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EXHIBIT 10.3
EMPLOYMENT AGREEMENT made as of August l6, l996, by and between
TRANS-LUX CORPORATION, a Delaware corporation, transacting business at 000
Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxx 00000-0000 (hereinafter referred to as
"Company"), and XXXXXXX XXXXXX, residing at 000 Xxxxxxx Xxxxxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000 (hereinafter referred to as "Xxxxxx").
WHEREAS, the parties have heretofore entered into a consulting
agreement dated December 30, l992 effective January l, l993; and
WHEREAS, the parties desire to terminate such consulting agreement as
of August l5, l996, but all rights and benefits which accrued or accrue to
Xxxxxx thereunder on or prior to August l5, 1996 shall not be abrogated and
shall remain in full force and effect; and
WHEREAS, the parties desire to enter into an employment agreement;
and
WHEREAS, Xxxxxx for approximately forty-five (45) years has been
continuously engaged as an employee, officer, consultant and/or director of the
Company, and for approximately thirty-two (32) years had been an executive
officer and chief executive manager of the affairs of the Company and its
subsidiaries and affiliates; and
WHEREAS, Xxxxxx has had a long, continuously successful experience
and performance in the business operations of the Company and has a unique and
deep
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knowledge of the management, needs, trade secrets, know-how and affairs of the
Company and its subsidiaries and affiliates; and
WHEREAS, by reason of all of the aforesaid, Xxxxxx'x services are
uniquely valuable and advantageous to the Company; and
WHEREAS, it is the considered judgment of the Board of Directors of
the Company that it is in the best interests and to the advantage of the Company
that it secure to itself the employment services of Xxxxxx by entering into this
employment agreement ("Agreement") upon the terms hereinafter provided;
NOW, THEREFORE, in consideration of the mutual premises herein
contained, the parties agree with each other as follows:
1. The Company hereby employs Xxxxxx to perform the employment
services to the Company on the terms and conditions hereafter set forth, and
Xxxxxx hereby accepts such employment with the Company for a term ("Term")
commencing on the date hereof and ending on December 31, 2002. Notwithstanding
the foregoing, Xxxxxx may terminate the Term of this Agreement on December 3l,
l998 and on December 3l of each year thereafter, on no less than six months
prior written notice, in which event the Term shall end on such December 3l to
the same effect as if such date was fixed herein as the date for the end of the
Term.
2. (a) During the Term, Xxxxxx will serve the Company faithfully and
diligently and shall render to the Company such services as are appropriate to
be rendered by the Chairman of the Board and such additional executive services
as may be reasonably assigned to him from time to time by the Board of Directors
of the
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Company, or by the Executive Committee of the Board of Directors of the Company,
provided that such services are of a type, dignity and nature appropriate to the
Chairman of the Board of Directors and former chief executive officer and
executive manager of the Company. Xxxxxx shall render such services primarily in
Southern Connecticut, the New York Metropolitan area or Santa Fe, New Mexico,
and shall devote such time and attention as may be reasonably necessary to
effect the efficient discharge of his duties hereunder.
(b) During the Term the Company shall use its best efforts to
nominate and elect Xxxxxx from year to year as the Chairman of the Board, a
director, and a member of the Executive Committee of the Company. In the event
that Xxxxxx shall not be elected at all times during the Term hereof as the
Company's Chairman of the Board of Directors, as a member of its Board of
Directors, and as a member of the Executive Committee, the same shall, at
Xxxxxx'x option, constitute a material breach of this Agreement by the Company
unless the Company shall completely cure such breach within thirty (30) days
from receiving notice from Xxxxxx specifically setting forth the claimed breach.
Upon failure of the Company to cure such breach, Xxxxxx, at his option, shall at
any time thereafter be entitled to terminate his obligations hereunder by notice
("Notice") to the Company, specifically including the rendition of any services
by him to the Company. After the giving of the Notice the Company shall pay to
Xxxxxx, notwithstanding such termination, all sums payable or otherwise provided
to Xxxxxx under this Agreement for the balance of the Term, including, but not
limited to: (i) the salary and fees, Profit Participation and Bonus payments
provided to be paid to him pursuant to Paragraphs 3(a), (b), (c) and (d) for the
period from the date of such Notice of termination through December 31, 2002;
and (ii) the insurance and other benefits provided under this Agreement. The
aforesaid sums and benefits shall be paid or provided to Xxxxxx as follows: (i)
the aggregate salary and fees provided to be paid
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for the balance of the Term pursuant to Paragraphs 3(a) and (b) shall be paid to
Xxxxxx in one lump sum ten (10) days after such Notice of termination, in the
same aggregate amounts as are so provided in said Paragraphs 3(a) and (b) to be
paid for the balance of the Term (adjusted for the CPI Adjustment, as hereafter
defined, to the date of such payment); and (ii) the sums provided to be paid
pursuant to Paragraphs 3(c) and (d) and the insurance and other benefits
provided under this Agreement, shall be paid or provided to Xxxxxx in the same
manner, at the same times, and in the same amounts as are provided in the said
Paragraphs (c) and (d) and in Paragraph 4 and elsewhere in the Agreement to be
paid or provided during the balance of the Term.
(c) Nothing contained in this Agreement shall in any
way limit or prevent Xxxxxx from:
(i) being connected with, in any manner whatsoever,
including, without limiting the generality of the foregoing, as
owner, investor, executive or director or otherwise in any business
whatsoever, including, without limiting the generality thereof, the
business of producing, distributing or exhibiting motion pictures, or
the business of film booking and buying, so long as the business is
not directly competitive with any business of the Company;
(ii) owning or dealing in the stock or securities of any
corporation whose stocks or securities are traded on any public
market provided that such holdings of Xxxxxx in any individual
corporation that is a direct competitor of the Company shall not
exceed five (5%) percent of the outstanding securities of any class
of any such corporation.
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3. During the Term the Company agrees to pay Xxxxxx the following, in
addition to Directors' fees and fees as a member of the Executive Committee and
other Committees, if any, of the Board of Directors of the Company (such fees to
be paid as if Xxxxxx was not an an employee of the Company and in the same
amounts as non-employee directors are paid):
(a) A salary at the rate of $296,762.08 per annum for the
balance of l996, subject to the CPI Adjustment for subsequent
years as hereafter provided;
(b) A fee as Chairman at the rate of $60,000 per annum for the
balance of l996, subject to the CPI Adjustment for subsequent
years as hereafter provided;
(c) An amount equal to one and one-half percent (l-l/2%) of the
Company's pre-tax consolidated earnings, as hereinafter defined
(after deducting minority interests) in each calendar year
during the Term hereof, hereinafter referred to as the "Profit
Participation". Such pre-tax consolidated earnings shall be
fixed and determined by the independent certified public
accountants regularly employed by the Company. Such independent
certified public accountants, in ascertaining such pre-tax
consolidated earnings, shall apply all accounting practices and
procedures heretofore applied by the Company's independent
certified public accountants in arriving at such annual pre-tax
consolidated earnings as disclosed in the Company's annual
statement for that year of profit and loss released to its
stockholders. The determination by such
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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 the
Company to Xxxxxx within thirty (30) days after such accountant
shall have furnished such statement to the Company disclosing
the Company's pre-tax consolidated earnings for such calendar
year. The Company undertakes to use its 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 the delivery of such statement
by said accountants to it, to deliver a copy of such statement
to Xxxxxx. The Company shall not have any liability to Xxxxxx
arising out of any delays with respect to the foregoing; and
(d) The Board of Directors of the Company, upon the
recommendation of the Compensation Committee of the Board of
Directors, shall consider no later than May of each year the
grant of a bonus ("Bonus") to Xxxxxx based upon the performance
of Xxxxxx during the immediate preceding year. In determining
whether to grant any such bonus and the amount thereof,
consideration may be given to the performance of the Company in
light of competitive and economic conditions. Notwithstanding
the foregoing, the Company shall pay to Xxxxxx the highest
Bonus applicable for each calendar year ending December 31,
commencing December 31, 1996, in the respective amounts
hereinafter set forth, in the event the Company's pre-tax
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consolidated earnings for any year during the Term, determined
in accordance with Paragraph 3(c), meets or exceeds the
respective amounts hereinafter set forth.
If Pre-Tax Consolidated Annual Non-Cumulative Level of
Earnings in Any Year Exceed Bonus Payable
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$ 250,000 5,000
500,000 10,000
750,000 15,000
1,000,000 20,000
1,250,000 31,250
1,500,000 37,500
1,750,000 43,750
2,000,000 50,000
Over 2,000,000 $50,000 plus 2-1/2% of each full
increment of $250,000 over
$2,000,000, the total annual bonus
not to exceed $125,000 (e.g., if
$2,900,000, $50,000 plus 2-1/2% of
$750,000 or $50,000 plus $18,750 =
$68,750).
Notwithstanding Paragraph 3(c) of this Agreement, for purposes of
only Paragraph 3(d) of this Agreement, there shall be excluded from the
calculation of pre-tax consolidated earnings during the Term of this Agreement
(i) the amount by which (x) any item or items of unusual or extraordinary gain
in the aggregate exceeds 20% of the Company's net book value as at the end of
the immediate preceding calendar year or (y) any item of unusual or
extraordinary loss in the aggregate exceeds 20% of the Company's net book value
as at the end of the immediate preceding calendar 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, (ii) any effect of FASB 109 or similar
promulgation or (iii) any direct effect on pre-tax consolidated earnings of
write-offs of
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existing prepaid financing costs prior to the normal amortization schedule of
such financings provided however that for the purposes of this Paragraph (d)
only, such financing costs shall thereafter be amortized in accordance with such
normal amortization schedule of such financings. Each Bonus payment shall be
made in accordance with the time provisions set forth in Paragraph 3(c).
Notwithstanding the foregoing, the Board may, in any event, even if any of the
aforesaid pre-tax consolidated earnings levels are not exceeded, xxxxx Xxxxxx
the aforesaid Bonus or any portion thereof for any such year or any other bonus
based on his performance.
In the event Xxxxxx is entitled to or is awarded a Bonus, the Company
shall notify Xxxxxx thereof no later than May 31 of such year and Xxxxxx shall
have the option of receiving such bonus in (i) cash, (ii) common stock of the
Company or (iii) cash and common stock in such ratio as Xxxxxx elects. Such
election shall be made by Xxxxxx by written notice to the Company and the
Company shall pay said Bonus in the form elected by Xxxxxx within fourteen (14)
days after receipt of Xxxxxx'x written notice thereof. Upon Xxxxxx'x failure to
make such election within sixty (60) days after notice to Xxxxxx from the
Company of the Bonus, such Bonus shall be paid in cash to Xxxxxx on the day
following the expiration of said sixty (60) day period. In the event Xxxxxx
elects to receive any such Bonus in common stock of the Company, the same shall
be valued at the Closing price of such common stock on the American Stock
Exchange (or other principal stock exchange on which the Company's common stock
is listed or, if not listed, at the mean between the average of the high and low
bid and asked prices on the over-the-counter market) on the date of Xxxxxx'x
election, or if there is no trade on such date on such exchanges, then the
Closing price on the date on which it last traded.
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(e) The Company may make appropriate deductions from the said
payments required to be made in this Paragraph 3 to Xxxxxx, to comply with all
governmental withholding requirements.
The payments provided in Paragraphs 3(a) and (b) shall be made in
equal weekly installments, or as otherwise may be the practice of the Company in
making similar payments, but not less often than once monthly. The payments
provided to be made to Xxxxxx pursuant to said Paragraphs 3(a) and (b) shall
each be appropriately adjusted upward ("CPI Adjustment") for inflation at the
beginning of each calendar year commencing in 1997 based on the United States
Department of Labor Bureau of Labor Statistics, Consumer Price Index, United
States City Average, all items (1996=100). The CPI Adjustment shall be paid
retroactively, when determined, for payments already made in the applicable
calendar year.
Xxxxxx shall also be entitled to reimbursement from the Company for
the amount of the social security payments payable by Xxxxxx based on amounts
paid to him under this Agreement to the extent such social security payments
would have been made by the Company if the fees under Paragraph 3(b) were paid
as a salary. Any such reimbursement payable by the Company hereunder shall be
grossed up to take into account and reimburse Xxxxxx for any tax consequences
resulting therefrom.
This Agreement shall not be deemed abrogated or terminated if the
Company, in its discretion, shall determine to increase the compensation of
Xxxxxx for any period of time, or if Xxxxxx shall accept such increase.
(f) If, during the Term of this Agreement, Xxxxxx shall be
prevented from performing or be unable to perform, or fail to perform his duties
by
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reason of illness or any other incapacity or disability, the payments and/or
benefits provided in Paragraphs 3 and 4 and elsewhere in this Agreement to be
made or provided to Xxxxxx, shall continue to be made or provided to Xxxxxx for
the balance of the Term, without any reduction whatsoever, at the same times, in
the same manner, and in the same amounts as provided in Paragraphs 3 and 4 and
elsewhere in this Agreement.
If Xxxxxx shall die during the Term, the Company shall pay to
Xxxxxx'x widow and/or issue, as provided below in this paragraph, an amount
equal to the aggregate payments provided to be made under Paragraphs 3 (a) and
(b) that otherwise would have been payable to Xxxxxx during the Term but for his
death, for the balance of the Term through December 31, 2002, without any
reduction whatsoever. Such payments of the amounts provided in Paragraphs 3(a)
and (b) shall be made at the same times, in the same manner, and in the same
amounts as provided in Paragraphs 3(a) and (b), as follows: Fifty percent (50%)
to Xxxxxx'x widow, if she shall survive him, and in such event the remaining
fifty percent (50%) shall be equally divided among his surviving issue, per
stirpes and not per capita. In the event that Xxxxxx'x wife shall predecease him
or, having survived him, shall die during the balance of the Term ending
December 31, 2002, the entire amounts thereafter payable during the balance of
the Term shall be payable as provided in Paragraphs 3(a) and (b) in equal shares
to his surviving issue, per stirpes and not per capita.
In addition to the payments, insurance and/or benefits provided in
Paragraphs 3(f) and 4 and elsewhere in this Agreement, in the event of Xxxxxx'x
death during the Term, the Company shall pay to Xxxxxx'x widow and/or issue, as
provided below in this paragraph, an amount equal to the Profit Participation
provided for in Paragraph 3(c) hereof and the Bonus payments provided for in
Paragraph 3(d) hereof
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which Xxxxxx would have been entitled to receive for the balance of the Term of
this Agreement through December 31, 2002 but for his death. Such payments of
Bonus and Profit Participation under this Paragraph 3(f) shall be made at the
same times, in the same manner, and in the same amounts as provided in
Paragraphs 3(c) and (d), as follows: (i) fifty (50%) percent thereof to Xxxxxx'x
widow and (ii) fifty (50%) percent thereof shall be equally divided amongst
Xxxxxx'x surviving issue, per stirpes and not per capita, provided, however,
that if Xxxxxx'x wife shall predecease him or having survived him shall die
prior to the completion of such payments, then in the event of her death, the
fifty (50%) percent said payment which would have been made to her pursuant to
(i) of this paragraph above, shall be made in equal shares to Xxxxxx'x surviving
issue, per stirpes and not per capita.
4. (a) The Company will obtain and furnish to Xxxxxx (provided Xxxxxx
is insurable) a policy of life insurance upon Xxxxxx'x life, the term of which
shall continue during the Term through December 31, 2002. Such policy shall
provide that Xxxxxx, upon the expiration of said policy, shall have a conversion
right privilege, if same is available. Said policy shall provide for a death
benefit of $250,000 payable as follows:
Eighty (80%) percent of the death benefit of such policy to
Xxxxx X. Xxxxxx, his wife, and in such event the remaining
twenty (20%) percent of such death benefit shall be equally
divided among his surviving issue, per stirpes and not per
capita. In the event that Xxxxxx'x wife shall predecease him,
then such policy shall provide that the entire death benefit
payable thereunder shall be payable in equal shares to his
surviving issue, per stirpes and not per capita.
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If Xxxxxx shall not be insurable, or if the amount of such insurance
is less than $250,000, then, upon Xxxxxx'x death during the Term hereof, the
Company shall in every event, pay to Xxxxxx'x said widow and/or issue as
provided above in this Paragraph 4(a), the amount of such uninsured portion
within 30 days after Xxxxxx'x said death. For example, if the amount of
insurance is $130,000, then $120,000 shall be paid by the Company to Xxxxxx'x
said widow and/or issue within 30 days after Xxxxxx'x death.
(b) The Company shall also provide to Xxxxxx and his wife
during the Term, at the Company's expense, medical insurance coverage for Xxxxxx
and his wife at least at the same levels as in effect for him on the date of the
execution of this Agreement, as well as any other group insurance plan,
hospitalization plan (subject to Medicare reimbursements), medical service plan
or any other benefit plan which Company may have in effect during the Term.
Included in such plans and benefits that the Company will make available or pay
to Xxxxxx are travel and accident insurance and Christmas bonuses to the extent
the same are made available or paid to the senior executives of the Company.
Xxxxxx shall also be entitled to any other insurance and other employee
benefits, including life insurance, which are available to senior executives of
the Company. Notwithstanding the foregoing, Xxxxxx acknowledges and agrees that
he is not entitled to participate in the Company's existing pension plan
("Pension Plan") and the Company agrees to reimburse Xxxxxx for any and all tax
liabilities relating to (i) said Pension Plan and (ii) previous payments to
Xxxxxx from said Pension Plan, resulting from Xxxxxx entering into this
employment agreement and/or becoming an employee of the Company. Any such
reimbursement by the Company shall be grossed up to take into account and
reimburse Xxxxxx for any tax consequences resulting from such reimbursement.
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5. The Company agrees that during the Term hereof Xxxxxx shall be
provided with appropriate secretarial and administrative support, office space
and office equipment in connection with his services under this Agreement. The
Company shall also reimburse Xxxxxx for all out-of-pocket expenses incurred by
him in furtherance of the business and activities of the Company, including
travel, board and hotel expenses. During the Term hereof, Xxxxxx shall be
entitled to reasonable periods of sick-leave in each year and vacations not in
excess of a total of six weeks in any one year. The Company shall also furnish
Xxxxxx with a car and driver, as may be requested by Xxxxxx during the Term
hereof.
6. A waiver by either party of any of the terms and conditions of
this Agreement in any instance shall be in writing and shall not be deemed or
construed to be a waiver of such term or condition for the future, or of any
subsequent breach thereof.
7. Any and all notices required or permitted to be given hereunder
shall be in writing and shall be deemed to have been given when deposited in the
United States mails, certified or registered, addressed as follows:
To Xxxxxx: Xxxxxxx Xxxxxx
000 Xxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
To Company: Trans-Lux Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Att: CEO
Either party may, by written notice to the other, change the address to which
notices are to be addressed.
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8. The Company may itself, or through any of its subsidiaries or
affiliates, make payment to Xxxxxx of the compensation due him hereunder,
provided, however, that if such payment be made by a company other than the
Company, that fact shall not relieve the Company of its obligations hereunder,
except with respect to the extent of the amounts so paid.
9. The provisions hereof shall be binding upon and shall inure to the
benefit of Xxxxxx, his heirs, executors and administrators and the Company and
its successors. During the Term of this Agreement, if the Company shall at any
time be consolidated or merged into any other corporation, or if substantially
all of the assets of the Company are transferred to any other corporation, the
provisions of this Agreement shall be binding upon and inure to the benefit of
the corporation resulting in such merger, or to which such assets shall have
been transferred, and this provision shall apply in the event of any subsequent
merger, consolidation or transfer.
10. Wherever in this Agreement it is provided that payments and/or
benefits are to be made and/or provided to Xxxxxx'x wife and/or widow, and/or
issue and/or trust, Xxxxxx shall have the sole right at any time and from time
to time during his lifetime to change the parties and/or the percentages and/or
the amounts to be paid and/or provided to such parties. Whenever in this
Agreement the term "issue" is used it shall mean natural issue except in the
case of Xxxxxx'x grandchildren issue shall include grandchildren legally adopted
by Xxxxxx'x natural children.
11. This Agreement contains all the understandings and agreements
arrived at between the parties in relation to the subject matter and supersedes
and terminates as of August 15, 1996, the consulting agreement made between the
parties
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dated December 30, l992 effective January l, l993. Notwithstanding the
termination of said December 30, l992 consulting agreement and this employment
agreement, all rights and benefits which accrued or accrue to Xxxxxx on or prior
to August l5, l996 under said December 30, l992 consulting agreement, shall not
be abrogated by this employment agreement and shall remain in full force and
effect, and this employment agreement shall not affect any agreement other than
said December 30, l992 consulting agreement between Xxxxxx and the Company,
including but not limited to, any stock option and insurance agreements. The
invalidity or unenforceability of any provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
12. This Agreement shall not be varied, altered, modified, changed or
in any way amended, except by an instrument in writing, executed by the parties
hereto, or their legal representatives.
IN WITNESS WHEREOF, Xxxxxx has executed and the Company has caused
its Vice Chairman, on its behalf, to execute this Agreement, on the day and year
first above written.
TRANS-LUX CORPORATION
/s/ Xxxxxx Xxxx
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Vice Chairman
/s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
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