agreement.
The Borrowers have requested that the Lender modify certain
of the financial covenants contained in the Credit Agreement. In
consideration of the representations, warranties and covenants
contained herein, each of the Borrowers and the Lender agree as
follows:
1. The figure "$10,000,000" contained in Section 1(b) of
Schedule 6.11 to the Credit Agreement is deleted and the figure
"$12,000,000" is substituted therefor.
2. To definition of "Fixed Charge Coverage Ratio" contained in
Annex A to the Credit Agreement is deleted and the following is
substituted therefor:
"Fixed Charge Coverage Ratio" shall mean, with respect to
any Person, on a consolidated basis, at any date, the ratio
of EBITDA less dividends paid by TLX to the sum of (i)
Interest Expense, (ii) Current Maturities (excluding
"balloon" payments but including Capital Lease Obligations),
and (iii) Capital Expenditures for Rental Equipment (except
that for the period from June 30, 1996 through and including
March 31, 1997 such amount shall be calculated at 60%).
Each of the Borrowers hereby restates and agrees to be bound
by all the covenants contained in the Credit Agreement and the
other Loan Documents and hereby reaffirms that all the
representations and warranties contained in the Credit Agreement
and the other Loan Dycuments remain true and correct in all
material respects. Each of the Borrowers represents and confirms
that no Default or Event of Default has occurred and is
continuing and the Credit Agreement and the other Loan Documents
are in full force and effect and enforceable against each of the
Borrowers in accordance with the terms thereof.
Please sign the enclosed copy of this letter to indicate
your agreement to, and acceptance of, the terms and conditions
contained herein.
FIRST UNION BANK OF CONNECTICUT
By: \s\ Anne S. Wilson
---------------------
Anne S. Wilson
Title: Vice President
Agreed to and accepted:
TRANS-LUX CORPORATION
TRANS-LUX CONSULTING CORPORATION
TRANS-LUX SIGN CORPORATION
TRANS-LUX MONTEZUMA CORPORATION
INTEGRATED SYSTEMS ENGINEERING, INC.
By: \s\ Angela Toppi
--------------------------------
Angela Toppi
Title: Senior Vice President and
Chief Financial Officer
<TABLE>
TRANS-LUX CORPORATION & SUBSIDIARIES EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
FOR THE THREE MONTH FOR THE THREE MONTHS
ENDED JUNE 30, 1996 ENDED JUNE 30, 1996
------------------- -------------------
<S> <C> <C>
Primary:
- --------
Net income $271,000 $519,000
========= =========
Average common shares outstanding 1,255,496 1,254,648
Assumes exercise of options reduced by
the number of shares which could have
been purchased with the proceeds from
exercise of such options 22,812 17,581
--------- ---------
Average common and common equivalent
shares outstanding 1,278,308 1,272,229
========= =========
Primary earnings per share $0.21 $0.41
========= =========
Fully diluted:
- --------------
Net income $271,000 $519,000
Add after tax interest expense applicable
to 9% convertible subordinated debentures 66,000 131,000
--------- ---------
Adjusted net income $337,000 $650,000
========= =========
Average common shares outstanding 1,255,496 1,254,648
Assumes exercise of options reduced by
the number of shares which could have
been purchased with the proceeds from
exercise of such options 26,110 26,110
Assumes conversion of 9% convertible
subordinated debentures 382,253 383,017
--------- ---------
Average common and common equivalent
shares outstanding 1,663,859 1,663,775
========= =========
Fully diluted earnings per share $0.20 $0.39
========= =========
Fully diluted earnings per share are not presented for the three and six months ended
June 30, 1995 as the effect is not dilutive.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF
INCOME FILED AS PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 317
<SECURITIES> 577
<RECEIVABLES> 3,764
<ALLOWANCES> 0
<INVENTORY> 1,848
<CURRENT-ASSETS> 6,871
<PP&E> 72,279
<DEPRECIATION> 25,381
<TOTAL-ASSETS> 59,767
<CURRENT-LIABILITIES> 7,006
<BONDS> 5,868
<COMMON> 2,740
0
0
<OTHER-SE> 19,257
<TOTAL-LIABILITY-AND-EQUITY> 59,767
<SALES> 7,680
<TOTAL-REVENUES> 20,624
<CGS> 5,032
<TOTAL-COSTS> 12,575
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,126
<INCOME-PRETAX> 894
<INCOME-TAX> 375
<INCOME-CONTINUING> 519
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 519
<EPS-PRIMARY> .41
<EPS-DILUTED> .39
</TABLE>
<PAGE>
AGREEMENT made as of the 1st day of June 1996 by and between
TRANS-LUX CORPORATION, a Delaware corporation having an office at 110
Richards Avenue, Norwalk, Connecticut 06856-5090 (hereinafter called
"Employer"), and THOMAS F. MAHONEY residing at 19 Mine Hill Road,
Redding, CT 06896 (hereinafter called, "Employee").
W I T N E S S E T H:
1. Employer hereby employs Employee, and Employee hereby
accepts employment, upon the terms and conditions hereinafter set forth.
2. (a) The term ("Term") of the Agreement shall be the two
(2) year period commencing on the date hereof and terminating May 3l,
1998.
(b) In the event that Employee remains or continues in the
employ of Employer after the Term, such employment, in the absence of a
further written agreement, shall be on an at-will basis, terminable by
either party hereto on thirty (30) days' notice to the other and, upon
the 30th day following such notice the employment of Employee shall
terminate.
(c) Upon expiration of the Term of this Agreement, neither
party shall have any further obligations or liabilities to the other
except as otherwise specifically provided in this Agreement.
3. Employee shall be employed in an executive sales capacity
of Employer (and such of its affiliates, divisions and subsidiaries as
Employer shall designate). Employer shall use its best efforts to cause
<PAGE>
Employee to be elected and continue to be elected a Senior Vice
President Sales of Employer during the Term of this Agreement. The
precise services of Employee may be designated or assigned from time to
time at the direction of the Board of Directors, the Chairman of the
Board, or the Vice-Chairman of the Board, President, Executive Vice
President or other person designated by the President or Executive Vice
President, and all of the services to be rendered hereunder by Employee
shall at all times be subject to the control, direction and supervision
of the Board of Directors of Employer, to which Employee does hereby
agree to be bound. Employee shall devote his entire time, attention and
energies during usual business hours (subject to Employer's policy with
respect to holidays and illnesses for comparable executives of Employer)
to the business and affairs of Employer, its affiliates, divisions and
subsidiaries as Employer shall from time to time direct. Employee
further agrees during the Term of this Agreement to serve as an officer
or director of Employer or of any affiliate or subsidiary of Employer as
Employer may request, and if Employee serves as such officer or a
director he will do so without additional compensation, other than
director's fees or honoraria, if any.
During the Term of this Agreement and during any subsequent
employment of Employee by Employer, Employee shall use his best efforts,
skills and abilities in the performance of his services hereunder and to
promote the interests of Employer, its affiliates, divisions and
subsidiaries. Employee shall not, during the Term and during any
subsequent employment of Employee by Employer, be engaged in any other
business activity, whether or not such business activity is pursued for
gain, profit or other pecuniary advantage. The foregoing shall not be
construed as preventing Employee from investing his assets in such form
or manner as will not require any services on the part of Employee in
the operation of the affairs of the companies in which such investments
are made, provided, however, that Employee shall not, either directly or
indirectly, be a director of or make any investments in any company or
-2-
<PAGE>
companies which are engaged in businesses competitive with those
conducted by Employer or by any of its subsidiaries or affiliates except
where such investments are in stock of a company listed on a national
securities exchange, and such stock of Employee does not exceed one
percent (1%) of the outstanding shares of stock of such listed company.
Employee shall not at any time during or after the Term of this
Agreement use (except on behalf of Employer) divulge, furnish or make
accessible to any third person or organization any confidential
information concerning Employer or any of its subsidiaries or affiliates
or the businesses of any of the foregoing including, without limitation,
inventions, confidential methods of operations and organization,
confidential sources of supply, identity of employees, customer lists
and confidential financial information.
4. (a) For all services rendered by Employee during the
Term of this Agreement, Employer shall pay Employee a salary at the rate
of EIGHTY THOUSAND DOLLARS ($80,000) per annum during the period June l,
1996 to May 31, 1997; and at the rate of EIGHTY FIVE THOUSAND DOLLARS
($85,000) per annum during the period June 1, 1997 to May 31, 1998.
Such salary shall be payable weekly, or monthly, or in accordance with
the payroll practices of Employer for its executives. The Employee
shall also be entitled to all rights and benefits for which he shall be
eligible under any stock option plan, bonus, participation or extra
compensation plans, pensions, group insurance or other benefits which
Employer presently provides, or may provide for him and for its
employees generally. Such rights and benefits include the sales
override commission plan (as currently in place and currently
compensated monthly) based on all sales and rentals of Employer's world-
wide sales staff. The sales override commission shall not exceed (x)
$23,333.33 for the period June 1-December 31, 1996, $40,000 for January
1-December 31, 1997, or $16,666.67 for the period January 1-May 31, 1998
plus (y) for any such period in which the bonus sales goal is exceeded,
-3-
<PAGE>
an additional bonus of 110% (100% plus 7/12 of 10%for June 1-December
31, 1996 period) times the override factor times the excess. For
example, if the sales override amount for a given period (year) is
$40,000 and if the mutually agreed upon goal for that period is
$11,376,000, the factor is .0035161 (override amount divided by goal)
and sales reached is $12,376,000, then there is an additional override
commission of $3,867.71 ($1,000,000 x .0035161 x 110%). Notwithstanding
the foregoing, in no event shall an additional override be paid for any
amount which exceeds twice the mutually agreed goal (e.g. up to
$22,752,000 if the goal is $11,376,000). This Agreement shall not be
deemed abrogated or terminated if Employer, in its discretion, shall
determine to increase the compensation of Employee for any period of
time, or if the Employee shall accept such increase.
All payments under this Agreement are in United States dollars
unless otherwise specified.
(b) Employer may make appropriate deductions from the
said payments required to be made in this Section 4 to Employee to
comply with all governmental withholding requirements.
(c) If, during the Term of this Agreement and if the
Employee is still in the employ of Employer, Employee shall be prevented
from performing or be unable to perform, or fail to perform, his duties
by reason of illness or any other incapacity for (4) consecutive months
(excluding normal vacation time) during the Term hereof, Employer agrees
to pay Employee thereafter during the Term for the duration of such
incapacity 35% of the base salary which Employee would otherwise have
been entitled to receive if not for the illness or other incapacity.
(d) The Board upon the recommendation of the Compensation
Committee of the Board shall consider no later than May 31, l997, l998,
-4-
<PAGE>
and l999,respectively (provided there is no delay in obtaining the
financial statements as provided below, but in no event later than 45
days following receipt thereof) the grant of a bonus ("Bonus") to
Employee based on Employee's performance for the immediately preceding
fiscal year. Notwithstanding the foregoing, Employer shall pay Employee
the highest Bonus applicable for any of the fiscal years ending December
31, l996, l997, and l998 only, in the event Employer's pre-tax
consolidated earnings for such year determined in accordance with
Section 4(d) exceed the respective amounts hereinafter set forth. The
Bonuses shall not exceed $11,667 for 1996, $20,000 for 1997, and $8,333
for 1998.
-5-
<PAGE>
<TABLE>
<CAPTION>
If Pre-Tax
Consolidated
Earnings Exceed Annual Non-
for Cumulative Level
1996-1997-1998 of Bonus Payable
-------------- ----------------
1996 (58.33%) 1997 1998(41.67%)
---- ---- ----
<C> <C> <C> <C>
$ 250,000 $ 364.56 $ 625.00 $ 260.44
375,000 546.84 937.50 390.66
500,000 729.13 1,250.00 520.88
625,000 911.41 1,562.50 651.09
750,000 1,093.98 1,875.50 781.52
875,000 1,275.97 2,187.50 911.53
1,000,000 1,458.25 2,500.00 1,041.75
1,125,000 1,640.53 2,812.50 1,171.97
1,250,000 1,822.81 3,125.00 1,302.19
1,375,000 2,005.09 3,437.50 1,432.41
1,500,000 2,187.38 3,750.00 1,562.63
1,625,000 2,369.66 4,062.50 1,692.84
1,750,000 2,551.94 4,375.00 1,823.06
1,875,000 2,734.22 4,687.50 1,953.28
2,000,000 2,916.50 5,000,00 2,083.50
2,125,000 3,098.78 5,312.50 2,213.72
2,250,000 3,281.06 5,625.00 2,343.94
2,375,000 3,463.34 5,937.50 2,474.16
2,500,000 3,645.63 6,250.00 2,604.38
2,625,000 3,827.91 6,562.50 2,734.59
2,750,000 4,010.19 6,875.00 2,864.81
2,875,000 4,192.47 7,187.50 2,995.03
3,000,000* 4,374.75 7,500.00 3,125.25
4,000,000* 5,833.00 10,000.00 4,167.00
5,000,000* 7,291.25 12,500.00 5,208.75
6,000,000* 8,749.50 15,000.00 6,250.50
7,000,000* 10,207.75 17,500,00 7,292.25
8,000,000* 11,666.00** 20,000.00** 8,334.00**
- -------
* For each incremental level of $l25,000 between $3,000,000 and
$8,000,000 not listed, there is an additional Bonus of $3l2.50
** Maximum
</TABLE>
-6-
<PAGE>
There shall be excluded from the calculation of pre-tax
consolidated earnings during the Term of this Agreement the amount by
which (x) any item or items of unusual or extraordinary gain in the
aggregate exceeds 20% of the Employer's net book value as at the end of
the immediate preceding fiscal year or (y) any item of unusual or
extraordinary loss in the aggregate exceeds 20% of the Employer's net
book value as at the end of the immediate preceding fiscal year, in each
case in (x) and (y) above as determined in accordance with generally
accepted accounting principles and items of gain and loss shall not be
netted against each other for purpose of the above 20% calculation.
Provided Employee is not in default of the Agreement,
the Board may, in any event, even if any of the aforesaid pre-tax
consolidated earnings levels are not exceeded, grant the Employee the
aforesaid Bonus or any portion thereof for such year based on his
performance.
Notwithstanding anything to the contrary contained
herein, if Employee is not in the employ of Employer at the end of any
aforesaid 1996, or 1997 fiscal year or on May 31, 1998, no Bonus shall
be paid for such fiscal year. In the event of Employee's death on or
after January 1 of 1997, or l998, or June 1, 1998 as to 1998, any Bonus
to which he is otherwise entitled for the prior fiscal year shall be
paid to his widow if she shall survive him or if she shall predecease
him to his surviving issue per stirpes and not per capita.
Such pre-tax consolidated earnings shall be fixed and
determined by the independent certified public accountants regularly
employed by Employer. Such independent certified public accountants, in
ascertaining such pre-tax consolidated earnings, shall apply all
accounting practices and procedures heretofore applied by Employer's
independent certified public accountants in arriving at such annual pre-
tax consolidated earnings as disclosed in Employer's annual statement
for that year of profit and loss released to its stockholders. The
-7-
<PAGE>
determination by such independent certified public accountants shall be
final, absolute and controlling upon the parties. Payment of such
amount, if any is due, shall be made for each year by Employer to
Employee within sixty (60) days after which such accountant shall have
furnished such statement to Employer disclosing Employer's pre-tax
consolidated earnings for each of the years 1996, l997, and l998.
Employer undertakes to use reasonable efforts to cause said accountants
to prepare and furnish such statements within one hundred thirty (130)
days from the close of each such fiscal year and to cause said
independent certified public accountants, concomitantly with delivery of
such statement by accountants to it, to deliver a copy of such statement
to Employee. The Employer shall not have any liability to Employee
arising out of any delays with respect to the foregoing.
(e) In the event Employee dies during the Term of this
Agreement while the Employee is still in the Employ of Employer,
Employer shall pay to Employee's widow or his surviving issue, as the
case may be, for the balance of the Term of the Agreement, or eighteen
(18) months, whichever is less, annual death benefits payable weekly or
in accordance with Employer's payroll practices in an amount equal to
35% of Employee's then annual base salary rate.
5. During the Term of this Agreement, Employer will
reimburse Employee for traveling or other out-of-pocket expenses and
disbursements incurred by Employee with Employer's approval in
furtherance of the businesses of Employer, its affiliates, divisions or
subsidiaries, upon presentation of such supporting information as
Employer may from time to time request.
6. During the Term of this Agreement, Employee shall be
entitled to a vacation during the usual vacation period of Employer in
accordance with such vacation schedules as Employer may prescribe.
7. Both parties recognize that the services to be rendered
by Employee pursuant to this Agreement are extraordinary and unique.
-8-
<PAGE>
During the Term of this Agreement, and during any subsequent employment
of Employee by Employer, Employee shall not, directly or indirectly,
enter into the employ of or render any services to any person,
partnership, association or corporation engaged in a business or
businesses in anyway, directly or indirectly, competitive to those now
or hereafter engaged in by Employer or by any of its subsidiaries during
the Term of this Agreement and during any subsequent employment of
Employee by Employer and Employee shall not engage in any such business,
directly or indirectly on his own account and, except as permitted by
paragraph 3 of this Agreement, Employee shall not become interested in
any such business, directly or indirectly, as an individual, partner,
shareholder, director, officer, principal, agent, employee, trustee,
consultant, or in any other relationship or capacity. For a period of
two (2) years following termination of employment for any reason,
Employee shall not directly or indirectly (i) engage or otherwise be
involved in the recruitment or employment of any Employer employee nor
(ii) solicit or render any service directly or indirectly to any other
person or entity with regard to soliciting any customer of the Employer
during the two (2) year period prior to termination of employment with
respect to products or services competitive with products or services of
Employer. Employee at no time during or after employment shall disclose
to any person, other than Employer, or otherwise use any information of
or regarding Employer except on behalf of Employer, nor communicate,
publish, or otherwise transmit, in any manner whatsoever, untrue
information or negative, competitive, personal or other information or
comments regarding Employer. In addition, Employee agrees that all
lists, materials, books, files, reports, correspondence, records and
other documents and information ("Employer Materials") used, prepared or
made available to Employee, shall be and shall remain the property of
Employer. Upon the termination of employment of Employee or the
expiration of this Agreement, whichever is earlier, all Employer
Materials shall be immediately returned to Trans-Lux Corporation, and
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<PAGE>
Employee shall not make or retain any copies thereof, nor disclose or
otherwise use any information relating to said Employer Materials to any
other party. As used herein the term Employer shall include Employer,
Employer's subsidiaries and affiliates, and any individuals employed or
formerly employed by any of them. Employer shall be entitled, if it so
elects, to institute and prosecute proceedings in any court of competent
jurisdiction, either in law or in equity, to obtain damages for any
breach of this Agreement, or to enjoin Employee from any breach of this
Agreement, but nothing herein contained shall be construed to prevent
Employer from pursuing such other remedies as Employer may elect to
invoke.
8. In the event any provision of paragraph 7 of this
Agreement shall be held invalid or unenforceable by reason of the
geographic or business scope or the duration thereof, such invalidity or
unenforceability shall attach only to such provision and shall not
affect or render invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be construed as if the geographic or
business scope or the duration of such provision had been more narrowly
drawn so as not to be invalid or unenforceable.
9. The waiver by Employer of a breach of any provision of
this Agreement by Employee shall not operate or be construed as a waiver
of any subsequent breach by Employee.
10. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and served personally or
sent by United States certified or registered mail, return receipt
requested, or overnight courier such as Federal Express or Airborne to
his address as stated on Employer's records, in the case of Employee, or
to the office of Trans-Lux Corporation, attention of the Chairman or
Vice Chairman of the Board, 110 Richards Avenue, Norwalk, Connecticut
06856-5090, in the case of Employer, or such other address as designated
in writing by the parties.
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<PAGE>
11. This Agreement shall be construed in accordance with the
laws of the State of New York.
12. This instrument contains the entire agreement between the
parties. It may not be changed, modified, extended or renewed orally
except by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, discharge or extension
is sought.
IN WITNESS WHEREOF, this Agreement has been duly executed on
the day and year above written.
TRANS-LUX CORPORATION
By:\s\ Michael R. Mulcahy
-----------------------
Executive Vice President
\s\ Thomas F. Mahoney
-----------------------
Thomas F. Mahoney
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