-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rj1f86uWarfsst74iWGPDtX0J/P6Cs8ZFebL31i/VC6zHGe2dqgO/KK68SRlTGbp 3+4ZSVEvRgfX0LsX/98n3g== 0000099106-96-000007.txt : 19960816 0000099106-96-000007.hdr.sgml : 19960816 ACCESSION NUMBER: 0000099106-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANS LUX CORP CENTRAL INDEX KEY: 0000099106 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS MANUFACTURING INDUSTRIES [3990] IRS NUMBER: 131394750 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-02257 FILM NUMBER: 96615464 BUSINESS ADDRESS: STREET 1: 110 RICHARDS AVE CITY: NORWALK STATE: CT ZIP: 06856-5090 BUSINESS PHONE: 2038534321 MAIL ADDRESS: STREET 1: 110 RICHARDS AVENUE CITY: NORWALK STATE: CT ZIP: 06856-5090 10-Q 1 TRANS-LUX CORP FORM 10-Q PERIOD ENDING 06/30/96 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.) 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 Part I - Financial Information ------------------------------ TRANS-LUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
June 30 December 31 ASSETS 1996 1995 ------ ----------- ----------- 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
TRANS-LUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY June 30 December 31
1996 1995 ----------- ----------- (unaudited) 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 ========== ==========
THE CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY ARE AS FOLLOWS:
Additional Common Class Paid-in Retained Treasury Stock B Stock Capital Earnings Other Stock ------ ------- ---------- -------- ----- -------- 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.
2 TRANS-LUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited)
FOR THE THREE MONTHS FOR THE SIX MONTHS ENDED JUNE 30 ENDED JUNE 30 -------------------- ------------------ 1996 1995 1996 1995 ---- ---- ---- ---- 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
3 TRANS-LUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
FOR THE SIX MONTHS ENDED JUNE 30 1996 1995 ------------------------------------------------------------------------------------------ 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.
4 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- 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- 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- 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- 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- 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- 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- EX-10 2 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. 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. 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 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. 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 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 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 EX-10 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 EX-11 4 TRANS-LUX CORPORATION & SUBSIDIARIES EXHIBIT 11 COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTH FOR THE THREE MONTHS ENDED JUNE 30, 1996 ENDED JUNE 30, 1996 ------------------- ------------------- 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.
EX-27 5 FINANCIAL DATA SCHEDULE
5 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. 1,000 6-MOS DEC-31-1996 JUN-30-1996 317 577 3,764 0 1,848 6,871 72,279 25,381 59,767 7,006 5,868 2,740 0 0 19,257 59,767 7,680 20,624 5,032 12,575 0 0 1,126 894 375 519 0 0 0 519 .41 .39
EX-28 6 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 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- 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- 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- 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-
If Pre-Tax Consolidated Earnings Exceed Annual Non- for Cumulative Level 1996-1997-1998 of Bonus Payable -------------- ---------------- 1996 (58.33%) 1997 1998(41.67%) ---- ---- ---- $ 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
-6- 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- 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- 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 -9- 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. -10- 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 c:\winworld\translux\mahempl\rev\7\17\96 -11- -----END PRIVACY-ENHANCED MESSAGE-----